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SIX
STEPS TO EFFECTIVE FINANCIAL PLANNING
Financial planning is not just about making investments
and selecting products. It is a methodological process
which requires careful planning and time.
At
Jordan Huebner, we have adopted a system to help our
clients get the most out of financial planning.
| STEP
1: |
Establishing and defining the relationship
between client and financial advisor
It is imperative
that the relationship between client and advisor
be clearly defined at
the outset. The
advisor should unequivocally explain the issues
related to the overall financial planning
process and establish
the duties and responsibilities of both parties.
In particular,
it is necessary to agree on the duration of the
relationship and the manner
in which decisions
will be made. Remuneration should also be agreed
upon. This could be commission-based, where
the advisor earns a percentage on products
sold. Or it could
be fee-based, where the advisor charges an
agreed fee for his consultation services. Or
it could
be a mixture of both.
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| STEP
2: |
Gathering
client data and setting goals
The
advisor at this stage works with the client
to determine
the client’s personal and financial
goals, needs and priorities, values and preferences
plus the customer’s risk tolerance
and profile. The advisor should also gather
all necessary
documentation
at this point in time.
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| STEP
3: |
Analysing
and evaluating your financial status
After the goals have been set, the next
step is to analyse the client’s current situation to determine
what needs to be done to achieve them. Depending
on the goals, this could involve analysing the client’s
assets, liabilities and cash flow, current
investments and insurance coverage, tax strategies,
retirement
planning and much more. Any problem areas
and opportunities are to be discussed at
this stage.
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| STEP
4: |
Developing
and implementing a financial plan
Now that the groundwork has been done, the advisor
can now offer recommendations and provide detailed
explanations for the customer to make an informed
decision. The advisor can also provide projections
on the returns on the investments as well as address
any concerns and questions that may arise. The advisor
then draws up a financial plan based on the discussions
and reviews the plan with the client. Both parties
then discuss the plan thoroughly and work on fine
tuning it until the client is satisfied.
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| STEP
5: |
Implementing
the financial plan
The advisor and client should agree on how the
financial plan is to be executed. Usually, the
advisor will
coordinate the entire implementation process for
the customer, including working with other professionals
like accountants, solicitors and stockbrokers where
necessary.
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| STEP
6: |
Monitoring
the financial plan
Since financial planning is a lifelong process,
it is essential for the advisor and client
to regularly
monitor and review the progress and goals of
the financial plan. Changes in one’s personal life
like births, marriage, illness and retirement can
often make an impact on the customer’s
goals, needs and financial situation. External
factors like
new tax laws and economic circumstances also
play a part. It is therefore important to review
the financial
plan regularly and to adjust it accordingly
to take into consideration the additional factors.
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Copyright© Jordan
Huebner (Asia) Pte Ltd, 2018. All Rights Reserved.
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