FINANCIAL PLANNING
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Transcript of FINANCIAL PLANNING
FINANCIAL FINANCIAL PLANNINGPLANNING
Simon LamOct 10, 2003
Financial planning or personal financial planning is “a scientific workflow model that assists clients in determining their financial needs and resources, and provides a systematic method of achieving their goals and objectives in an optimal manner.”
Financial Planning Practice Standards of APLIC for FChFP designees
The Key Role of the Financial
Practitioner/Planner
To remove financial worries from a client’s life as much as possible.
THE SIX STEP FINANCIAL PLANNING PROCESS
1. Setting goals,objectives & priorities2. Gathering relevant data & information3. Analyzing information & assessing financi
al status4. Developing and presenting a financial pla
n for implementation5. Executing the financial plan6. Monitoring execution & reviewing of the fi
nancial plan
Setting Goals, Objectives & Priorities
The Financial Planning Process1
Client Motivation to Seek Financial Planning Services
A desire to insure against certain riskTo increase my expected income in retirementTo save tax
What else?
The Financial Planning CirclePension adviser
The press
Friend
Estate agent
Insurance
Lawyer
Accountant
Stockbroker
The Financial Planning CircleMotivation
Wills
Pensions
Selling business
Creating Time
Insurance
School fees
Tax saving
To dig out the client’s need
A Typical Individual’s Financial Life Cycle
INFLUENCES
•Marital
status
•Employment
•Economic
outlook
•Age
•Number of
dependents
•Family
money
NEEDS VS WANTS
Know Your Client!
Never judge a book by its cover
Different Money Personalities
HoardersSpendersMoney monks
Moneyavoiders
Moneyworriers
Moneyamassers
Risktakers
Riskavoiders
Goal Setting - SMART
S = specificM = measurableA = achievableR = realisticT = tangible
List the client’s precise goals or objective and their priority ranking.
$ Dates
Gathering Relevant Data & Information
The Financial Planning Process2
TYPES OF INFORMATION REQUIRED
Quantitative
information
Qualitative information
PERSONAL DETAILS
Names, genders, birth dates and
places
Health status of all members
Family structures and history
Employment information
ASSETS AND LIABILITIES
Assets
Liabilities
Remember to advise your clientDon’t count everything
Set a value limit
Using Fair Market Value
QUALITATIVE INFORMATION
Attitude to risk
Attitude to investment
Investment experience
Income needs
Investment time horizon
Analyzing Information & Assessing Financial Status
The Financial Planning Process3
Developing and Presenting a Financial Plan for Implementation
The Financial Planning Process4
All Financial Plans Involve 3 Steps
Maximizing Income and Wealth
Using Money More Effectively
Monitoring ExpendituresPreparing the Pro-forma Cash Flow Statements (Budget Statements)
The Interlocking Network of Financial Plans and Statements
Evaluate and plan major outlays Reduce taxes Establish savings/investment
program Manage credit Secure adequate insurance coverage
Monitor and control income, living expenses, purchases, and savings on a monthly basis
Actual financial results: Balance sheet Income and expenditures statement
Financial Plans
Budgets
Financial Statements
FEED
BA
CK
There should be a balance between oral and written presentation
Presenting the Financial Plan
Preparation
Presentation
PreparationPrepare the presentation documents
Prepare for the meetingKeep your office clean and neat Review the plan prior to the meetingPrepare list of point if necessaryBe groomed
PresentationExplain the cost structures
Ensure client understandingListen to client’s concern and revise the recommendations as appropriateTime frames
Executing the Financial Plan
The Financial Planning Process5
Action PlanAction Plan
What
When
Whom
Coordination of other professionals
Monitoring Execution & Reviewing of the Financial Plan
The Financial Planning Process6
Checking and adjusting the execution to ensure goals and objectives listed are met.The plan should be monitored annually or at other agreed intervals, to ensure the client continues to progress towards his goals.
Establishing Client-Practitioner Relationship
What is Relationship Marketing?
Dialog is established with customer to discover
needs
Customers needs are addressed and
communicated
Purchase/Service is purchased
PRIMARY OBJECTIVE: Growing Customers
Relationship Marketing
Customeris predisposed to additional communications
Client Relationship Management (CRM)
•CRM refers to the management of all interactions with the customer that an enterprise indulges in. Its focus is on managing and optimising the entire customer life cycle.
Outcome of all smartCRM decisions
LoyalRelationship
Loyalty
Customer LoyaltyCustomer Loyalty / Satisfaction Model
Lifetime
Sleepers
Trapped
Promiscuous
CUSTOMER SATIFACTIONHIGH LOWC
US
TO
ME
R
LOY
ALT
Y
Implementing CRM
• Identifying your client
•Differentiating clients one from another
Potential client?
• Interacting with client
•Customizing your services to meet the client’s individual needs
• Meeting the client
Sign contract with client
This contract should specify:
The range of services to be
performed by the financial practitioner
The method of
compensation The client’s responsibility in
the planning process
Important Steps to Effective CRM
• Treat the Client as the Boss
• Go to see the Client• Don’t Make Excuses to the Client
• Take the Client’s Phone Calls• Provide the Client with
Proactive Feedback
• Solicit Feedback From the Client• Do the Client’s Job
• Enhance the Product Delivered to the Client
• Allow the Client Easy Access to Staff
• Understand the Client’s Perspective
• Establish a Climate of Mutual Respect
Things Not To Do
Taking the traditional insurance broking or selling approachDelegating to non-professionalsAccepting a half hearted commitmentFailure to sell the serviceFailure to get things doneFailure to move with the times
10 MOST COMMON
MISTAKESMISTAKES
FIANANCIAL PRACTITIONERS MAKE
Failing to take your own medicine
Elephant hunting with an unloaded gun while ignoring pet rabbits that will eat out of your hand
Procrastinating
Putting product selection first
Insisting on doing everything yourself
Playing hide and seek
Never trying on a client’s shoes
Hiding from clients when investments go south
Confusing technical jargon with good communication
Failing to take responsibility
T O P ST O P S
Trust
OpportunityPS
ainolution
End of This Part