FINANCIAL PLANNING

1. FINANCIAL PLANNING Simon Lam Oct 10, 2003

2. Financial planningorpersonal financial planning is “a scientific workflow model that assists clients in determining their financial needs and resources, and provides a systematic method of achieving their goals and objectives in an optimal manner.” Financial Planning Practice Standards of APLIC for FChFP designees

3. The Key Role of the Financial Practitioner/Planner • To remove financial worries from a client’s life as much as possible.

4. THE SIX STEP FINANCIAL PLANNING PROCESS • Setting goals,objectives & priorities • Gathering relevant data & information • Analyzing information & assessing financial status • Developing and presenting a financial plan for implementation • Executing the financial plan • Monitoring execution & reviewing of the financial plan

5. The Financial Planning Process 1 Setting Goals, Objectives & Priorities

6. Client Motivation to Seek Financial Planning Services • A desire to insure against certain risk • To increase my expected income in retirement • To save tax What else?

7. The Financial Planning Circle Pension adviser The press Accountant Friend Stockbroker Estate agent Insurance Lawyer

8. Motivation Wills School fees Pensions Tax saving Selling business Creating Time Insurance The Financial Planning Circle

9. To dig out the client’s need

10. A Typical Individual’s Financial Life Cycle • INFLUENCES • Marital status • Employment • Economic outlook • Age • Number of dependents • Family money

11. VS NEEDS WANTS

12. Know Your Client! Never judge a book by its cover

13. Different Money Personalities Hoarders Spenders Money monks Money avoiders Money worriers Money amassers Risk takers Risk avoiders

14. Goal Setting -SMART S = specific M = measurable A = achievable R = realistic T = tangible

15. List the client’s precise goals or objective and their priority ranking. $ Dates

16. The Financial Planning Process 2 Gathering Relevant Data & Information

17. TYPES OF INFORMATION REQUIRED • Quantitative information • Qualitative information

18. PERSONAL DETAILS • Names, genders, birth dates and places • Health status of all members • Family structures and history • Employment information

19. ASSETS AND LIABILITIES • Assets • Liabilities Remember to advise your client • Don’t count everything • Set a value limit • Using Fair Market Value

20. QUALITATIVE INFORMATION • Attitude to risk • Attitude to investment • Investment experience • Income needs • Investment time horizon

21. The Financial Planning Process 3 Analyzing Information & Assessing Financial Status

22. The Financial Planning Process 4 Developing and Presenting a Financial Plan for Implementation

23. All Financial Plans Involve 3 Steps • Maximizing Income and Wealth • Using Money More Effectively • Monitoring Expenditures Preparing the Pro-forma Cash Flow Statements (Budget Statements)

24. The Interlocking Network of Financial Plans and Statements • Evaluate and plan major outlays • Reduce taxes • Establish savings/investment program • Manage credit • Secure adequate insurance coverage Financial Plans FEEDBACK • Monitor and control income, living expenses, purchases, and savings on a monthly basis Budgets Actual financial results: • Balance sheet • Income and expenditures statement Financial Statements

25. Presenting the Financial Plan • Preparation • Presentation There should be a balancebetweenoral and written presentation

26. Preparation • Prepare the presentation documents • Prepare for the meeting • Keep your office clean and neat • Review the plan prior to the meeting • Prepare list of point if necessary • Be groomed

27. Presentation • Explain the cost structures • Ensure client understanding • Listen to client’s concern and revise the recommendations as appropriate • Time frames

28. The Financial Planning Process 5 Executing the Financial Plan

29. Action Plan What When Whom Coordination of other professionals

30. The Financial Planning Process 6 Monitoring Execution & Reviewing of the Financial Plan

31. Checking and adjusting the execution to ensure goals and objectives listed are met. • The plan should be monitored annually or at other agreed intervals, to ensure the client continues to progress towards his goals.

32. Establishing Client-PractitionerRelationship What is Relationship Marketing?

33. Relationship Marketing Purchase/Service is purchased Dialog is established with customer to discover needs Customer is predisposed to additional communications Customers needs are addressed and communicated PRIMARY OBJECTIVE: Growing Customers

34. Client Relationship Management (CRM) • CRMrefers to the management of all interactions with the customer that an enterprise indulges in. Its focus is on managing and optimising the entire customer life cycle.

35. Loyal Relationship Outcome of all smart CRM decisions Loyalty

36. Customer Loyalty Customer Loyalty / Satisfaction Model CUSTOMER SATIFACTION HIGHLOW CUSTOMER LOYALTY Lifetime Trapped Sleepers Promiscuous

37. Implementing CRM • Identifying your client • Differentiating clients one from another

38. Potential client?

39. Interacting with client • Customizing your services to meet the client’s individual needs • Meeting the client

40. Sign contract with client This contract should specify: • Therange of services to be performed by the financial practitioner • The method of compensation • The client’s responsibility in the planning process

41. Important Steps to Effective CRM • Treat the Client as the Boss • Go to see the Client • Don’t Make Excuses to the Client • Take the Client’s Phone Calls • Provide the Client with Proactive Feedback

42. Solicit Feedback From the Client • Do the Client’s Job • Enhance the Product Delivered to the Client • Allow the Client Easy Access to Staff • Understand the Client’s Perspective • Establish a Climate of Mutual Respect

43. Things Not To Do • Taking the traditional insurance broking or selling approach • Delegating to non-professionals • Accepting a half hearted commitment • Failure to sell the service • Failure to get things done • Failure to move with the times

44. 10MOST COMMONMISTAKESFIANANCIAL PRACTITIONERS MAKE

45. Failing to take your own medicine Elephant hunting with an unloaded gun while ignoring pet rabbits that will eat out of your hand

46. Procrastinating Putting product selection first

47. Insisting on doing everything yourself Playing hide and seek

48. Never trying on a client’s shoes Hiding from clients when investments go south

49. Confusing technical jargon with good communication Failing to take responsibility

50. T O P S T rust O pportunity P ain S olution