Probably the most important part of what a financial planner does is to establish what is important to clients regarding both the life and their finances. To ensure that any recommendations we make are aligned with your needs, we go through a detailed process of goal-setting. Our experience is that clients initially think that they have simple goals, but this is because they are suffering from a little financial myopia – what is right in front of me is what is most important!
To ensure we capture all client goals, we have developed a unique seven-stage process where we look at your financial life.
Are those actions that you have firm plans to undertake within the next 0-3 years. They will not generally require investment decisions to be made, but rather will have a cash flow impact or will utilise existing savings. For example, buying a new car or taking an overseas holiday.
Are financial events that are likely to occur within 4-10 years. Unlike short-term goals, there is likely to be an investment or savings component to their achievement. Examples of these might include education funding or significant home improvements.
Are plans you would like to achieve in a time frame longer than 10 years. These goals require significant planning, but the time frame will mean different things to different people. Typically this might include mortgage repayment, university education or for those a little older – funding aged care needs.
Your financial security, or more particularly, your ability to financially withstand catastrophic personal events, is a vital part of your financial plan. We discuss the different scenarios that may lead to this situation and strategies to overcome their financial consequences.
Understanding what will happen if you die or lose the ability to make decisions is something that none of us like to think about let alone discuss. However, as superannuation balances grow and family life becomes more complicated than ever it is a very important part of the advice we provide. Many clients are surprised to learn that superannuation and life insurance fall outside the scope of many wills and ensuring that these proceeds are paid to the person you want them to are part of our advice and strategies.
Your retirement goal consists of identifying what income will be required to provide for your living costs, and providing a lump sum for special purchases you plan to make at or around retirement. Specific lump sum costs at retirement might include purchase of a caravan, new car, or one-off significant trip.
The reality check of the above goals occurs when we look at the relationship between your income and your expenses. We all know that completing and sticking to a budget is difficult but it is the cornerstone of a successful plan. There is no point allocating money that doesn’t exist, or conversely, spending in an inefficient manner. We will help you to complete an honest review of your spending and then develop strategies to make you stick to it.