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The Key Stages Of Financial Planning – What You Need To Know (inc. podcast)Written on October 25, 2016 by Kirk Rice LLP

The Key Stages Of Financial Planning – What You Need To Know (inc. podcast)

For most of us, planning for our own and our family’s future is a high priority. Yet, making sense of our finances can be daunting, as there are so many things to consider. In this article, we talk about the key stages of effective financial planning.

If you would prefer to listen to the podcast, please click below:

Stage 1: Get To Know Your Advisor

Meet your advisor and get to know them. The ability to establish a good working relationship is a key consideration when choosing your advisor. There are a number of factors to consider when assessing the advisor’s suitability. Ask yourself whether you will be able to get on well with them? Do they possess the required skills and experience in the subject areas you are most concerned with?

Stage 2: Information Gathering

The advisor should aim to gather as much information about you as possible. They should investigate the hard facts such as what policies and investments are already in place. Additionally, they should gather information on the soft facts, such as how do you feel about risk, what are your concerns and priorities, what are your objectives and expectations.

Stage 3: Analysis

Once all the facts have been gathered, the advisor should compare how your current financial situation fits in with your objectives.  For instance, some current investments may no longer be appropriate for your needs or unsuitable from a tax perspective. Once this analysis is complete, the advisor will be in a position to look at areas for improvement.

Stage 4: Financial Plan

A financial plan is produced at this stage where recommendations are put forward in terms of types of financial products to consider.  The advisor will meet with you and run through the report, covering all the key points to ensure you understand all the recommendations.

Stage 5: Plan Implementation

Once an agreement is reached with yourself, the advisor should initiate implementation of the financial plan. The advisor will manage on behalf of the client all aspects of paperwork, applications, amendments, and so on.

Stage 6: Monitor and Review

The final stage is to monitor and review the plan.  If recommendations have been made and changes implemented, the advisor should consistently monitor the plan activities.  Any changes to personal financial circumstances may have an impact on the success of the financial plan.  Furthermore, there may be fluctuations in the economy which could impact your personal finances. Perhaps a classic example of this is all the pension changes we have seen recently in this country.  These changes have had a big impact on personal financial plans so it is vital that regular reviews are held with the client.

In summary, financial planning can be broken down into two aspects: firstly to protect the things you love ie., making sure your family is provided for if the worst happens. In this instance, financial products such as life insurance and critical illness cover are key considerations.

The second aspect is wealth generation.  Most people are accumulating wealth for their retirement, however, your priority may be other expenses, such as school fees.  From a financial planning viewpoint, unless you manage the first aspect ie. protecting your wealth, the second aspect of wealth generation is at risk.  For example, your financial advisor could recommend you allocate £500 or £1000 a month to achieve your financial plan, however, if your health stops you from working, this isn’t a realistic objective.

For further information on this topic, please read our Key Guide to Financial Planning, which provides more detail on the financial planning process.  The guide also covers considerations from the client’s perspective when choosing an advisor and the key stages involved.

Click here to read our Key Guide ‘The Key Stages Of Financial Planning.’ (there are 17 other key guides which you can also access)

Peter Sharratt, is a Financial Planner at Kirk Rice Accountants. If you have any questions, please feel free to contact Peter on +44 (0)1344 875 000 or  email peter.sharratt@kirkriceaccountants.co.uk.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. The FCA does not regulate tax and trust advice.