Benefits and reviews of financial planning

The best way for families to achieve their financial goals is through proper financial planning. Registered and certified financial planners can help families when they have saved a decent amount of money or when their financial circumstances have changed – redundancy, job promotion, having more children, etc.

The benefits of family financial planning are myriad. Here are six reasons to get professional money planning advice.

Boost Household Savings and Investments

A financial advisor can look into a family’s financial circumstances and help them maximize their savings through various financial products and investments. The financial planner can also help the family to borrow for investments. Called gearing, this powerful strategy can help households grow their financial assets faster than conventional savings and investment methods.

Manage Tax Effectively

For many Australian families, managing tax is a tricky thing, especially when investments and superannuation come into the picture. To have an in-depth and clear understanding of tax implications, it’s best to review them through a registered financial planner. He will help the client to fully understand any potential risks involved in the investment decisions as well as recommend effective strategies to maximize returns and achieve short- and longer-term financial goals.

Help Families Get the Right Insurance

Although insurance premiums can be rather costly, sufficient insurance is crucial to protect the family and its assets against unforeseen circumstances. Life insurance, income protection insurance, health insurance, trauma insurance as well as home and content insurance are necessities for families. A financial advisor will be able to structure the right level of cover for a household’s needs and specific circumstances, depending on the family’s financial situation.

Financial Advice When Job Changes Occur

Salary cuts, redundancies, changing jobs and promotions at work affect families’ financial situations. Each time any of these occurs, it’s important to review superannuation, investment and insurance needs. A financial consultant can help his client make informed decisions about revising his financial plan, making employee payments and getting ample insurance cover.

Assist in Retirement Planning

Retirement planning should be part of a long-term financial plan and start early. Financial planners can help people plan for their retirement and maximize their retirement income to help them achieve the lifestyle they want when they are no longer in the workforce. Those on the verge of retirement can also benefit when financial planners help them invest their savings.

Estate Planning for Families

Estate planning is a very important part of any financial plan. However, it is also often the most neglected part. With proper estate planning done by a financial consultant, a person’s family affairs and family members will be appropriately cared for according to his wishes in the most tax effective manner if he suddenly passes away or becomes incapacitated.

Professional money planning isn’t just for wealthy people or big businesses. It’s for average households too. The benefits of family financial planning include the ability to maximize savings and investment returns, manage tax effectively, get the right insurance, have sound financial advice when there are job changes as well as get help in retirement and estate planning.

Understanding Financial Planning

Unlike singles, couples with children have extra financial responsibilities. They have to manage their money well and plan for future finances such as family health insurance, childcare costs, children’s education, managing taxes and retirement planning.

While many households manage family finances well without any outside help, those who have sought advice from financial planners have been successful in planning and investing for their families’ future. In fact, according to research conducted by the Financial Planning Association (FPA), 90% of Australians who have used a financial planner have benefited from the experience.

Before choosing a registered or certified financial planner, an understanding of how financial planning works will help. Here are the six steps involved in when getting professional money planning advice.

Gather Financial Data

The process starts with the family’s financial data. At the first appointment with the financial advisor, information on income, assets, debts and money commitments will be collected. It is very much like a financial stocktake.

Identify Financial Goals

The second step is to identify the family’s short- and long-term financial goals. These may include income and asset levels that the family hopes to achieve in different time frames, future education costs, income protection, buying a new home, estate planning, retirement planning and planning for unforeseen events.

Identify Financial Issues

At this stage, the financial advisor will compare the real financial situation with the desired financial goals to develop the best strategy to achieve those goals. The family’s financial strengths and weaknesses will be looked at as well.

Prepare the Financial Plan

Based on the comparisons and discussions above, the financial planner will formulate an overall financial plan, called a Statement of Advice (SOA) tailored to the family’s needs. Very often, the client’s attitude towards risk will be taken into account before the advisor starts developing recommendations especially designed to achieve the desired financial goals.

Implement the Financial Strategy

Once all the recommendations in the money plan are agreed on, it’s time to implement the financial strategy. All necessary paperwork will be prepared and signed by both the financial planner and client.

Review the Financial Plan

Financial environment, government legislation, health issues and family circumstances are not static, hence the need to review and revise the financial plan from time to time to keep it updated. There should be on-going communication between planner and family involved to check the progress in achieving the financial goals, track existing investments, discuss new investment opportunities and talk about the possibility of revising the entire plan.

A financial advisor’s job is to understand a family’s financial situation and helps them develop a financial plan to meet their financial goals. The processes involved in drawing out the strategy include gathering the family’s financial data, identifying the financial goals and issues, preparing the financial plan, implementing it and reviewing it on a regular basis.