Finance

WHAT’S THE PLAN?

Andrew Fort B.A. (Econ.) CFPcm Chartered MCSI APFS, Certified and Chartered Financial Planner, Fort Financial Planning

There is a recurring phrase that I use in my articles which is ‘real financial planning’. I use this phrase as most financial advisers, incorrectly in my view, describe themselves as financial planners.

Financial planning is a process, not a product. It is the long-term method of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. In order to create a sound financial plan, goals must first be established. Data is then gathered to analyse and evaluate your financial status. Once complete, your plan can be developed and implemented. Monitoring the plan on an ongoing basis is essential in order to make necessary adjustments to reach your goals.

Not only is financial planning a process, it is one that has internationally agreed standards, as well as an internationally agreed (and vigorously tested) educational and competency standard, the designation being Certified Financial Planner™. The examination not only tests technical competency at a very high level (level 7) but also focuses on the practical aspects of delivering successful financial planning. At level 7, there is no higher achievement for Financial Planners in the UK and those who achieve the qualification standard will be part of an exclusive group.

One of the most challenging aspects of real financial planning is that of defining goals and dreams. It can be difficult for many people to identify what they really want out of life. For many it may be a straightforward feeling of security. Indeed many people’s overriding goals can be described as reaching financial independence at a certain age (meaning they can choose whether to work or not), ensuring that their partner will be financially secure in the event of death, or simply being financially well organised. There may also be specific goals, although these are somewhat rarer. It might be a desire to help children financially or a desire to purchase a holiday home.

What they all have in common is that they come with a ‘price tag’. If, for example, you wished to achieve financial independence by the age of 60 you would need to analyse what your likely cost of living would be when that point in time is reached. Some people have very simple requirements and modest expenditure; other people have very high expectations and significantly higher outgoings. One is not better than the other, they simply reflect the differences between us human beings.

A Certified Financial Planner™ is experienced in the six processes that represent real financial planning and can help people who wish to define the life that they wish to live in the future.

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