Financial planning

Everyone needs money for his or her sustenance, comfort and old age. Does the hard earned money really used for this purpose? How many of us still try hard to make ends meet just to fulfill every months basic needs? When this is the case how can we save money from the meager income that we get? How much is really too much money? How can we grow or make optimal use of the finance that we normally handle? Questions like this cloud our minds most often as we fail to manage our finances efficiently.

Who we are or how much we earn is of less concern as long as we can manage and plan our finances wisely. A pauper can become rich and a rich man can suddenly lose his wealth if his financial planning is improper. Usually people blame their stars for their misfortune. They go in search of astrologers who will live out of them by changing their names and houses. They find solace in blaming others be it God or stars for their backdrop. Insecurity and thoughts of ones future might lead to depression and frustration.

Make hay while the sunshines as the popular saying goes is the golden rule every human being should definitely follow. We earn to live happily with comforts but we forget to pay ourselves for all the hard work we put in. we pay for everything in this world, do we pay ourselves for the service we do to our family, nation and society.

In the western countries they make it a habit to save 10% of their personal income for their own future use, a millionaire once said, I am glad I am worth at least 10% of what I earn.

Better late than never, just sit with a planner and take stock of where you are now. Jot down your financial position as of today. Set long time and short time goals in life and set a imeline to achieve that goal in time. Then carefully think about how you can achieve the goal and what you can do to go where you want to go. Attitude is very important in any major life changes that you might ncounter. Thus set your attitude as if you are planning a vacation. So you first decide the vacation spot, and then set out to make reservations, then pack

your bag and then leave.

Financial planning is just like your vacation planning. First you should fix your target, then make certain changes in your life style, like cutting down your pizza or sacrificing your cigars, then pack up or wind up your extra expenses and start the savings plan when that is dome just relax and enjoy the fruits of your unparallel and diplomatic achievement. Your money will start growing and so will your self-esteem and self-confidence and finally you are efficient and capable to finance your kids higher studies or retire peacefully with the recurring income from the timely savings.

Financial planning provides the reassurance that your future in Canada and all around the world that secures you to live in the comfort as you would like.

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Financial planning provides the reassurance that your future in Canada and all around the world that secures you to live in the comfort as you would like.

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Divorce is a dreadful event emotionally for everyone involved, but it also has a huge financial impact on Australians due to our family law arrangements.

When it comes to splitting assets, everything can be considered part of the matrimonial asset pool: the home, investments, savings, and even your superannuation.

Data from the Australian Bureau of Statistics (ABS) indicates that around half of all marriages end in divorce with 47,000 divorces granted in Australia each year. When you consider this figure doesn’t include defacto couple break-ups it’s easy to see how many people are impacted by the financial ramifications of relationship breakdowns.

Financial Advice for Divorce

Rebuilding your life financially and emotionally after divorce and relationship breakdown is a difficult task. In addition to the emotional impact, your divorce and separation also has financial ramifications. Whether you were the main income earner in the household, or a stay at home mum, your financial status has changed as a result of the separation and you need to ensure that your assumptions are realistic going forward. To start rebuilding your life you need to start with a budget to ensure that you have an accurate idea about your new cost of living. Many people find that an experienced financial planner can assist them in this rebuilding phase to:

• assess your income and expenses and develop a budget moving forward
• help you to identify your financial goals it is likely that these will have changed now that you are divorced
• formulate a financial plan to help you secure your financial future through appropriate investing and life insurance. This may incorporate any funds received from your financial settlement.

Many people who divorce find that the financial impact can set them back years. This is particularly evident where divorce occurs later in your working life you have less time to rebuild your finances before retirement. By getting the advice of a financial planner experienced in divorce and separation, you can make the most of a difficult situation and start getting your financial life back on track.

For more information about how to rebuild your finances after divorce, download our free ebook Divorce and Separation. In it you’ll find some great information to help you.

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Financial Spectrum -
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Financial Spectrum is an independently owned financial planning firm based in Sydney Australia. For more information about us and how we can help, visit us at http://www.financialspectrum.com.au

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With the compulsory transition to fee for service pricing in the financial planning profession by 2012, many commission-based financial planners are left wondering how they will make the switch to fee-for-service. Commentators in the industry have focused on the difficulties that planners will face in the logistics of making this transition, but what about the impact on clients?

