Financial planning is a service that is about designing the ‘optimum’ way for you to structure your financial affairs. It is not about selling a particular product or products. In every circumstance there will be an ‘optimum’ way to structure yourself financially to set you on the right path to achieving your goals and there will be an ‘optimum’ strategy for investing your available funds to achieve those goals.
Financial planning can be likened to cooking. All of us are capable of doing it (such as buying shares or putting money into the superannuation environment), but only a few of us are experts. Financial planners are experts in their profession. We spend our entire working lives remaining up-to-date with changes in legislation, economic and market conditions. Unless you can afford the same amount of time to do this, then you are running the risk of making the wrong decisions, which could be very costly to you in the long term.
The key criteria in selecting a financial planner is to choose someone that has a sufficient level of independence so that the product selection phase of the financial planning service is solely dependent upon your needs, objectives, understanding and comfort level associated with the particular products chosen.
Your financial planner should have available to them all types of investment products. This should include but not be limited to managed funds, direct shareholdings, term deposits, bonds and international equities.
Detailed below are the steps involved in seeking independent financial planning advice:
- Determine where you are now
- Decide where you want to go
- Develop a strategy
- Undertake product selection
- Ongoing monitoring and review
Stage One and Two involve an in-depth face to face meeting with your financial planner. These stages will take between one and three hours. The objective of the first stage is to comprehensively determine where you are now, both financially and personally. This process is very detailed and is essential to determine your current situation, as everyone will be different. Without a complete understanding of where you are now, any advice provided may be in-appropriate to your circumstances.
Once your current situation has been determined, it is necessary to identify what your financial goals and objectives are. These will range from short-term goals such as purchasing a new car in six months time to longer-term goals such as retirement or estate planning goals.
Stage three is the nuts and bolts of the financial planning process. This is where your personalised comprehensive financial plan is developed. At this stage, your current situation, financial goals and objectives and current legislation and legal framework are integrated together to determine the ‘optimum’ way to structure your financial affairs. You are not classified into categories or boxes.
Our final recommendations are determined after considering various alternatives until the ‘optimum’ one is selected. At this stage, your investment strategy is determined on a generic level based upon the various asset classes.
Stage four is adopting the investment strategy ‘weightings’ derived in stage three and selecting appropriate investment vehicles having consideration for the current economic and market conditions and most importantly, your wishes and comfort with particular investment types.
Stage five is the implementation stage. This is where the financial planner presents their recommendations to you personally and describes what they have recommended and more importantly why they have recommended that particular strategy for you. This stage will involve the presentation of the written financial plan together with a verbal explanation. The later part of this stage is the acceptance of our recommendations and the undertaking to carry out those recommendations.
The final stage, stage six, is seemingly the most important. That is the regular monitoring and review of your financial strategy to ensure that it continues to be appropriate to your individual circumstances and financial goals. Nothing is ever static, whether it is your personal circumstances, financial circumstances, legislation or the current economic and market conditions. That is why it is essential that your financial strategy is regularly monitored and reviewed.
It is our belief that every person should have a written financial strategy. You wouldn’t start a business without a sound written plan, so why should your personal financial life be any different?
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