11 - Lecture 11 The Financial Planning Process, and...

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The Financial Planning Process, and Construction of a SoA 1 Lecture 11 ` Each life stage presents very specific issues and problems ` There are a number of identified life stages: Savings vs. Consumption phase – generally younger people, trying to get established, new jobs, wanting cars, saving for home, enjoying life Early Family Formation phase – people with young families, both partners may be working, issues with mortgage payments, child care, school fees, need for insurance, trying to stretch their budgets 2 ` Wealth Accumulation phase – generally families where the mortgage does not take up so much of their income, in career positions earning higher salaries, balancing work and leisure, assisting their children and saving for their own retirement ` Approaching Retirement phase – generally associated with people in their early fifties up to age 65 – people seeking to maximise their retirement savings so that they can comfortably fund their retirement income needs ` Post-retirement phase – people managing retirement savings to ensure a satisfactory retirement income stream throughout their retirement years 3
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1. Arrange interview with client 2. Attendees – who should attend? All relevant family members (husband, wife, adult children) 3. Questionnaire – provide client with comprehensive questionnaire, including risk profiler 4. Client gathers info, perhaps with assistance: accountant, insurance agent, solicitor, etc 5. At the second meeting, client provides info and documents; reviewed by FP; any additional info is sought; all relevant info is now with FP 6. FP prepares a draft written financial plan 4 7. At the third meeting, FP presents the draft plan to client(s); FP watches and listens carefully to client responses 8. Client reviews the plan at home, and discusses it with relevant family members / other advisers 9. Plan is amended as necessary by FP, following feedback and further info from client 10. Final presentation of written plan; implementation of plan once client is happy; signing of authorities to proceed 11. Annual or biannual review of all aspects of the plan 5 1. Gathering data, fact finding 2. Data analysis 3. Developing recommendations 4. Preparing written recommendations 5. Agreement and implementation 6. Review, revise, maintain 6
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` Initial meeting 40-70 minutes, usually no obligation to client. Commonly no cost. Explore whether FP’s abilities and services match client’s needs Discussion regarding data collection and client goals Advisors get to know their clients and what their clients need and will undertake; ditto for clients ` Standardised risk tolerance assessment, leading to selection of products, services, including weighting of asset classes Lessens the risk to the financial planner of an unhappy and litigious client 7 ` Discuss the following issues: Why is the prospective client with you? What is client’s current financial position?
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11 - Lecture 11 The Financial Planning Process, and...

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