A GOAL WITHOUT A PLAN IS JUST A WISH

– Antoine de Saint-Exupéry

The Importance of a Financial Plan

One of the most common reasons for financial failure or distress is a lack of financial planning. Any professional financial planner knows that financial records are vital to properly monitoring cash flow. They also know that insufficient coverage under a financial plan for market changes or unexpected expenses could become a death trap.

A financial plan is crucial because it helps you make better decisions on spending your budget and income. It is an integral part of any sound financial strategy and has objectives beyond forecasting future income.

A budget or forecast won’t tell you where your financial capacity will be in three years despite being one of many financial services that can provide insight into your current financial situation. Strategic financial planning puts you ahead of the game by helping you identify opportunities while simultaneously determining risk tolerance. If executed properly, a financial plan could have priceless benefits for any individual. Many firms provide financial planning services to help people achieve their financial goals.

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How to Conduct Effective Money Management

Personal financial planning, while rarely known, is often a powerful tool to aid in asset, budget, and money management. However, despite its importance, many people do not commit to having a plan for their finances. Therefore, it is worthwhile to examine and understand the basics and importance of personal money management and how to do it effectively.

The process of managing your savings involves various steps. A financial plan includes assessing your expenses and saving habits to determine how you earn and use your income over time. Debt interest should be defined as a measure of the overall effectiveness of your management skills in finance. For instance, spending more than you earn puts you in a situation where you always owe other people due to not having any savings.

Financial planning professionals also help by offering financial products and relevant services about finance, cash flow, insurance, and investment decisions that can improve an individual’s ability to save effectively for different purposes such as education and retirement. In addition, some financial advisors recommend budgeting to ensure that adequate money management strategies are correctly executed at all times.

Choosing The Right Financial Advisor For You

Financial advisors help their clients to manage their money and achieve their long-term financial goals by offering investment advice, wealth management advice, tax planning, and many other aspects of personal finances.

Identify Which Financial Advisors Have Your Best Interests At Heart

There are many different terms that all refer to financial advisors, such as brokers, investment advisors, certified financial planners, portfolio managers, and financial coaches. With all the confusion surrounding who actually does what, how do you know who you can trust?

The most common name you will come across in the financial services industry will likely be “financial advisor.” However, this title is not definitively tied to any particular credentials or training, so don’t assume that this person has your best interests in mind. Financial advisors are required to register their services with the appropriate authorities. For example, American financial advisors have to register with the US Securities and Exchange Commission or the state based on the assets under management. Likewise, financial advisors in Europe need to be members of the Financial Planning Association.

Most financial advisors are obligated to continuously operate in their clients’ best interests instead of their own. In other words, they have a fiduciary duty toward their clients. Therefore, be sure to entrust your financial affairs with a registered and licensed fiduciary. The best course of action is to choose a fee-only financial advisor rather than a professional who earns their money through commissions by selling investment products to you. As a vital component of their certification, certified financial planners all have a fiduciary duty to their clients.

The difference between a fee-only and a fee-based financial advisor are as follows:

Fee-only financial planner:

  • The client directly pays the financial advisor for their services, and the advisor is unable to receive any other sources of payment, like from fund providers, for example.
  • The financial advisor acts as a fiduciary, so they have to put the interests of the clients first.

Fee-based financial planner:

  • Clients pay the financial advisors, who also receive additional sources of income, such as commissions from financial products sold.
  • Registered representatives, dealers, and brokerage services simply need to sell financial products “suitable” for the client’s needs.

Regardless of what title, credentials, license, or certification a financial advisor claims to have, it is your responsibility to ensure the credibility of such claims and follow up on the legitimacy and reputation of the financial advisory firm.

Is there a difference between an “advisor” and an “adviser”?

The terms “financial advisor” and “financial adviser” are used interchangeably. However, “adviser” is the term that is used to refer to individuals who must be registered with the relevant authorities according to the Investment Advisers Act.

The term “advisor” is more frequently used, but there is essentially no significant difference in the meaning of these terms. Both terms refer to financial professionals.

Consider What Financial Planning Services You Can Afford

Financial advisors are known to be relatively expensive, but there will always be a suitable option available for your budget. It is essential that you know what costs are involved in a financial advisory service before committing to a provider. In general, there are three price categories you will most likely come across:

  1. Robo-advisors frequently charge a percentage amount of the balance of your account as an annual fee. Fees that robo-advisors charge typically start at 0.25% of your account balance.
  2. Online financial planning services either charge a flat fee for subscriptions or a percentage amount of the balance of the assets under management annually. In some cases, they will charge both. Annual flat fees may increase depending on the complexity of your financial situation.
  3. Traditional financial advisors typically charge a percentage amount of your account balance, the median of this fee being 1%. However, these fees may decrease for larger accounts and increase for smaller accounts. Some services may charge an hourly rate, a flat fee, or a retainer.

