The financial planning process

The financial planning process

Recent legislation has encouraged the insurance industry to take a holistic approach when dealing with clients. 

The days of selling a product just to get the sale are rapidly disappearing. 

Many clients still look for the cheapest product only to find that the product did not suite their needs in the first place. Instead we are entering an era in which clients and Financial Advisors build long term relationships. 

The following steps are crucial to build the relationship; 

□ Establishing and defining the professional relationship 

□ Gathering of data including goals 

□ Analysing and evaluating the client’s financial status □ Developing and presenting financial planning recommendations and/or alternatives 

□ Implementing the financial planning recommendations 

□ Monitoring the financial planning recommendations 

The process:

1. First contact allows us to get to know each other as each persons goals and dreams differ.
2. In order to start the process, information such as income, pension statement, dependents, etc. are required.
3. In order to make any recommendations, the data needs to be analysed to determine what provisions are already in place and how that fits into the clients goals.
4. Recommendations with quotations are then provided with the clients goals in mind.
5. Once the client has decided on the recommendations the work of implementing starts, e.g. making doctors appointments to determine the clients health status, opening investment accounts, etc.
6. It is crucial to review one's progress on an annual basis.

I actively strive to follow and recommend this approach, with the client’s assistance, as I believe that it is to the benefit of all parties concerned. 

Knowing the shortfalls in one’s portfolio and making an informed decision of what action to take is far better than taking a guess. Far worse is to take action because you know you should have life insurance, that you should make provision for retirement, that you should invest and than realising that it does not suite your needs when it is too late.

Financial planning

Why is financial planning important?

If you are in a car accident today and you do not survive, will your dependents be able to continue with their current standard of living without your salary?

What if you do not die or you suffer a trauma? Will you have enough money to pay your medical expenses while serving  your normal monthly expenses?

Any entity (person/business) that generates an income should have a financial plan in place.

This financial plan should be reviewed at least once a year.

In one's personal capacity one should plan for lose of income, expected and unexpected expenses as well as any risk that may lead to the lose of income. This planning is normally done for the length during one expects to be financially active, e.g. 55 - 65.

Expected expenses will include;             
- retirement provision, 

- provision for tertiary education, 

- the purchasing of property, vehicles,  furniture, etc.

This can be for a long term goal (e.g.: retirement) or short term goals (e.g.: holidays, purchase of a new vehicle, etc.)

Not having a plan is close to negligence.