Page 238 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Unit 13: Strategies of putting together a Complete Financial Plan

In addition, every person, no matter how young or old, has a requirement for a will in order to Notes
have the best opportunity for their assets to be passed to those whom they would wish to receive
them.
Finally, many people will have a need to issue a power of attorney to a trusted family member
or friend.

The comprehensive financial planning approach views the person’s requirements from a holistic
perspective. In this situation, the financial planner develops a range of individual strategies as
the infrastructure of an all-encompassing strategy that enhances the person’s whole financial
position. The written comprehensive financial plan is the document that combines the individual
strategies to articulate the financial planner’s recommendations to the person.

13.1 Strategy Development Process

While the plan is a single, interrelated document, it is still possible to break the strategy
development process into a number of steps and sub-stages.

Step 1: Check that you have all the Information

You should, first and foremost, ensure that you have all of the information required to prepare
the plan.

Step 2: Secure your Current Financial Position

In developing the strategies within the comprehensive financial plan, the financial planner
firstly look to securing the person’s current financial position. This is achieved through a
reconciliation of the person’s position from the data gathered from the person on the data sheet
or questionnaire.

The financial planner you hire must look to address the following questions:
Does the person have adequate insurances (life, fixed assets, hospital/medical)? If not,
what recommendations are essential to better secure the person’s position?

Does the person have a valid will?
Does the person have a need to issue a power of attorney?
What is the position of the person’s balance sheet (assets/liabilities)? For example, are
there sufficient assets to cover liabilities?
If liabilities are high, what recommendations can be made to reduce liabilities and increase
assets?

What is the state of the person’s budget (income and expenditure)?
Is there an emergency cash reserve?
Does the person have the capacity to accrue surplus income?

If so, how should this surplus income be accumulated to move the person closer to their short
and long term financial goals?
In developing the written comprehensive financial plan, the financial planner will identify
current deficiencies or problems in the person’s position and then move to make
recommendations to secure that position.

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