Financial Planning

The Financial Planning Process and Plan

It is common to think of financial planning as largely being concerned with investment selection and management, but that is just one part of the process. Generally, a planner will follow something like the following process:

• Collect your financial data
• Identify your short, medium and long term aspirations and lifestyle goals
• Pinpoint where you are now in relation to those goals and where you want to be
• Agree on, and understand, the financial plan
• Implementation of your financial plan, and
• A periodic review of your financial plan to ensure it stays up-to-date and relevant to the current economic climate and your changing lifestyle.

A financial plan should ordinarily include:

Short, Medium and Long term aspirations and lifestyle goals

These are intrinsic to a successful plan and need to be clearly identified by the planner and client together. Planners need to ensure that any goals are financially realistic.

Current Family Status

The plan should contain an accurate record of the family's current status - including individual family members (age, gender etc.,) and a statement of the planning units assets, debts, income and expenses. This should include all assets, both in Australia and overseas

Assumptions

The plan will be driven by "assumptions" such as rates of return, inflation, taxation rates, retirement age(s) and life expectancy. These need to be realistic and should be understood by the client.

Taxation Issues

Tax issues will normally form an intrinsic part of any plan - both from the perspective of tax minimisation and as driver for the type of investment product that should be chosen. Both superannuation and non superannuation investments need to be considered as part of the overall objectives of the client.

Superannuation and Retirement Planning

Lifestyle targets will need a certain level of income to support them - superannuation and retirement planning should consider how that income can be generated and the savings plan that need to be put in place to achieve those goals.

Insurance

Consideration of life insurance, disability/income protection insurance, together with home and contents insurance should be a part of the financial plan. Additionally, it is not just the income producing spouse that needs to be insured.

Estate Planning

Estate planning should be covered to some extent in any financial plan since it may have a significant impact on the structure of retirement income. Expatriates with assets overseas need to be aware of the potential estate duty liabilities which may arise overseas.

Investment Alternatives

Before consideration is given to specific investments, the plan should identify the types of investments. This includes super vs non-super; managed vs direct; allocated pension vs lifetime annuity, , property and investment in a business etc. etc.,

Investment Recommendations

Specific investment recommendations should always be the final consideration in any financial plan, once strategies have been developed and investment alternatives considered.

Although many of these elements are common to all financial plans, the planning for an expatriate will often be made more complex by the different tax and legal jurisdictions that need to be considered.

Complete the Financial Planning inquiry form