Monday, December 29, 2008

Developing your Financial Plan

As Financial Planners, we help our clients in developing a Financial Plan. Many people have no idea what a Financial Plan should constitute. Some of them demanded more complicating stuffs from us and disappointed on how simple it can be. Our roles are not well defined and often misunderstood.

* Financial Plan is not Rocket Science that comes with complicating formulaes. We are not Financial Engineers.
* Financial Plan is not about helping you make lots of money and to analyse all your stock holdings. We are not Financial Analyst.
* Financial Plan is not about scrutinising every stocks in your Unit Trust and answer why was some shares selected. We are not Fund Managers.

If a Financial Plan do not help us analyse all these and let us make lots of money, then why need a Financial Plan?

My work desk and unpresented Financial Reports

I always consider myself more like a Financial Counsellor and not a Financial Professor with complicating formulaes to impress others. My role is to guide my clients in a structured way towards managing their finance and to ensure that they are disciplined enough to hit their financial goals. We are also like cheerleaders, cheering and encouraging them to be focused on their goals through our regular reviews.

So what are the considerations that we, as Financial Planners take when we construct a Financial plan? I can share 10 basic things that I do for my clients.

1. Understanding client’s needs, short/mid/long term goals and priorities
2. Gathering relevant quantitative and qualitative data
3. Hearing first hand on client's problems and concerns and record them into their individual file
4. Informing clients on assumptions used in the Financial Plan and when a review is necessary
5. Analysing Client's Net Worth and Cash Flow
6. Using basic Formulas to guage Client's Financial Health
7. Looking through Client's current Insurance policies and assist them with knowing their insurance numbers. (Hospitalisation, Death, Disability Critical Illnesses, accidents, etc)
8. Understanding Client's Investment Strategy and Philosophy
9. Understanding Client's Retirement needs and if on track with current strategy
10. Income Tax and Estate Planning considerations

After the Financial Plan is completed, we'll proceed with Recommendations and the Implementation process. As FAs, we have another layer of job which is to identify the plan with the best value from the range of companies we represent. Last but not least, Our job is also in reviewing the financial plan as an on-going service.

A Financial Plan is normally not complicated but tedious and time consuming to construct. We recommend according to needs and earns a modest living when we recommend plans of good value for our clients. Majority of us earns a commission and it is a way to compensate our time.

For me, I do more on Simple Cases and I cannot have differing standard as of who I shall charge a fee and who shall not. For simplicity, I keep to one system for the moment.


Anonymous said...

Well done, Adrain. This is what consumers must consider if they want their goals achieved. Salesmen disguised as financial consultants, senior or executive, they are still peddlers who peddle products like those at Albert Street. NTUC agents are infamous for this and they should set up stalls there to peddle revosave and vivolife like koyok or snake oil too and compete with some koyok men from Malaysia.
If consumers are serious and want value for money advice see Adrain for a plan.

darth said...

sometimes when I read comments involving name-calling and insults, I really wonder what insurance agents have done to these people.

cause -> ???
effect -> name-callnig and insults using the same vocab repeatedly.

It doesn't help when these people go on to claim "isn't it obvious" and refuse to elaborate. No it's not obvious coz I'm not a worm inside your stomach.

One of the perpetuated myths is that no insurance agents would want to meet up to transact a cheap term or shield plan. Let me guess: you only looked for those holding director positions and driving big cars?

Anonymous said...

you have no idea how much damage insurance agents have done to people's life.In the words of a MAS
director today Singaporean are still grossly under insured. Why? How come? If the insurance agents had been doing a GOOD JOB why Singaporean still under insured?
You are too naive. You think it is unfair to bash the insurance agents, calling them names.Why don't you ask the widows how much their deceased spouse left them and the children? What is insurance?
You for one might be one of the victims walking around with a time bomb. You might have false sense of security.Why don't you have your insurance policies and investment checked by a third party. I am not surprised you might be mis-sold, misrepresented' or have inappropriate recommendation etc.You might think that insurance is a straight forward thing and it is about buying from any tom and dick insurance agent. It is no myth that insurance agents don't sell term. If you have experienced, I am sure the first product they would whip out of their bag is a whole life, or an endowment or a regular ILP.You can ask , how did they know that one of these products suited you in the first place.
As i said you might be a victim except you don't know until you have an expert financial planner review for you.

darth said...

well, January 1, 2009 7:16 PM

glad to see that your communication style of "you're always wrong n i'm always right" has brought you a long way and readied you for the many horrors and atrocities in life.

see ya.