Financial planning advice covers a wide variety of investment
related topics including budgeting, expenses, debt, saving,
retirement and insurance. Financial advisor helps you in
understanding how each of these topics work together and affect each
other. Financial planning advice is important for laying the basis
for a solid financial foundation for you and your family.
Essentials of a financial planning advice:
There are numerous sites available on the internet that provides
financial planning advices free of cost. However, if you are
thinking about going to a professional financial planner, you have
to be prepared. You need to sit back and work out which advisor or
planner will be best for you.
Check whether they are licensed.
Their charges for financial planning advice
Who do they work for?
It is important to remember the three key points mentioned above in
order to prevent any malfunctioning of finances. By law, licensed
advisors are required to:
• Consider your goals, needs and circumstances when they make their
suggestions
• Explain very clearly and accurately about the cost of the advice
and the investment
• Reveal if they have any vested interests, which may be in conflict
with your interests.
There are three different ways to pay for a financial planning
advisor:
Firstly a fee that covers their hourly rate which is usually paid
upfront; or a commission when they complete the transaction; which
generally is a percentage of the capital you invest; or a trailing
commission; which is a percentage of your investment returns, as
long as you hold on to the investment. This has opened more options
for the people about how and when they pay for financial planning
advice.
Financial planning advice can be offered by businesses such as:
Banks, General insurance companies, Fund managers, Stockbrokers, or
Accounting firms.
Steps involved in financial planning advice:
Identify Your Short, Medium and Long-Term goals- The first advice in
financial planning is to identify your goals. Your short-term goals
might include a wedding, a honeymoon, picnics, furniture or a new
car. Plan your medium-term goals, such as having your own home and
financing your kid’s educations. Finally, list your long-term goals,
such as retirement and travel. Once you have identified your goals
you can estimate how much money you will need to save each month in
order to meet each of your goals.
Budgeting- Budgeting is one of the core advices given by the
financial planners. However, while budgeting, do not forget your
short-term, medium-term, and long-term goals. Try not to sacrifice
one for the other.
Investment- It is advisable to invest in Money Market Funds to
achieve your short-term goals, and the stock market for your medium
and long-term goals.
Various firms look at the total financial picture of their clients
before giving any financial planning advice. They work with them to
define and refine their financial goals customising the necessary
steps to realise these goals. This helps to achieve a long-term
relationship with the clients because it is over time that financial
security is required..
