Financial Needs Analysis: counting pennies, creating wealth

To build a sound investment plan for the future, the first thing you need to do is consult a financial planner who will conduct an analysis of your current situation with the view to connecting your financial status with needs and goals. From this starting point, a strategy can be set in place comprising steps to a well-considered investment regime that will ultimately build the kind of wealth you dream of and hope for. It’s a thorough investigation of your financial affairs. A financial needs analysis is therefore essential to preparing for, and accessing, future financial needs.

There is no one plan that suits everyone, which is precisely why the individual analysis must be done. It’s a process that will be affected by five major factors: current wealth; income; health; dependents; and goals.

Key-points of Analysis

There are several things that your financial planner will need to look at – and which will affect your plan:

  • Marital status.
  • Number of dependents.
  • Income and expenses.
  • Current assets and liabilities – your assets will include any property, and liabilities include any debts.
  • A list of current financial products or policies such as life insurance.
  • Employment benefits such as group life assurance and medical aid.
  • Car ownership and repayment situation.

Once your planner has this information to hand, along with a view of where you are hoping to find yourself in the future, he or she will be able to offer recommendations. This should include all the following factors:

  • Saving for your children’s education.
  • Saving for your retirement.
  • Income protection insurance to cover you in case you are retrenched.
  • Health insurance, including dread disease cover.
  • Disability insurance.
  • An important aspect of all this work is also to ensure that you are not sold products that you don’t need and can’t afford to pay for.

What you need to prepare before seeing your financial planner

When making an appointment to see your financial planner, there are several things you need to prepare so that your advisor can grasp your current situation along with your view of the future as clearly as possible. It is advisable not to guess this information, but to take a really practical assessment of what is possible.

  • Draw up a budget on how much you earn, what you spend, and what you spend that money on.
  • You need a balance sheet of major liabilities – how much you still owe on your house and a car, for instance.
  • Outline your goals, detailing those needs which are essential, such as retirement planning and children’s education and health concerns.
  • Also then put in a quick picture of things you would like to achieve in the next years, such as a trip overseas, or starting your own business.

Your advisor will help you devise steps to achieve goals in order of priority, and help you lay the foundation of your investment programme, including an emergency fund which is vital to have on hand in case of unexpected events. The key is to first know what you need, and what you can afford. The idea is not to have everything at once, but to draw up the road map that will add to your journey positively as the years continue.

The financial planner has to ensure a balanced progress to avoid risk: for instance, you may be carrying too much life insurance but not enough disability insurance. Depending on whether you have children, you may need to refocus your life insurance to cover your dependents in the event of your death. Your financial planner is trained to know how to guide you in using your financial resources to your best advantage.

A financial needs analysis is not a once-off thing. It should be regularly updated on a 5-year basis, or when any major changes take place in your life: marriage; children; divorce; losing a spouse; reaching retirement; or starting your own business. All these are turning points in life and will obviously impact your financial needs and planning.

Taking the steps with professionals in the field

  • When you first meet your financial planner, you should be introduced to his company. Then it’s about listening – so that your advisor can understand your mindset and how he or she can add value. There is a relationship to be built here.
  • The next step is to really examine your financial goals and objectives. This will involve gathering personal information and all pertinent documents. These are used to conduct a financial needs analysis which is the basis for formulating strategies for investing such as balanced, offshore, or cautious. This also allows time for the assessment of which products might be the most appropriate for your circumstances.
  • In the next step, there will be discussions of what is most suitable and what you feel comfortable with. Understanding the products advised is an important part in the process. You may receive the input and advice from more than one financial planner at this point.
  • Once all the questions and concerns have been ironed out, you will be presented with your financial plan. This is the time to go through each point carefully, and be sure you understand the details. The plan will be comprehensive and you need to feel confident of its potential effectiveness.
  • Then your signature will be required on several contracts. Your financial planner will engage with several product providers on your behalf and administer each contract for you.
  • Your plan will be reviewed annually, in a formal meeting between you and your advisor, discussing specific policies and investments for the year to come. Your financial planner should always keep you updated with newsletters and ad hoc reports on any major unexpected events.

Adding quality to every stage of your life

The Foster Group, backed by a proud 30-year history, believes in working for only the best results in all areas, from investments through to retirement planning, and including insurance matters. Creating a personal partnership with each client – and mindful of every individual’s plans, dreams and goals – we are there to guide and advise you on each milestone of your financial journey, not only during your working years but well into retirement.

For us it’s about more than just generating income and retaining capital in investments, it’s about the quality of your life each step of the way and your peace of mind. That’s why we focus on building sound relationships based on professionalism, experience, and friendship.

Find out more about us at:

Tags: ,