Page 17 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Personal Financial Planning

Notes The best results of working with a comprehensive financial planner, from an individual client
or family’s perspective are:

To create the greatest probability that all financial goals (anything requiring both money
and planning to achieve) are accomplished by the target date, and
To have a frequently-updated sensible plan that is proactive enough to accommodate any
major unexpected financial event that could negatively affect the plan, and
To make intelligent financial choices along the way (whether to “buy or lease” whether to
“refinance or pay-off” etc.).

Before working with a comprehensive financial planner, a client should establish that the planner
is competent and worthy of trust, and will act in the client’s interests rather than being primarily
interested in selling the client financial products for his own benefit. As the relationship unfolds,
an individual financial planning client’s objective in working with a comprehensive financial
planner is to clearly understand what needs to be done to implement the financial plan created
for them. So, in many ways, a financial planner’s step-by-step written implementation plan of
action items, created after the plan is completed, has more value to many clients than the plan
itself. The comprehensive written lifetime financial plan is a technical document utilized by the
financial planner, the written implementation plan of action is just a few pages of action items
required to implement the plan; a much more “usable” document to the client.

1.6.2 Functions of a Financial Planner

A financial planner specializes in the planning aspects of finance, in particular personal finance,
as contrasted with a stock broker who is generally concerned with the investments, or with a life
insurance intermediary who advises on risk products.

Financial planning is usually a multi-step process, and involves considering the client’s situation
from all relevant angles to produce integrated solutions. The six-step financial planning process
has been adopted by the International Organization for Standardization (ISO). Financial planners
are also known by the title financial adviser in some countries, although these two terms are
technically not synonymous, and their roles have some functional differences.
Although there are many types of ‘financial planners,’ the term is used largely to describe those
who consider the entire financial picture of a client and then provide a comprehensive solution.
To differentiate from the other types of financial planners, some planners may be called
‘comprehensive’ or ‘holistic’ financial planners.
Other financial planners may specialize in one or more areas, such as insurance planning (risk
management) or retirement planning.
Financial planning is a growing industry with projected faster than average job growth through
2014.

Case Study Financial Planning isn't just for the Rich

A lot of people feel that financial planning is only for the rich and it isn’t at the top of mind
of many first jobbers. After all, if one does not have a lot of money what is there to plan?
But eventually you may want to buy that first house, get married, travel the world or
retire early. Where will that money come from if you did not plan?
Contd...

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