Demystifying Financial Plans: The Process Explained

by | Nov 24, 2020 | Retirement

Pre-Retirement Couple with Financial Plan

The mere mention of “financial planning” sends many folks heading for the hills. However, once you understand how it works, you’ll see that there’s nothing to be worried about. Quite the opposite in fact – a good financial plan in action will have you sleeping soundly with the knowledge that you’ve taken steps to secure your future and retirement. If anything, the lack of a financial plan is what should be keeping you up at night!

A financial plan is not just some recommendations around your superannuation or investments. A plan should establish your financial goals, manage and prioritise them when they are in conflict, and importantly demonstrate to you in plain English what can be achieved. Here we look at what good financial planning is all about.

What Goes In Dictates What Comes Out

The quality of the financial plan you receive depends a lot on the information you provide at the outset. Your financial adviser should set aside a time to meet to discuss your needs. This is often referred to as a ‘fact finding’ meeting.  So you should be prepared to discuss the following:

  • Your goals and objectives – this is the core of any financial plan – not your superannuation, investments and strategy.  Those things are just a means by which to achieve your goals and objectives.  So, think about things such as:
    • When would I like to retire?
    • What capital expenditure plans do you have such as home renovations, new cars, holidays, children’s education and weddings etc?
    • What assets would you like to pass to your estate?
  • Your personal situation such as your work, age, relationship status and health.
  • Assets such as your home, superannuation and investments, as well as personal assets such as your car, home and contents.
  • Debts including your mortgage, investment loans, car loans, personal loans and credit cards.
  • Income such as your salary, investment income and other sources.
  • Insurance policies – details of each policy such as provider, cover amounts and premiums.
  • Expenses – it is important to have a good grasp of what your expenses are now and what you think you will need to live on in retirement as your circumstances change such as children leaving home, loans being repaid etc.
  • Estate plans including Wills and Powers of Attorney.

Your Goals and Objectives

Goals and objectives, are at the core of any financial plan. Your financial adviser should discuss these with you and help you prioritise any conflicting objectives. The key to a good good financial plan is that you actually understand how it works. It should be able to clearly demonstrate how goals and objectives will be met, with financial workings and a summary to show how they are met. 

Sometimes my clients ask me whether all this information is necessary and relevant. For example, “why are you asking about my personal assets such as car and home contents?” This is usually needed to calculate any potential government benefits such as the Age Pension down the track. Another one is health status. Health is important to consider from an insurance, estate planning and longevity modelling for investments and superannuation.

Help Is At Hand…

I also find new clients somewhat hesitant to commit to the process because of the information that they need to prepare. I get it, it does sound like a lot! This however shouldn’t put you off; a good adviser will prepare a list of what they require for the initial ‘fact finding’ meeting and help you fill in the blanks when you get stuck.

Common areas where we can assist are helping you prepare a budget or work out what you are currently spending, gathering additional information on your superannuation, investments and life insurance. This requires the client to complete a letter of authority for these, that way the adviser can contact the provider directly, on your behalf, and gather the required information. If the preparation of what seems to be a lot of information is stopping you from taking action, fear not. A good adviser will help you with this. Generally, some of the basic information I request for in an initial fact find meeting is as follows:

  • Last pay slip/s
  • Last tax return/s
  • Last superannuation, life insurance and investment statements available
  • List of loans, interest rate and repayments
  • List of investment and personal assets

Usually it does not take too much time to gather these and then the rest of the information can be gathered and discussed in the initial meeting.

Be Clear on What Advice is Being Prepared and the Cost

After your first meeting, the following should be clear to you:

  • The scope of advice being provided. For example, is the advice just covering you superannuation or is it more holistic and covering an array of areas such as cashflow management, life insurance, non-super investments, estate planning etc?
  • The cost for the advice and how it can be paid for.
  • What is included in the cost of the advice. For example, is implementation included or regular meetings to review your plan?

What should Your Financial Plan Contain?

Your financial plan, also referred to in the industry as a Statement of Advice (or “SOA”) should contain the following:

  • A summary of your financial position such as assets, debt, income and expenses
  • Your financial goals and objectives and personal situation
  • The scope advice i.e. what the financial plan does and does not address
  • Your investment risk profile i.e. what level of investment risk you are comfortable with and the type of investor you are
  • An explanation of each recommended strategy and how it is relevant to your situation and how it will help meet your goals and objectives
  • Explains the pros and cons of each strategy
  • Recommended investments, superannuation and insurance and the pros and cons of switching products
  • Clearly articulates all fees for financial advice and the products recommended and who these fees are paid to

Accompanying your financial plan should be the financial projections demonstrating how you should be able to meet your goals and objectives. Finally, product disclosure statements should be provided for each product recommended.

At Killara Wealth, we fundamentally believe that every financial plan we produce clearly demonstrates how clients can meet their objectives and explain investments and strategies in plain English. To back this up, you will be provided with detailed financial projections demonstrating the appropriateness of each strategy recommended and calculations that demonstrate what value your financial plan will add for you. We can also run multiple scenario analysis and comparisons to demonstrate our value add. Now that you understand more about about the process of financial planning, maybe you’d like to get the ball rolling and book a complimentary 15-minute phone appointment? If so, please contact us today. You might also like to read my article about how much financial plans cost here.

To arrange a complimentary 15 minute discussion on how I can help you secure and manage your financial future please, contact me.


Tony Richard-Preston

Tony Richard-Preston

Principal Adviser & Managing Director of Killara Wealth

I have 20+ years’ experience providing comprehensive financial and investment advice to clients and have held senior roles in financial planning, life insurance and investment management. During my career I have managed multi billion dollar institutional equity portfolios, established three financial advice businesses in the industry fund and profit-to-members sector and launched a life insurance advice business.

At Killara Wealth I provide advice to professionals such as lawyers, accountants, executives, senior public servants and ADF personnel (those with membership of government or military defined benefit schemes), assisting clients to meet their life and investment objectives through comprehensive investment, tax, cashflow and goals-based advice.

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