Financial planning in plain English

The most compelling reason to seek financial advice is to establish a plan to help you achieve your goals and protect yourself from life’s unexpected events. Knowing if you’re adequately insured is a start. People are often financially devastated by an uninsured loss.

Along with being adequately insured, you should consider the steps you need to take to maintain and improve your lifestyle by building wealth now and in the future.

One of the keys to achieving your longer term financial goals is determining as early as possible which strategies are right for you. After all, you shouldn’t be losing sleep worrying about money. A good financial planner will spend a lot of time getting to know you, your situation and what you want to achieve in life.

This is a very important consideration. Your ‘investor profile’ is a financial planning term, which goes to the heart of your attitude to risk. It’s about understanding how much risk you’re prepared to tolerate to achieve your goals.

Generally speaking, the higher the potential returns, the greater the risk. Your tolerance for risk may depend on your stage of life, your investment time-frame, your available funds and your investor profile. A financial planner can help you determine the right balance between risk and return - but only if you’re honest with yourself. If you’d be financially and emotionally devastated by a loss, then you’re better not to invest in areas where there’s a chance that you may lose money.

Technically, a financial plan is known as a ‘Statement of Advice’. This is simply the advice and strategies recommended to you by your financial planner. The financial planner will prepare the plan after learning as much as possible about your current situation and future goals whilst ensuring you’re comfortable to proceed.

Because every person is different, naturally every plan should be tailored to the individual.

As a basic rule, your plan should cover the following:

• Reflect your discussions and clearly set out your current circumstances, your goals and the recommended path to achieve them.
• What you asked for – This may be referred to as your ‘requested scope of advice’. Essentially it outlines any areas you asked the financial planner to look at.
• Your current situation – Make sure the details recorded about your current situation are accurate. If they aren’t, this may impact the advice you have been given.
• Your needs and objectives – This section should accurately reflect your current needs and your objectives.
• The future should be taken into account when determining the recommendations made.
• Investor type – This is a description of your risk profile and should influence the type of investments recommended.

Make sure the financial planner can explain how the investments suit your risk profile.

• The recommendations – This should include the rationale for these recommendations, reflecting the information above, along with an examination of other options/products considered and why they were dismissed.
• Fee summary – This should outline all fees including any product related fees, fees charged for preparation, implementation, management and review of the plan and how much will be received by the financial planner and/or the organisation you’re working with.

It’s in your interest to do some preparation before your first meeting with a financial planner. This will ensure the session is as productive as possible. Don’t be concerned if you can’t locate exact details of everything listed below, but the more you have the better.

Assets

• Your latest superannuation statements (You may have super in more than one area).
• Details of any property you own, its estimated value and your latest mortgage statements.
• Statements concerning any other investments.
• Details of your annual household income and expenses.
• Last year’s tax return.
• Bank statements.
• Statements concerning any loans and or credit cards.
• Statements concerning any current insurance policies.

Identity documents - there are several documents suitable for use as identification.

• Passport or birth certificate.
• Driver’s license, tertiary student identification card or Commonwealth identification card
• Your mortgage.
• Credit card or Medicare card.

The Financial Planning Association of Australia can help you find a planner in your area.

You could get some form of financial advice from just about anyone. But when it concerns the future wellbeing of you and your family, you need to choose someone you know you can trust.

ANZ Financial Planners are experts and fully qualified to help develop a strategy to suit your specific needs. They take the time to discuss your present circumstances, your goals for the future and eventual retirement plans to help deliver an appropriate solution. Your first appointment is complimentary and without obligation. 

• Make an appointment with an ANZ Financial Planner.