financial planning

Financial Planning

What is financial planning all about?

It's all about a financial plan.  "To fail to plan, is to plan to fail."  We have heard that before, and it's true.

So, what sort of plan do you need?

  • It might start with a way to organise your finances and create on ongoing cash flow surplus.
  • For those paying a lot of tax, it most likely will include ways to invest which will turn tax savings into investment gains.
  • Sometimes 'gearing' is appropriate.  That's a way of multiplying investment returns.
  • It's common to review superannuation, working out whether or not the superannuation fund itself is cost effective, generating good investment returns, and utilising appropriate strategies
  • Projections into the future are often appropriate.  Naturally one needs to be careful not to depend on them, however, it can be very helpful to see where your current trajectory is headed.  How much are you likely to have in your superannuation when you retire, and how long is that likely to last?
  • Any plan will need periodic reviews.  When we produce a plan for you, it will recommend a course of action.  But we will not leave you out in the cold alone.  Ongoing support will be offered, and that will include reviews at appropriate intervals.

Every plan needs to begin with a thorough consideration of both your current position and situation as well as your goals and objectives.  While 'limited advice' can be given to focus in on just a few things at a time, it all needs to be done in light of the big picture.  Hence, your adviser will begin with a thorough fact find and 'client needs analysis' to get a clear view of where you are at and what you need.

What if you are not certain of your objectives and goals?

It's easy to not even think about your future. Living a day at a time does have some benefits, but not spending any time in looking towards the future is downright foolish.  If you stop and think about it, you probably have some dreams and desires for the future.  What's needed is to work through them, and determine what's important and achievable.

That doesn't mean that you need to have it all worked out before you see a financial adviser. Part of the financial planner's job is to assist you in working out an appropriate set of objectives.

How is financial planning done?

It involves two or more people.  You, and potentially a partner, and your financial adviser.  You are the one needing a plan, and your adviser is the one experienced in knowing what sort of plans work, and what will be needed to achieve your goals.

While some of the process is similar to counselling, financial advice involves research and calculations to determine what is likely to work for you.  The plan will be something that is defines specific products, strategies and investment amounts.  It will be targeting goals that are measurable and that ought to be achievable.

The process begins with a meeting.  Where you are local to the Newcastle or Central Coast NSW region, that will generally be in our offices in Toronto, near the shores of Lake Macquarie.  If you are distant, it most likely will be by phone or video-conference.

Following that first meeting, your adviser will email you a "letter of engagement."  In this email he will set out the financial planning services that he proposes to provide, and the cost involved.  The cost will be related to the time involved in researching your current investments, comparing them with other possibilities, working out tax effective and suitable strategies to utilise with those investments and coming up with recommendations.

In order to demonstrate the likely benefits of the products and strategies, typically a set of projections will be provided for different strategies, including what is currently in place.  That will often include two segments: from now until retirement, then for retirement itself.  Again, there are a lot of variables that we have no control over which can change the results immensely, but if the plan shows that you are coming in short, it's a bit like a pilot coming in for a landing and being beneath the desired glide slope - he'd better put on some more power!

The plan is presented in the form of a "Statement of Advice."  Advice that you can depend on ought to be in writing.  That way there is no question as to what was said, and it can be refered back to over time.  While we seek to keep those documents succinct and practical, they are often 50 to 70 pages in length.

Along with the Statement of Advice, you will be provided with Product Disclosure Statements, quotes and other helpful materials for any finanical products that are being recommended.

When the Statement of Advice is completed, your financial adviser will email it to you, along with the related information and documents.  In that email he will offer to meet with you to go through it and explain it to you in detail.  He will be happy to answer your questions and clarify matters as necessary.  

Either at that meeting or later you can decide whether or not to proceed with the advice.  Your adviser will prepare the necessary forms, and help you through the entire process of getting the advised changes in place.  Given that you have engaged your adviser's on-going services, he will continue to assist you with matters related to those investments, and conduct regular reviews.

How expensive is a financial plan?

For a start, the first appointment is offered with no cost or obligation.  That's a time for you to get to know your adviser and be confident that he is the one who can truly help you.  It's also the time when your adviser will be seeking to understand you, your needs and goals.  He will gather some basic information about your situation so that he can determine the nature and extent of the finanical plan that's needed for you.

As he prepares a "letter of engagement" for you, he will estimate the amount of time that will be required for him to research the investments, make the calculations, write the statement of advice, and then present it to you.

If you simply need a question answered, it might cost very little.  However, most plans include the full retirement plan as described above, and often there are special aspects that need to be considered and worked through.  A plan of that nature isn't going to cost just a couple hundred dollars.  20 hours plus of financial planning work by your adviser, working out what to do for the rest of your life is worth well over ten times that.  Everyone's situation is different, so to know the cost you need to have that first appointment.  What you can be confident of, is that it will be well worthwhile.  After all, we are talking about achieving your goals and dreams for the rest of your life, not just working out how to fund your next trip to Fiji!

The cost for ongoing financial planning services

This cost will be quoted in the finanical plan (Statement of Advice).  It will be an amount appropriate to the amount of time that your adviser expects to invest in assisting you each year with your financial matters and reviewing your investments and progress in achieving your goals.

You will have a choice of how it is charged.  It could be a simple portion of a percent drawn from your investment platform, a fixed annual retainer, or you always have the option of simply paying by the hour for the services as they are provided.

How to get started

You can begin by submitting an enquiry from our website.  Should you want to fast track things, go to the Online Advice page.  It will give you a "Fact Find" form to complete.  When you send that in, it will go straight to your adviser, and when he first contacts you, he will already know a lot about your situation and help can start right away.

Grace Financial Services Pty Ltd and James Massey are Authorised Representatives of HNW Planning Pty Ltd, , AFSL 225216. Authorised Representative nos. GFS: 452765, James: 398841. Content of site may not be fully up to date as legislation and financial products are constantly changing. Any advice provided on this website is of a general nature not taking into account your personal objectives and situation. Such matters are important to consider prior to taking any action. Please make an appointment to discuss your specific situation so that appropriate advice may be given with regard to suitable products using current information.