"The WHAT, WHY & HOW"

What is Financial Planning?

It’s All About Achieving The Great Goals In Life! Achieving the great goals in life starts with a plan. Without a well-thought out plan, we’re much less likely to know where we’re headed and when we get there. A comprehensive financial plan creates the “roadmap” to achieving one’s life goals and objectives. It helps answer questions like:

How Do You Create a Financial Plan?

Step One:
Determine your Financial Goals

Choose your financial planner wisely as you will be entrusting this person to help you turn your financial dreams into reality.

To begin the financial planning process, you will need to determine your financial goals specifically. This means to establish a date to achieve those goals including why, when, where, and for whom you want to build assets. Although these goals may seem unobtainable at first but continuing the planning process will enable you to evaluate these goals and modify them if and when needs or situations arise.

It is often best to complete this step in conversation with a trusted financial planner. Here are a few areas that you may consider.
 

•	What are your short-term, medium-term and long-term life goals?
•	When and how do you want to retire?
•	Are there religious issues that you would like to be considered in your plan?
•	What financial issues make you lose sleep at night?
•	Upon the premature death and total disability of you or your spouse, what would the future hold for your family? Do you have an income replacement plan in place?
•	Have you thought about the cost of your child's education?
•	How do you want to pass on your life’s financial achievements?

Put these goals down in writing and prioritize them according to importance and urgency.

Step Two:
Gather sufficient information

Once you have clearly defined your life’s goals — including what, why, when, and for whom you want to create, preserve and distribute your assets — you can then begin to draw up your plan. As for the how, gather and provide information which is appropriate, accurate and complete to your financial planner to analyze. The information should not be just quantitative in nature eg. what type and how much insurance policies, investment plans, estate planning tools that you possess but also qualitative eg. your dreams and goals, risk tolerance, religious beliefs etc.

Step Three:
Analyze your Financial Position

Assess your current financial position: determine your current net worth from your list of assets and liabilities, and your current cash flow from your income and expense statement. From these information, you would be able to look at your current financial situation as indicated by financial ratios that your financial planner would have made available to you. Some financial planners use financial planning software to enable technology to do financial calculations as well as to present them in graphical form. Remember that the correctness of the results are also dependent on the quantity and quality of information given.

Step Four:
Design a Financial Plan

Now that your goals and your current financial position have been determined, it is time to design a financial plan that will address your needs and wants.

Most sound financial plans should, at a minimum, cover the following areas:
 

•	Risk Management.
•	Tax Planning.
•	Investment Planning.
•	Children's Education Funding.
•	Retirement Planning.
•	Estate Planning.

Once you and your planner have developed the plan and put it in writing, then implement It. The very best plans are useless unless they are implemented. For Muslims, they may want to plan for their Pilgrimage, and on top of tax planning, tithe considerations would need to be addressed.

Step Five:
Implement your Plan

In implementing the plan, you would need products and related services to fulfill the needs. They could be in the form of Insurance or Takaful products whether they are Term, WholeLife or Investment-Linked for Risk Management; Unit Trusts, Land Banking, Stocks and Shares as investment vehicles to fund your children’s education and retirement; making a Will and Creating Trusts in planning for the Distribution of your Estate or Assets etc.

Typically, simple plans are executed entirely by the financial planner with minimal outside help. But for comprehensive or complex plans, you may want to engage the services of Tax Advisors, Will Writers, Asset Management companies (for big amount of assets), Accountants, Insurance Professionals, Lawyers etc to fill the areas of expertise that your financial planner may not possess. Financial planners are generally generalists with expertise in one or two areas. However, your financial planner should be able to recommend the services of the other professionals in his network.

Step Six:
Monitor your Financial Plan

Remember that financial planning is a process and as such does not end with the first plan constructed. Together, with your financial planner, you will need to evaluate your plan at least once a year, making certain that you are on track to meet your goals and that your plan reflects your most current stage in life and that you have considered any change that may have taken place since the last review eg birth, new career etc. So, when your plan needs to be revised, meet with your planner and, together, take the appropriate action.

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