When our firm decided to offer fee for service financial planning it was because we felt that it provided a greater level of holistic services to our clients, plus enabled us to provide a more technical level of financial planning based on strategy and with less bias on recommending products in order to get paid. Becoming fee for service allowed us to focus more on the needs of our client, and gave us the freedom to give advice in more grassroots areas of financial planning such as budgeting something which we did under a commissions-based model but we didn’t get paid for this advice.

We have noticed however, a real resistance in the Australian consumer to the fee for service model. Whilst it is true that the well-informed client comes to us specifically to seek fee for service advice because they believe it is better, there seems to be a large proportion of clients who have become so used to the commissions model, that when faced with the prospect of paying their financial adviser for their advice many baulk at the prospect. Whilst it’s true that the commission-model client ends up paying more in premiums etc to cover the cost of the commission to their adviser, there is something more challenging in the prospect physically handing over your own money to pay for advice. In the lead up to the fee for service transition in 2012 this poses some concerns.

In a recent study conducted by GESB, they found that 44% of Australians believe that a five-year financial plan should cost less than $500. When you consider that the time it takes for a financial planner to meet with a client, research and formulate a financial plan, write a financial plan, then consult and implement that plan is as a minimum 8 hours work that is well below what a financial planner could possibly afford to charge if they want to stay in business!

Why is it that many Australians aren’t prepared to pay a reasonable sum for financial planning advice? Perhaps it is because the true cost of advice has been hidden from consumers by commissions for so many years.

With the profession transitioning to fee for service by 2012 this raises a concerning issue. Unless consumers change their stance toward paying a realistic amount for the cost of a financial plan, we believe there will be a significant decline in the number of people who will seek professional financial advice. This is of course worrying for the viability of the financial planning profession, but of greater concern is the prospect that the overwhelming majority of Australians will not have a financial planner to help them.

For more information on fee for service financial planning and free ebooks and articles, visit our website http://www.financial-planner.com.au

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Financial Spectrum -
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Financial Spectrum is a privately owned fee for service financial planning firm based in Sydney, Australia. To find out more about us, visit our website: http://www.financialspectrum.com.au

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What is fee for service financial planning?

Fee for service financial planning is where a client pays their financial adviser a fixed fee for the services and advice they provide. Much like you would pay your mechanic to service your car.

Currently in Australia there are two main ways that financial planners are paid Commissions and Fee for Service:

1. Commissions – this is the most common form of remuneration for financial planners in Australia. It is where product providers or financial institutions pay financial advisers a commission when their client invests or purchases their product or investment. There are generally two types of commission that are paid:
   - Upfront commissions which is a larger lump sum amount paid to the financial adviser when the product or investment is first set up. This lump sum amount varies depending upon the arrangement with the provider but is generally around 4%
   - Trail commissions which is a smaller ongoing commission which is paid to the financial planner usually on a monthly basis for the life of the investment or as long as the client retains the product or advises the provider that they have transferred to another financial planner. The average trail commission is around 0.8% per year.
2. Fee for Service – this is a less common form of remuneration for financial advisers where instead of receiving payment from the product provider, the client pays their financial planner directly for their time and advice. Often there will be a set fee either based on an hourly rate and/or packaged based where you can choose to pay for particular services such as a full Statement of Advice or setting up of a Self Managed Super Fund.

Which financial planning payment style is better? Commission vs fee for service?

There has been a lot of debate in the media about which style of remuneration provides is better for clients. The overwhelming majority of financial advisers in Australia are still commission based but our opinion is that fee for service financial planning is much better for clients as it lessens the risk of a conflict of interest. When a financial adviser is paid by a product provider we believe that they are inclined to work for the commission rather than work for the client. This can result in clients being “sold” into products which may not necessarily be the 100% best option for their needs. Say your financial planner has 2 options of where to recommend you invest. One is better for your needs than the other, but the lesser alternative happens to pay the adviser a larger commission. You can see where the conflict for commission based financial planners arises.

In addition is the problem where most financial advisers in Australia don’t offer advice in areas such as budgeting, savings, and tax structuring as because they aren’t placing their client into a product they don’t get paid. Many people need this grassroots financial advice from a professional and aren’t getting it for this reason.

At Financial Spectrum, we believe that fee for service financial planning is the way forward. We know that we are in the minority of financial planners in Australia but we believe that this payment structure offers the best service to our clients and enables us to give advice to our clients in all areas of financial advice. At the end of the day, it is our clients who pay us for our service and advice, and it is our client that we are working for.

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Financial Spectrum -
About the Author:

Financial Spectrum is a privately owned fee for service financial planning firm based in Sydney, Australia.

