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Financial Planning

The following information is provided by Australian Financial Services.

The Financial Planning process should follow a series of steps. Australian Financial Services suggest that the following steps are both proven and logical.

Step 1 - Fact Finding Meeting

Before any advice or recommendations are made, the financial adviser needs to know all about you and have a complete understanding of your financial positions and goals eg. do you want a wealth creation plan, a retirement income plan, a rearrangement of your affairs for tax purposes, a risk protection plan etc.

Step 2. - Concept Report

To ensure the financial adviser has a complete understanding of your needs, they need a report from you. This can either be in written format or in a cashflow spreadsheet format. This will give you and the financial adviser a clear picture of what is the most appropriate strategy for you to take.

Step 3. - Recommendation Report

It is at this point, if you want the financial adviser to prepare a financial plan for you, that you pay a fee. The fee is based on the estimation of the costs involved in preparing the plan. The fee should be discussed with you before proceeding. Step 1 and Step 2 should be free.

Step 4. - Implementation

You will be asked to sign an ‘Authority to Proceed’ to enable the financial adviser to ‘make it all happen’. This can take several months to finalise. On completion of the implementation process a final meeting is held to confirm everything and to present a folder with copies of all documentation of your records. Discussion should also take place re any ongoing reviews of your plan.

Step 5. - Annual Reviews

The annual review is the most vital component in the financial planning process. The purpose is to ensure the plan is still doing what it was designed to do. Changes can be made if necessary and the performance is reviewed to ensure it is meeting your expectations. The financial adviser receives ongoing brokerage or commission, so reviews should be free of any fees.

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