There is a common misconception amongst the public that financial planning and financial advice are one and the same thing. This has not been helped by the banks and building societies naming their in-house financial advisers financial planning managers.
So to avoid any further confusion I thought it best to make it very clear as to the distinct differences.
Financial Planning is an ongoing process to help you make sensible decisions about money that can help you achieve your goals in life.
It might involve putting appropriate wills in place to protect your family, thinking about how your family will manage without your income should you fall ill or die prematurely, spending money differently, but it involves thinking about all of these things together i.e. your ‘plan’. You can build a plan on your own, or if your needs are more complex you might want the help of a Financial Planner.
Creating a sound financial plan is done in six steps
1. Establish your goals in life – short, medium and long term
2. Work out what assets and liabilities you have – write them down
3. Evaluate your current financial position – how close are you to achieving your goals
4. Develop your plan – create a “route map” for achieving your different goals
5. Implement your plan – make the changes and make it happen
6. Monitor and review your plan at least yearly and make adjustments when needed
Start by working out your goals in life, in the short, medium and long term. Prioritise them, and think about the likely cost of those goals and when you will need the money, so you can start to plan your finances to work out how to achieve them. Don’t forget you also have to plan for some of the hurdles you may have to overcome too. It’s about getting organised; being in control of your finances rather than letting your finances control you.
By planning your finances to meet your goals you will:
• Have a much greater confidence of where you are going in life
• Reduce your stress levels and start to enjoy life more
• Gain control and peace of mind through knowing whether you’re on track for the future you want for you and your family
Financial Planning is a professional service for individuals, their families and businesses, who need objective assistance in organising their financial affairs to achieve their financial and lifestyle objectives more readily. Financial Panning is not the same as financial advice. Financial Planning is an evolving action plan resulting from a cyclical process, whereas financial advice is a recommendation regarding a financial transaction at a fixed point in time. We believe financial advice should only ever come after the financial planning stage, to help support the financial plan, if required. I hope this helps clarify.