A guide to financial planning

Financial planning is an ongoing process. It helps you establish your financial goals, and then achieve them by making the best use of your financial resources.

How does financial planning work?

Your financial planner uses a six-step process that helps you take a ‘big picture’ look at where you are and where you want to be. Using this process they help you work out what you need to do now and in the future to reach your goals.
  1. Gathering your financial data, such as details on your income, debt level, commitments, etc.
  2. Identifying your financial goals.
  3. Identifying any financial issues or deficiencies between where you are now financially and where you want to be.
  4. Preparing your financial plan, which will identify recommended investments and address your attitude to risk.
  5. Implenting your financial plan.
  6. Reviewing and revising your plan – to ensure it stays up-to-date and relevant.

How can a financial planner help you?

The best way to manage your financial affairs is to get expert advice. Your financial planner will work through each stage of the planning process with you and help you manage the trade-off between satisfying your current needs and meeting your long-term financial goals.
 
Your financial planner can help you in the followig areas:
  • growing your wealth
  • choosing investments
  • investment administration
  • superannuation
  • borrowing to invest (gearing)
  • insurance
  • taxation planning
  • retirement
  • redundancy
  • Centrelink
  • estate planning.

Choosing a financial planner

When you seek financial advice it’s important to know that your planner has the appropriate skills and experience and that the Australian Financial Services Licensee he or shee is associated with is able to deliver the ongoing services you need.

The following questions may help you to assess the merits of a financial planner:

  1. Do they have a Financial Services Guide (FSG)?
All financial planners are required by law to produce a FSG which gives you an easy-to-understand explanation of their fee structure and the services they offer. The FSG should help you make an informed decision about whether you want to use their services. 
  1. Are they, or their company, licensed by the Australian Securities and Investments Commission (ASIC)?
An authorised financial planner must meet the knowledge, skills and integrity standards required by ASIC. 
  1. What are their qualifications and experience?
Check that the financial planner has appropriate qualifications, preferably at least a Diploma of Financial Planning. Ask how long they have been a financial planner and what types of clients they typically work with. 
  1. Are they a member of a professional association?
We strongly advise that any financial planner you use is a member of the Australian Financial Planning Association (FPA), the Institute of Chartered Accountants in Australia (ICAA) or a Certified Practising Accountant (CPA).
 
The FPA is the professional body for financial planners in Australia, while ICAA and CPA are the profeesional bodies for Accountants in Australia. Memebers must abide by Codes of Ethics and strict operating guidelines which protect clients’ rights. 
  1. What services do they offer?
Does the adviser only offer investment advise or do they offer total financial solutions including insurance, tax, estate planning and so on.
  • Do they have formal ongoing review services?
  • Do they offer investment administration services?
(The financial planner’s FSG will list the services they provide.) 
  1. How are they paid for their services?
Find out if they operate on a flat fee, brokerage or commission basis. Ask them to explain all upfront, ongoing and exit fees which you might have to pay (directly or indirectly). (The financial planner’s FSG will list the services they provide.)

Things you should consider

This publication provies an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. This publication does not take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and we recommend you seek help from a financial planner.
 
IMPORTANT INFORMATION
This information was prepared by Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687 and is current as at 1 March 2008.