Financial planning involves the collaboration of the planner and the client to assess the client’s present financial situation. The planner then takes stock of the situation and sees to it that the client’s current financial needs are understood. Then comes the important part of creating conditions whereby the client’s financial goals are met. The strategies adopted might be short-term as well as long-term. The planner must also take the client’s aspirations into account. Then the planner issues a statement drawing up the client’s financial planning. This is also known as the ‘blueprint’ or ‘statement of advice’ that also takes into account the pension plans of the client. The first step of financial planning is drawing up a budget for the client. This comprises the salary the customer is willing to forego every month for meeting future financial goals. The current savings plan plays a major role in financial planning. This is discussed and reforms are suggested.
The planner then moves towards investments that have the ability to save taxes. The government also contributes to one’s financial health in terms of schemes that it launches from time to time. This includes the pension plans that the state-owned finance institutions have in their bouquet. The client is also encouraged to invest in self-managed super funds. Direct shares are also proposed in order to meet the goals of financial planning. Investment in property and mortgage repayment strategies are also worked out so that goals are met as fast as possible. It often transpires after the planning terminates that there is an unbridgeable gap between one’s aspirations and the current situation. To make financial planning viable, then, several measures are suggested. One could plan a late retirement or one could sacrifice that overseas holiday that has been on the calendar for a long time. This financial planning exercise covers almost all the requirements of a client. It so happens that financial planners are handy when dealing with specific problems rather than an overarching problem with one’s finances. The initial meeting remains on the house which enables the client to pick and choose the right financial planner.