6 Steps of Financial Planning Process

1. Goal Setting

- Set specific targets of what you want to achieve and when you want to achieve.
- Identify where you wants to go in terms of finances and life.
- What is your priority?

* Risk Management and Insurance Planning
* Cash Flow and Liability Management
* Investment Planning
* Retirement Planning
* Child Education Planning
* Asset Management and Re-financing
* Taxation Planning
* Estate Planning

2. Information Gathering

- Each financial decision you make can affect several other areas of your life.
- For example: a decision about your child's education may affect when and how you meet your retirement goals. An investment decision may have tax consequences that are harmful to your estate planning etc.
- Use the Financial Wizard to enhance the data gathering process. (You may consult your financial adviser)
- Collect financial information needed to generate a proper financial proposal.
- This would include the qualitative and quantitative aspects of your financial and relevant non-financial situation.

3. Information Analyzing

* This is the most tedious part for the planner where he/she have to crunch all the data and analysis them.
* The planner is able to check your current financial health by seeing the cash-flow status and financial ratios.
* The planner also has to detect your potential short and long-term financial problems.
* Problem areas can include too little or too much insurance coverage, or a high tax burden.
* Your cash flow may be inadequate, or the current investments may not be winning the battle with changing economic times or during economic crisis.
* These possible problem areas must be identified before solutions can be found.

4. Financial Plan Designing

# Based on the understanding of what you wants in the future and your current financial status, a road map to your goals is drawn to facilitate the achievements of those goals.
# The planner sets out and develops a set of recommendations to help you achieve financial goals.
# Once you selects the most suitable and agreeable idea, funding will be explored to implement the financial plan.
# The proper Financial Plan should contains the following elements:
a) Net Worth statement - Understanding your balance sheet
b) Cash flow management
c) Risk Management and Insurance Planning
d) Assets and Liabilities management
e) Investment Planning
f) Retirement Planning
g) Tax Planning
h) Estate Planning

5. Strategies Implementing

# On agreement of the recommended action plan, the planner shall draw a proposal based on an analysis of the most suitable plan whether its insurance, investment or others financial tools.
# Other professionals such as Lawyers or Tax Accountants might be needed at this stage especially when more complicating tax or estate issues are involved.
# Time-frame are set on when and how the implementation shall take place.
# The planner will help you to take action through the most appropriate financial tools.
# You must be motivated to be responsible in going ahead with the plan.

6. Plan Monitoring and Reviewing

# There should be a tracking mechanism to monitor if you are on track to the related financial goals to record changes along the way.
# The financial plan must be constantly reviewed depend on which type of financial goals you set.
Example: Investment planning (review every 3-6 months), risk management & insurance planning (review every 1-2 years), estate planning (review every 1-2 years) etc.
# On certain occasions such as additional to family and marriage, a full review of the financial plan might be necessary.
# From time to time, comparisons must be made between the plan objectives and the original financial goals.
# The objectives and the actual performance of the plan might differ over time, thus the planner and yourself must work hand in hand to ensure that the financial goals are achieved as planned.

Personal Financial Planning

Personal Financial Planning

Personal financial planning is defined as a process of determining an individual's financial goals, purposes in life and life's priorities, and after considering his resources, risk profile and current lifestyle, to detail a balanced and realistic plan to meet those goals. The individual's goals are used as guideposts to map a course of action on 'what needs to be done' to reach those goals.

Scope

1. Risk Management and Insurance Planning

• What is your risk profile?
• What type of risk you having in your current lifestyle?
• How to diversify your risk to protect you and your family?
• Do your insurance coverage matching with your lifestyle?
• Do your family's risk have been enough covered?

2. Cash Flow and Liability Management

• Inflow (Income) Vs Outflow (Expenses)
• What is your cashflow ratio?
• Asset Vs Liability
• What is your networth?

3. Investment Planning

• What is your risk profile?
• What type of investment you plan to involve?
• How to set your investment portfolio?
• How to diversified your investment according to your portfolio?
• Do you understand concept of dollar averaging cost?

4. Retirement Planning

• Your current age Vs retirement age
• What types of lifestyle or goal want to achieve during retire?
  What is your estimated fund needed for retirement?
• What types of tools use to accumulate the fund?
• Any planning or incomes during retire period?
  

5. Child Education Planning

• Your child age Vs Uni entry age
• Where you intend to send your child for study?
• Duration of the course?
• How much for the course?
• How much the current fund available to save?

6. Asset Management and Re-financing

• Current asset in hand Vs the market value
• What is the current interest rate package for your property?
• How much interest can be saving with re-finance facilities?

7. Taxation Planning

• Planning for reduction of tax liability and freeing up of cash flow

8. Estate Planning

• What is will writing?
• How important will writing in your estate planning?
• What is a trust service?
• How does the trust account functioning and help you in your distribution process?
• How to create and accumulate our wealth for our next generation?
• How to form a guardian fund for our young children?

The 6 Steps Process:

1. Goal Setting
2. Information Gathering
3. Information Analyzing
4. Financial Plan Designing
5. Strategies Implementing
6. Plan Monitoring and Reviewing