What should be the first action taken by a CFP® professional after a client's financial situation changes significantly?

The first action that a CFP® professional should take after a client's financial situation changes significantly is to gather updated personal and financial information. This is crucial because any changes in a client's life—such as a new job, changes in income, a large inheritance, or shifts in family structure—can substantially impact their financial needs, goals, and capacities.

Collecting updated information allows the financial planner to fully understand the new context in which the client is operating. It ensures that the financial strategies and recommendations moving forward will be relevant and tailored to the current circumstances. Without this thorough and current information, any subsequent actions—such as reassessing investments, discussing market risks, or initiating tax planning—may be based on outdated data, leading to potentially ineffective or inappropriate advice.

Understanding the client's updated situation is foundational for effective financial planning, and it informs all other aspects of the planning process. Therefore, starting with a comprehensive update allows the CFP® professional to navigate the subsequent steps more effectively and ensures that all recommendations align with the client's true needs.