Financial Planner - How To Do Financial Planning

A financial planner or personal financial planner is a professional who prepares financial plans for people. These financial plans often cover cash flow management, retirement planning, investment planning, financial risk management, insurance planning, tax planning, estate planning and business succession planning (for business owners).

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Scope

Financial planning should cover all areas of the client's financial needs and should result in the achievement of each of the client's goals as required. The scope of planning would usually include the following:

How To Do Financial Planning Video

 

Process

The personal financial planning process is described in ISO 22222:2005 as consisting of six steps:

Step 1: Establishing and defining the client and personal financial planner relationship

Step 2: Gathering client data and determining goals and expectations

Step 3: Analysing and evaluating the client's financial status

Step 4: Developing and presenting the financial plan

Step 5: Implementing the financial planning recommendations

Step 6: Monitoring the financial plan and the financial planning relationship

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Licensing, regulations and self-regulation

In many countries, there are no requirements regarding use of the title of 'financial planner'.

Australia

In Australia, a company providing financial services must be obtain a licence from ASIC. However, there are no requirements for the individuals providing the financial advice and the ASIC website states "Holding an AFS licence does not provide a guarantee of the probity or quality of the licensee's services".

India

Financial Planning Standards Board India

Malaysia

The Securities Commission Malaysia introduced legislation through amendments made to the Securities Industry Act in 2003 to regulate financial planning and the use of the title or related-title of 'financial planner' or to conduct activities related to financial planning.

In 2005, amendments to the Malaysian Insurance Act require those who carry out financial advisory business (including financial planning activities related to insurance) and/or use the title of financial adviser under their firm (which, like in Singapore, must be a corporate structure) to obtain a license from Bank Negara Malaysia (BNM). Some persons who offer financial advisory services, e.g., licensed life insurance agents, are exempted from licensing as a practising requirement.

Singapore

In Singapore, financial services sector are highly regulated by The Monetary Authority of Singapore (MAS). MAS is the regulator and supervisor of financial institutions in Singapore. Rules are set by MAS for financial institutions and are implemented through legislation, regulations, directions and notices. http://www.mas.gov.sg

Currently, majority of the financial planners (financial consultants) are commission-based, which at times may cause conflict of interest on the products recommendation. In 2015, Balanced scorecard framework is implemented to better align the interests of the FA industry and consumers. This ensure FA representatives and supervisors meet key performance indicators that are not related to sales, such as providing suitable product recommendations and making proper disclosure of material information to customers (Non-Sales KPI). Failure to achieve good grades for these non-sales KPI will directly affect their commission (variable income).

New Zealand

The Financial Markets Authority (FMA) (formerly the Securities Commission) provides Authorisation to individuals who provide Personalised Financial Advice, Investment Planning Services and/or Discretionary Investment Management Services. Individuals who receive Authorisation are referred to as an Authorised Financial Adviser (AFA). In order to receive Authorisation individuals must complete the National Certificate in Financial Services (Financial Advice) (Level 5).

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