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What is the financial planning process?

Anyone who has not used a financial adviser before may be wondering if they really need one? Especially if they feel they are doing ‘okay’ without any help. Often this view is because many people who haven’t used a financial adviser previously, don’t understand the full spectrum of the financial planning process and relate it to just investment advice.

The financial planning process and the role of a financial adviser encompasses a whole lot more. When explaining the role of a financial adviser to someone who is not aware of our role – I often use the analogy of an architect. For example, when you are building a home you generally know they type of home you want, but an architect will provide advice on the best ways you can achieve your plans within the constraints set by building regulations and planning permission. Many architects will take on the responsibility of preparing details of the cost of the project, making sure it all runs smoothly, and getting in touch with builders for quotes.

Likewise, many people use a financial adviser for similar reasons, because they don’t have the time, knowledge or motivation to do it alone. Keeping up with the constant changes in laws and regulations regarding tax and superannuation, along with understanding investment markets, and the track record of various investments, can be a real challenge.

Most people don’t have the time or patience to be up-to-date with all of these issues, but it is something financial advisers do everyday. At the same time, it does not mean you hand over total control to your adviser – you need to be comfortable with and understand any advice received.

Whether you are planning for retirement, an overseas trip, your children’s education, or for a deposit for property, a financial adviser can help you plan to reach these goals.

The financial planning process helps you assess your financial position and identify your personal and financial goals. Clearly setting out your goals puts you in a position to make better choices about how to achieve them.

In your first discussions with a financial adviser you’ll probably go over some basics to try and establish your current financial position and your plans for the short, medium, and long term. You should always ask questions to ensure you understand and are comfortable with the options being put forward.

When you are happy with what is presented, the adviser will develop a strategy, a plan, and investment recommendations, all detailed in a personal Statement Of Advice.

What does financial advice cover?

A financial adviser can help you in areas of:

  • Investment planning
  • Retirement planning
  • Tax-effective planning
  • Planning for business
  • Insurance
  • Estate planning
  • Centrelink benefits
  • Cash management
  • Debt consolidation and budgeting

The primary reasons for using a financial adviser

  1. Building your wealth — A financial adviser will help you build a wealth-creation strategy that enables you to meet your day-to-day living expenses, manage your debt, and is tax-effective. Strategies may involve borrowing to invest, accelerating your savings, and making the most of your superannuation.
  2. Making debt work for you — Managing debt appropriately can provide great returns. An adviser can help with strategies involving debt consolidation, increased frequency of mortgage repayments or even borrowing to fund investments. An adviser will also assess these options in conjunction with your goals and the level of risk you are comfortable with.
  3. Tax strategies — When developing strategies, an adviser will look at tax strategies to ensure you get the most from your investments.  Such strategies may include income-splitting, salary sacrificing to superannuation, gearing and tax effective investments.
  4. Protecting your wealth — Unexpected injury or illness can dramatically change your world.  An adviser can help you establish measures to protect your wealth, through suitable risk insurances, to ensure a financial safety net is in place to enable you to be sufficiently prepared to support yourself, and those depending on you, should something unexpected happen.
  5. Facing redundancy — An adviser can help you invest your payout to ensure it delivers long term benefits in a tax effective manner.  They will also be able to identify if you will be eligible for government benefits and advise you on how to manage your superannuation during this change. With all of these issues taken care of, you will be free to concentrate on your next career move.
  6. Preparing for retirement — An adviser can help you determine the level of savings you will need for retirement and provide advice on strategies that will deliver the income you will need throughout retirement. Such strategies will include advice on superannuation, government pensions, and options around employment where applicable.
  7. Financial health check — You may feel that you have implemented sound strategies but just want to ensure all aspects of your financial situation are in order. An adviser can review and identify areas of your finances that are healthy and strong, and others that may need improvement

Quality advice can help you establish a secure and comfortable future for you and your family. It will be based on your goals and objectives and puts you in control of your financial future.

Speak with our financial advisers on freecall 1800 804 296 about this in more detail, or enquire online.