The correct choice highlights the importance of understanding a client’s personal and financial circumstances as a preliminary step in the financial planning process. During this stage, the planner actively gathers relevant information, which includes a thorough review of the client’s financial statements—such as income statements, balance sheets, and tax returns. This review is crucial for establishing a clear picture of the client’s current financial situation, including assets, liabilities, income, and expenses.
Evaluating these statements allows the planner to identify financial strengths and weaknesses, assess cash flow, and understand overall financial health. This foundational understanding is necessary before moving on to goal setting or developing specific recommendations, as it informs all subsequent steps in the planning process. Therefore, reviewing financial statements is an integral part of understanding the client's complete financial landscape.