If you don’t know where you’re going,
You might wind up someplace else – Yogi Berra
Choosing a Financial Planner may be one of the most important decisions you make for yourself, your family and your loved ones. A good Financial Planner will display a depth of knowledge and have a broad range of expertise that they can draw on to provide you with a comprehensive plan that will address all of your financial needs such as investments, insurance, estate planning, tax planning and retirement planning. They can provide you with advice and guidance over your lifetime to achieve your life goals and financial well being and will also work with you to address specific needs as they arise.
Your financial planner will also work with your accountant, solicitor, and other advisors to coordinate all of your financial services. A good Financial Planner therefore will provide you with peace of mind whilst supporting and guiding you the whole way through the process to achieving your goals. Therefore, it is important that you choose a Financial Planner who is qualified, competent and is someone who you can trust and rely upon.
What a financial planner does
A financial planner sets out to understand each client’s different needs and financial objectives and to recommend an appropriate financial strategy. There is an established six step financial planning process* set out by the Financial Planning Association (FPA), which all professional advisers follow with every new client:
Step One : Gathering Data
To make appropriate recommendations on your financial future, your Financial Planner will work with you to understand your present financial position, your financial objectives and needs, and the levels and types of investment that will meet your needs.
Step Two : Identifying Your Goals
An integral part of the planning process for your financial plan is the identification of your goals and objectives. You should consider:
- the income and asset levels you are seeking
- placing your investments in a secure manner
- future education expenses
- upgrading the family home
- protecting your occupational income through adequate death, disability and income protection cover
- estate planning: writing a will and appointing a power of attorney
- accumulating assets to a defined level by a defined date
- maintaining an agreed level of investment accessibility and flexibility
- maintaining your lifestyle against inflation rises.
Step Three : Identifying Financial Issues
Your Financial Planner will compare your financial situation with your financial goals and identify steps necessary to achieve your goals. Your current situation, your goals and future plans will all form the basis of your financial plan.
Step Four : Preparing Your Financial Plan
Having identified your goals and objectives and assessed your financial situation, your FPA practitioner member will formulate an overall strategy. Central to the strategy will be your ‘risk profile’ – it is your attitude to risk that will principally determine the investments that the planner recommends for you. This is important because investments that offer a higher rate of return have a greater risk of losing value. Detailed information on understanding risk is contained in the booklet, The Trade-Off: Understanding Investment Risk, which is available on the FPA web site at www.fpa.asn.au
Your plan will provide clearly identified recommendations relating to your goals and objectives. It will also recommend any actions necessary to remedy shortfalls, for example, in capital or income.
Step Five : Implementing Your Financial Plan
Once you have agreed to the financial plan developed with your FPA practitioner member, he or she can implement it on your behalf, or assist you through the process.
Step Six : Reviewing Your Plan
The preparation and implementation of the financial plan is the starting point for your relationship with your Financial Planner.
Ongoing services can include:
- tracking of existing investments
- reviewing progress in achieving your financial goals and revising strategies as required
- investment portfolio valuations and reviews
- information on new investment opportunities
- ongoing communications
- ongoing consultations as required.
*"Advice worth taking" booklet – produced by the Financial Planning Association of Australia Limited.
Avery Gibson Financial Planning is a Principal member of the Financial Planning Association of Australia. Our approach to achieving your financial well being and lifestyle goals is in keeping with the FPA’s recognised six-step financial planning process.
According to the Financial Planning Association (FPA) research, nine out of ten Australians who have used a financial planner have benefited from the experience. (FPA Consumer Attitudes to Financial Planning Study, Galaxy Research April 07)
