Financial planning is essentially the process of aligning the finances to one’s lifestyle, aspirations and ambitions. It is a broad concept which encompasses aspects like budgeting, insurance, retirement planning, saving, cashflow management and others. Financial planning helps in clarifying a person’s/organisation’s current state of being constructing a well-defined plan to enable them to reach their goals in life while helping them to make sensible decisions about money to meet the end objective.
Who is a financial planner?
A Financial Planner is a qualified professional who provides assistance in developing financial plans for individuals and corporations to help them meet their long-term goals.
For this, the financial planners engage with clients to understand their objectives, weigh their risk-taking capacity, life or corporate stages and recommend a suitable class of investments and a roadmap ahead. Upon agreement, they may formulate a program for the distribution of the available savings of the client across diversified class of investments to provide income as and when desired/required. For instance, the three well-known asset classes comprising stocks/equities, fixed-income, and cash and equivalents have varying degrees of risk and return associated with them. Thus, each one behaves differently over time and they may be selected accordingly.
In addition, certain financial planners may also have specialisations in say, asset allocation, tax planning, retirement and/or estate planning and risk management.
The financial planning process may look like this:
Financial Advisor & Financial Planner
A financial advisor may have a specialization in investment management, estate planning, insurance, debt repayment, retirement planning, tax planning, education funding planning or any other domain of the financial services industry. A financial planner is a kind of financial advisor who holds certain expertise. Financial advisors and financial planners may acquire different certifications and licenses.
Choosing the Right Financial Planner
An individual must interview at least three financial planners to choose the one that is right for them. Some of the important questions to ask may include-
Significance of financial Planning
The intricacies of investment, taxation and ever-changing regulations may be complicated to understand for someone with minimum financial literacy. Thus, seeking professional help can simplify the process of financial planning and help an individual understand his/her short-term and long-term goals better.
Some of the important advantages of financial planning inlcude –
- Managamenet of income to effectively allocate it to tax payments, other monthly expenditures and savings.
- Improvemnt in cash flows through careful monitoring of spending patterns.
- A high cash flow would lead to increase in capital, allowing a person to consider more investments and augment wealth.
- Ensures financial security to the family memebers through the necessary insurance coverage and policies.
- Choosing the appropriate investments based on timely needs, personality and goals.
- The savings accumulated through intelligent planning helps in maintaining the Standard of Living, especially in a case of emergency.
- Enhances financial understanding and gives an individual more control over their finances.
Financial planning can be utilised at any stage/crossroads in life for the following needs.
How do they charge
Typically, the first appointment with a financial planner is free and purely designed to inform the individual about the benefits of having a financial plan in place. Upon continuation with the personalised financial advice, there is some fee charged along the way depending upon the level of advice- standard, comprehensive, complex or subsequent and ongoing advice. The criteria may vary for different financial planners.
Details on few Financial planners in Australia
In Australia, the Financial Planning Association (FPA), established in 1992 and based in Sydney, represents the interest of financial planners across the country. FPA offers the Certified Financial Planner certification program, and develops professional, compliance and ethical standards for CFP professionals.
Some of the financial planners in Australia are discussed below.
Australia-based AMP Limited (ASX: AMP) is a wealth management company which provides financial services including superannuation, self-managed superannuation funds (SMSFs), banking, investment management, life insurance, retirement income and investing to customers in around 11 countries across the Middle East, Asia, the United Kingdom, Europe and North America.
AMP’s 2018 financial performance reflects the challenges that the company witnessed during the year to 31 December 2018 such as the imperative to remediate customers in their advice business, a deterioration in the performance of the wealth protection business and the impact of the Royal Commission proceedings on AMP’s reputation.
Yet, AMP reported an underlying profit of $ 680 million for the period and profit attributable to shareholders of $ 28 million. However, the board declared a reduced 2018 final dividend of 4 cents per share, resulting in a total dividend paid for 2018 of 14 cents per share, considering the uncertainty in the operating environment.
Brisbane-based Suncorp Group Limited (ASX: SUN) is one of the leading Australian financial services brands which offers Home and Motor Insurance, Banking, Life Insurance, and Superannuation solutions to clients in Australia and New Zealand. As per the highlight for 2018, Suncorp had 51% women in leadership, investments of ~ $10.1 million in local communities and recorded 8% cash return on average shareholders’ equity. The company offers its customers financial planning services through its branch offices or via online. The first customer visit is free of cost.
For the half-year ended 31 December 2018, the Group recorded New Zealand profit after tax of around NZD 120 million, an increase of 79.1% on the prior corresponding period (pcp) and a strong top line growth. Moreover, the general insurance business delivered a profit after tax of $ 103 million, up 106% on the pcp.
Moneyplan Australia Pty Ltd
Moneyplan Australia, established in 1985 has a long history of providing quality financial planning and wealth management services to a vast range of clients. The company aims at developing long-term relationships through customised support, simplify financial planning and help the clients make informed decisions.
The company’s area of expertise includes budgeting and cash flow strategies, Debt management, protecting the things that are important to an individual from the risks of life i.e. loved ones, assets, income, lifestyle and business, strategies to grow wealth, superannuation strategies, SMSFs, retirement planning, tax effective strategies, investment advice and portfolio management, redundancy and employment termination advice, aged care advice, estate planning, and business success planning.
Australian Financial Planning Group (AFPG)
Australia-based AFPG is a privately-owned national financial services provider that offers holistic attention to a client’s financial needs by giving them access to a wide range of financial products, suitable for each of their specific circumstances. The services include residential and investment lending, insurance, superannuation, investment management, retirement planning, SMSFs, budgeting, estate planning, accounting and tax planning and financial planning.
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