Do you know the importance of going through a Financial Planning Process with your Financial Planner?
And this process is not just plainly buying insurance plans through your Financial Planner but rather more of understanding of your personal and financial situations, current/future needs and objectives.
If you have not really done so or do not know what is this all about, I will be sharing what are the benefits that you can actually get out from going through one.
First – What Is This Financial Planning Process And Its Benefits
To Financial Planners, this is the process known as “Knowing Our Clients” and every insurance companies do have their own means in the form of either a software or booklet, ranging from between 10 to even 20 pages and in which a lot of your personal information and particulars will be recorded.
Certain Important Particulars Like:
1. Occupation (to assess the risks) and Family Dependents
2. Total Savings, Investments and Loans/Debts
3. Current Total Income and Expenditure
4. Your Available Budget
And to your benefits of this, there will also be calculations done and these numbers will be of great importance to you! These numbers, if properly calculated based on your full and truthful declaration, will let you know whether you are:
– Protected Against Any Financial Risks Or Long Term Care
There’s enough means for you carry on your lifestyle in situations like a sudden short-term illness/injury or for your family to continue living in any case of premature death.
What about conditions that are long term or permanent? Knowing your numbers will help you to take care of this situation and also lessen any burdens on your family.
– Protected Against Living Too Long
You have enough money to last through your retirement based on the lifestyle that you want. You will also be able to “really” retire by then and not having to continue to work just to keep the income coming in.
– Able To Pay For The Costs Of Raising Your Children And Their Education
Do you know that a $42,000 university education this year (that’s the cost I paid for my Civil Engineering Degree back in 2006) will not the same $42,000 in 20 years time. Think near to $100,000. You have to factor in inflation and rising education costs.
– Able To Have Enough Money For A Special Purpose (e.g. new car, bigger house) In A Stipulated Time Frame
A desired interest rate can be calculated for you to ensure that you are saving/investing in the right place thus being able to meet your objective in dues time.
– Able To Pass Wealth On To Your Next Generation
It’s not just the Rich that are able to pass on their wealth to their generation. If you have gotten all the numbers for the above, it’s all about planning for this extra amount to be factored in.
Second – The Importance Of These Numbers To Your Present And Future
The numbers generated from this Financial Planning Process tell their own stories and also the action plans that you need to take good care of them in this present stage.
Also you can use these numbers as reference for future planning as and when you have changes in your current lifestyle, e.g. a new and high-paying job (= increased concern for higher protection but more ability to pay off debts) or an addition to your family (= increased cost of raising and education). Taking all these into considerations and re-doing your numbers will give you a clearer picture of what is needed to be done.
These numbers will also justify the product recommendations or advices done by your Financial Planner. For example, because you know your numbers, a fixed budget can be used to take care of two concerns (i.e. Retirement and Protection) rather than just taking up a plan because it’s personally recommended by the Financial Planner but not to your advantage.
Third – A Personal Record For You That You Can Bring Around
As mentioned, a Financial Planning Process will generate numbers based on your personal information and a good part is that all these informations are properly documented and formulas for getting these numbers do not really change much.
If you have no changes to your current lifestyle, the numbers that you get form your own personal record which you can use to obtain your insurance needs.
In this manner, you can make a better judgement which insurance plans from which insurance companies can meet your objectives.
Going Through The Financial Planning Process – What To Expect
Going through this process does not really take too much time and to better prepare yourself – you just need to know your personal information, income, total savings/investments/debts. All these informations should be easily obtainable.
Once you are done with your information, getting them down by your Financial Planner will usually take around 1 – 2 hours. For the calculations, do give your Financial Planner one or two days to do them up. If it’s recorded down using a software platform, you can get your numbers usually on the spot.
For any product recommendations needed, this must take one or two days.
Now There’s No Reasons…
Given the benefits as shared, there’s no reasons why you should not go through a Financial Planning Process or even to suggest to your Financial Planner that you would like to go through.