Financial Planning : Financial Planning
What is Financial Planning? : What is Financial Planning? Financial planning is a process to help an individual in establishing a realistic and achievable financial goal.
Financial plan comprises of different life stage planning, which are related to each other and changes as you progress through the various stages of your life
Financial Planning is a Six-step Process : Step 1: Establish the client-planner engagement
Step 2: Gather data and determine goals and expectations
Step 3: Clarify present financial status and identify any problem areas and opportunities
Step 4: Develop the financial plan
Step 5: Implement the financial plan
Step 6: Monitor the financial plan Financial Planning is a Six-step Process
Why Financial Planning : Why Financial Planning Developing and maintaining a personal financial plan is essential for achieving financial security
You know your true net worth
Helps to Identify and prioritize your personal and financial needs and goals
Evaluate the level of risk that you are willing to take with your investments - estimate your ‘risk tolerance’ and develop an asset allocation strategy
Need for Financial Planning : Need for Financial Planning Help savings for major expenses –
a. funding a child's education,
b. buying a house or car, or
c. developing a cash reserve for special
occasions like weddings and vacations
Prepare you for retirement by estimating retirement income and expenses and determine the amount you need to save to help meet those retirement goals
Need for Financial Planning : It helps to plan your investments to reduce taxes,
Protect you and your family against financial crisis should you become disabled or die prematurely
Preserve estate and ensure your assets are distributed the way desired, fund estate taxes, and minimize their effects where possible Need for Financial Planning
The Life Cycle of Financial Planning : The Life Cycle of Financial Planning Stage 1: The Early Years -- A Time
of Wealth Accumulation
Stage 2: Approaching Retirement
-- The Golden Years
Stage 3: The Retirement Years
Common Misconception With Regards To Financial Planning : Common Misconception With Regards To Financial Planning Do not have measurable financial goals
Make financial decisions without understanding their effects on other financial issues
Neglect to re-evaluate their financial plan periodically
Look for a quick financial fix instead of a long-term strategy
Expect unrealistic returns on investments
Common Misconception With Regards To Financial Planning : Common Misconception With Regards To Financial Planning Think that financial planning is only for the wealthy
Think that financial planning is only necessary when they get older
Think that financial planning is primarily tax planning
Wait until a money crisis occurs to begin financial planning
Think that using a financial planner means losing control
Different Aspects of Planning : Different Aspects of Planning Preparing cash flow statement
Preparing balance sheet
Budgeting
Help allocate emergency fund
Saving
Buying/Leasing Decision Cash Management:
Cash Management: : Cash Management: Cash Flow Management takes into account all lifestyle expenses, all sources of income, taxes, wealth accumulation strategies, and the effects of inflation
Investment Strategies: : Investment Strategies: Needs analysis
Risk assessments
Asset allocation
Investment selection
Portfolio Developments and management
Monitoring Risk
Income Tax Planning: : Income Tax Planning: Minimizing tax consequence
Taking benefit of tax deductions
Investing tax efficiently
Tax-Deferred Investing
Slide 14 : Safety of assets through the use of insurance
Risk retention and risk transfer decisions
Analyze insurance adequacy for life, health
and property casualty D. Insurance Considerations:
Retirement Planning: : Retirement Planning: Setting retirement goals
Maximizing retirement funding
Plan Selection
Post retirement asset utilization plan Start Early
Save regularly
Invest wisely
Hedge against inflation
Estate Planning: : Estate Planning: Designing efficient means to pass on wealth to successors.
Business succession plan
Help update wills, living trust durable/medical power of attorney
Maximize gift and estate consequences
Help avoid costly and time consuming probate process
Financial Planning is a Six-step Process : Step 1: Establish the client-planner engagement
Step 2: Gather client data and determine clients goals and expectations
Step 3: Clarify clients present financial status and identify any problem areas and opportunities
Step 4: Develop and share the financial plan
Step 5: Implement the financial plan
Step 6: Monitor the financial plan Financial Planning is a Six-step Process
Benefits of Financial Planning : Benefits of Financial Planning A comprehensive financial plan provides
A snap shot of a clients’ current financial situation, prioritizes his/her goals and identifies necessary resources to get there
It gives the client a game plan
Acts as a compass to check if you are on right course
It is a check and balance instrument
It puts all financial concerns in perspective and allow you to focus on the big Picture
Summary : Summary Build your financial future around a financial plan:
Manage the unplanned -- financial planning withstands minor setbacks.
Accumulate wealth -- financial planning maps out strategies for meeting your goals.
Save for financial independence and/or retirement -- financial planning helps you determine the costs of retirement and how much you need to save.
Summary (cont’d) : Summary (cont’d) “Cover your assets” -- financial planning includes protecting your assets with insurance
Invest intelligently -- financial planning helps you understand the principles of investing
Minimize taxes -- financial planning helps you keep your assets where they should be, in your own pocket
Summary (cont’d) : Summary (cont’d) Evaluate your financial health – you must first know where you are before you can determine where you are going.
Define your goals – you must first know where you want to go before you can decide how to get there.
Develop a personal financial plan – you must first draw a map before you can follow it.
Summary (cont’d) : Summary (cont’d) Implement your plan – you must begin before you can end.
Review your progress – you must continue to check the map t ensure you are staying on course.
Just Do It!
Conclusion : Conclusion All great achievements start with a good plan……..