The extent of your financial planning needs, assets, and budget will determine what you should spend on financial advisory services. For example, if your portfolio is relatively small and does not include more complex products, such as exchange-traded funds, you will do well saving some money and opting for a robo-advisor. However, if your financial situation is a bit more complicated, a robo-advisor won’t be sufficient, and an independent financial adviser would be the best option.

What is Retirement Planning and Why is it Important?

Have you ever wondered how much money you could save up if you lived frugally and invested your finances into your savings? Retirement planning is a method used to estimate how much money you should be able to save during your life to provide you with a comfortable future.

However, it is essential to note that retirement planning doesn’t help you retire sooner or acts as insurance to live out your golden years in luxury and comfort. Instead, this plan assists you with making sure that when the time comes for you to stop working and start taking trips around the world – instead of worrying about where the rent payments will come from – there will be enough money set aside for such an endeavour.

Of course, as simple as this sounds, a retirement plan is easier said than done. There are other factors that you need to consider if you want to commit to this process. These include your age and how long you intend to work before retiring, the cost of living during retirement and other financial milestones that you hope to accomplish in the future. All these considerations will guide your financial planning and help you plan what amount of money is enough for you to live comfortably when the time comes.

As with most things, early financial planning will give you more options down the road. Retirement planning is no exception — it gives you an idea of how much cash should be set aside so that even if life’s inevitable crisis strikes, there will still be something left over for living expenses. Effective financial planning also ensures that by the time your working days are done, there will be enough money to support you for the rest of your life.

Determine Which Financial Services You Need

Ask yourself the following questions to determine which financial services you will require:

  • Do you need help with investment planning?
  • Do you need help setting up a budget?
  • Do you want to structure a financial plan?
  • Do you need guidance in planning your estate or creating a trust?
  • Do you need help with tax planning?
  • Do you need guidance with your insurance planning?

People’s answers to these questions determine who will be the best financial advisors for their personal circumstances. To make the most of every aspect of your financial life, utilise the professional advice of experienced advisors who will be able to provide you with sound strategies on how to meet all your financial needs.

Learn More About Financial Advisory Options

Financial advisors aren’t exclusively available at local banks and advisory offices. Today, there is a myriad of ways to obtain financial advice. The form of financial advising that would be best suited for you will depend on your budget and your financial plans and needs.

Robo-advisors

A robo-advisor is an online advisory service that offers clients straightforward and inexpensive investment management. The user will answer a number of questions online, and algorithms will use that information to create an investment portfolio based on your risk tolerance and financial goals.

Online financial advisory and planning services

This form of a financial adviser is one step up from the robo-advisors mentioned above. It is also an internet-based service offering clients access to human financial advisors.

Some online financial advisory services may also offer automated investment management solutions similar to what a robo-advisor might offer, in addition to a team of financial advisors who can answer any questions you may have.

The more specialised services available may include Person Capital and resembles traditional financial planners in that you will be matched with a human financial advisor who will be responsible for managing your investments and coordinating with you to structure a comprehensive financial plan. Most online financial advisers will be able to connect you with an advisor online who has top-tier credentials, such as a certified financial planner.

Traditional Financial Advisors

Traditional financial advisors are the most well-known form of financial advisors and will meet you in person to discuss your financial planning requirements.

High Cost

This is frequently the most expensive option, and most traditional advisors will typically charge 1% of all the assets under management. Furthermore, some may implement a relatively high minimum balance in assets.

It is beneficial when…

If you require specialised services because your financial situation is complex, it would be beneficial to consult a traditional financial advisor and develop a trusting relationship.

Find another option if…

If you would be comfortable settling for similar services where you can pay less, rather opt for a different form of a financial advisor.

Evaluate The Background Of The Financial Advisor

If you are seriously considering giving your business to a traditional financial advisor, it is important to vet their background and reputation. Verify and confirm that any credentials they claim to possess are legitimate, and be sure to speak to some existing clients to gather valuable information regarding the standard of their services.

Although an online financial advisor will likely validate their advisors for you, it is not a bad idea to additionally conduct your own research.

There are some key questions worth asking any financial advisor you may be considering, which include whether they have a fiduciary standard, how frequently they will be in touch with you, and what their fee structure looks like.

With Infinity, you will be able to obtain financial guidance at any point in time and obtain valuable advice before making any significant financial decisions. Regular communication with your personal independent financial advisor will go a long way in structuring a comprehensive financial plan that will secure your financial future.

Always reach out to us if there are any changes in your financial situation. Perhaps you have inherited money or other assets, or you earned a promotion. Whenever you come into a large sum of money, it is always wise to consult us on how you can make your money work for you long-term.

Get in touch
with a financial planner

Let’s grab a coffee and chat!

Get in touch
with a financial planner

Let’s grab a coffee and chat!

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