What is financial planning about?

Financial planning is about using a fully licensed and qualified adviser to help you make the most of your assets, income and available resources to achieve your lifetime goals. You may be just starting out, a young adult or a young couple.

You may want to move ahead financially with investments for your future or cover the cost of your children's education from any age.

You may have a desire to fund for your own wealthy retirement. You may be preparing for retirement or have already retired.

What ever you want to do it all costs money by developing a plan of action you will have a map to follow with indicators showing you how well you are progressing.

Financial planning is conducted by a professional called a Certified Financial Planner who may also be a Specialist Self Managed Superannuation Adviser.    << back

 

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Why should I use a financial planner?

A professional financial planner can help you plan, organise and manage things, such as:

• Budgeting and cash flow management
• Debt management and elimination
• Insurance e.g. life, trauma, income protection cover and business expense cover
• Superannuation
• Self Managed Superannuation fund planning, setup, administration, management and investment strategies.
• Wealth accumulation and investment strategies
• Investing in a tax effective manner
• Gearing (borrowing money) to invest
• Estate planning and taking care of your families finances 
• Retirement planning           << back

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How can a financial planner help me?

There are many benefits to having professional financial advice. A financial planner should:

• Provide direction, focus and meaning to your financial decisions.
• Help you with lifestyle planning
• Help you and your partner understand how each decision you make affects other areas of your finances.
• Can help you make the most of your money, to make sure you meet your short, medium and long term goals.        

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Do I need to have a lot of money first before I see a financial planner?

No, you don’t have to have hundreds of thousands of dollars to visit an adviser. Everyone has different financial matters to think about, how to get the best use of your income, saving for tomorrow, debts to be paid, investments, superannuation and lots more. You can play an active role in managing these sorts of matters, with the help of a financial planner.  

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But how do I choose an experienced financial planner?

It is important to choose a planner that is not only qualified, but who you feel comfortable with and has years of hands on experience needed to provide you with the advice you may require.

Look at the advisers qualifications and ask about the length of time the adviser has been a practitioner?   Then go to the next step, asking questions.  

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What should I ask a financial planner?

The Financial Planning Association of Australia recommends that you ask these questions:

• Could I have a copy of your Financial Services Guide (FSG)?
  
  All financial planners must have an FSG. It is a simple document that gives you details on a planner. You should check whether the planner holds an Australian Financial Services Licence (AFSL) or is an authorised representative of an AFSL holder. If they don’t meet this criteria, then look for another planner who does. Our office procedures are to provide you with this document at your initial meeting

• What is your approach to financial planning?
  
  Ask the planner about the types of clients and financial situations they typically work with. This will help you establish whether the planner specialises in areas that relate to your situation.

• How much do you typically charge?
  
  The planner should be able to give you an estimate of possible costs. This could include the cost of the planner’s services (their time and expertise) and the percentage they would receive as commission on products you may purchase. Our office procedures are to clearly discuss and disclose all fees that you may be charged, at your initial meeting.

• What do I need to know about risk?
  
  Any investment involves ‘risk’, that is, the chance that you will not achieve your financial goals. Generally, the higher the expected return on any investment, the higher the risk.
  
  There is also personal risk, which needs to be considered. If you or your partner suffered a catastrophe such as an untimely death, became totally and permanently disabled, suffered a major life threatening illness or lost the ability to earn an income all your plans could be ruined.

• Can I have a written Statement of Advice (SoA)?
  
  Your planner should provide you with a written financial plan or ‘statement of advice’ (SoA) whenever giving personal financial advice. This written plan should set out the basis for the advice and the reasons for the particular recommendations.

• Will my financial plan change as my circumstances and needs change?
  
  Your goals will change over time, and so your financial plan should be reviewed and changed too.           

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What information will the planner need to know to be able to assist you in a professional manner?

Your financial planner will ask a lot of questions so they understand your situation. You should be open and honest with your adviser so an accurate picture of your financial position can be presented. With this information along with further discussions a financial planner can then develop a plan tailored just for your requirements.        

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What are some of the details the financial planner will want to know?

• You full name
• Your age and date of birth
• Your current and future income
• Any anticipated future expenses, like future planned overseas holidays or motor vehicle upgrades etc.
• All of your assets and liabilities both personal, business and investment.
• Number of dependants
• Superannuation and Life insurance figures
• Any health or external issues that may impact upon your financials       

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What information will you need to bring with you?

• Income
• household expenses
• car expenses
• personal expenses
• health
• assets
• superannuation
• loans
• business interests and family trusts.

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 A different language?

You will hear some new language that may be different to you in financial planning. Don't let this confuse you and always be prepared to ask "what does that mean" Your financial planner will be happy to explain the new terminology, which can seem foreign initially, but will become clear the more you question and learn.

This is what some of this different terminology means.

• Australian Financial Services Licence (AFSL)
  
  An Australian Financial Services Licence authorises a person to carry out financial services that are specified in the licence. Changes to the Corporations Act as a result of the Financial Services Reform Act specify five main classes of financial services for which you will need an AFSL:
  • Provide financial product advice
  • Deal in a financial product
  • Make a market for a financial product
  • Operate a registered scheme
  • Provide a custodial or depository service
    
    
• Warning: If the person you are talking to claims to be a financial planner but does not hold an AFSL or is not an Authorised Representative of an AFSL and cannot prove this with the correct certificates and license numbers then do not under any circumstances go any further.  Seek advice from someone who is fully licensed and can prove it to you.
  
  
• Authorised Representative
  An authorised representative of a financial services licensee means a person authorised by the licensee to provide a financial service on behalf of the licensee.
  

Certified Financial Planner (CFP)

This is the highest professional recognition that can be given to a financial planner. A CFP Practioner has extensive experience and has undergone rigorous study. The qualifications gained by a CFP Practioner are well in excess of those required under current Australian law.

Specialist Self Managed Superannuation Fund Adviser (SSA)

This is the highest professional recognition that can be given to an adviser who specializes in providing advice to  people who want to set up or already have a Self managed Superannuation Fund. A SSA practitioner has extensive experience and has undergone rigorous study. The qualifications gained by a SSA Practitioner are well in excess of those required under current Australian law.  

Financial Services Guide (FSG)

A guide that outlines information about the licensee and your planner such as who they are, who they work for, how they charge for services, the range of services they can provide, and products they can recommend.

• Production Disclosure Statement (PDS)
  
  A product disclosure statement must be given to you where a recommendation is given to buy a financial product or an offer is made for a financial product.
  
• Statement of Advice (SoA)
  
  Also called a ‘financial plan’, this document is customised and tailored to your individual needs and circumstances. It recommends strategies and relevant investments to achieve your financial goals. It should clearly state all fees and charges. This will enable you to make an informed decision about the suitability of the advice and if you are receiving value for money.