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There’s a lot of misconception about financial planning and how it can help you. Here is a list of the top 6 myths surrounding financial planning. We hope that by dispelling some of these common myths you can get a better understanding of financial advisers and how they can assist you to achieving financial prosperity and security.

Myth #1: Only people who have already accumulated wealth and/or assets can see a financial adviser

This is one of the biggest myths surrounding seeking professional financial advice. Most people believe that you need to have already established yourself financially before a financial planner can help you. Some financial advisers will only want to work with you if you have some established assets as by advising you on how to allocate this wealth this allows them to be paid. At Financial Spectrum, our financial advisers are fee-for-service, or charge a flat fee instead of earning a commission. This means that they are able to assist you in accumulating wealth through things such as setting up savings plans and budgeting, whereas other advisers won’t as they wouldn’t earn a commission for this advice. The value of advice at the early stages of your life can be just as great, if not greater than when you have already built up your wealth.

Myth #2: Financial Planners just sell their clients managed funds

Many people believe that financial planners just sell managed funds to their clients. This isn’t true. Whilst a financial adviser can recommend their clients invest in specific investments as one tool to help grow their wealth, a holistic financial planner will look at areas such as debt reduction, tax minimisation, property, shares, superannuation, insurance, and cash flow just to name a few. All of these areas are important when looking to grow and secure wealth not just investing into products. Some financial advisers have a greater emphasis on placing their clients into managed funds as this provides them with payment via a commission. This perhaps may explain why this myth is a common one. Not all financial advisers are equal however. Financial Spectrum is in the minority when it comes to offering clients truly holistic advice. Because Financial Spectrum doesn’t earn commissions, its’ financial advisers place just as much emphasis on areas such as paying less tax and budgeting, as placing clients in managed fund investments.

Myth #3: I’ve already got an accountant, so I don’t need a financial planner.

Many people already have an accountant that they know and trust for their financial needs so they don’t think that they would benefit from seeking the services of a financial planner. What most people don’t understand however, is that although it is very important that accountants and financial planners work together in partnership, both fulfil very different needs. Financial advisers are trained to take a more holistic approach to your finances than accountants are. Whereas an accountant will complete your tax return or offer advice for small business, a financial planner will work with you on understanding your life goals and help to implement a financial plan to help you achieve them.

At Financial Spectrum, we work closely in partnership with accountants to ensure that our clients receive the benefit of a team approach.

Myth #4: I don’t need a financial planner I’m nowhere near close to retirement

A common misconception is that financial planners are only to help retirees or people starting to think about retiring. This is very far from the truth! Whilst it is true that there are many financial advisory firms whose target market are retirees, at Financial Spectrum we believe the true value of financial advice can be gained by starting early. Most of our clients are younger professionals in their 20s, 30s and 40s who are at the accumulation stage of their lives. We know that we are in the minority when it comes to our competitors but we are passionate about helping young Australians get ahead financially. We help our clients to map out the goals they want to achieve in the short, medium and long term, and work with them to implement a financial plan to help achieve these goals. Time is your biggest ally when it comes to setting yourself up financially so don’t wait until you are in your 50s and 60s to start planning for the future!

Myth #5: Financial planners charge too much and get hefty kickbacks from companies they recommend their clients invest in

Financial planners have received a lot of bad press over the years and the result is that many Australians have a very negative view of the trustworthiness of the financial planning industry. In truth, individuals authorised to provide financial advice to people in Australia are bound by strict regulations from the Australian Securities and Investments Commission (ASIC). All remuneration received by implementing a proposed financial plan must be clearly outlined in a Statement of Advice (SoA) which must be given to the client. This enables transparency in the financial planning process so that you know exactly how much your financial adviser will be paid in relation to your financial plan.

At Financial Spectrum, we’ve gone one step further and developed a fee-for-service or a fixed fee payment structure so that we don’t receive any commissions from any investment product that we recommend to our clients. This means that our clients pay for our advice. We believe that this fee structure helps to protect our clients from potential conflicts of interest. In addition we offer a range of packages for our clients to select from so that they can feel comfortable that they’re getting value for money.

Myth #6: All financial advisers are the same. Shouldn’t I just see the adviser at my bank branch?

There are financial advisers, and then there are financial advisers. Whilst it’s true that all financial planners in Australia must be authorised under a financial planning licence from ASIC, it is important to know that there are potential conflicts of interest that may arise by seeking the services of a financial adviser who is connected to a large institution be that a bank or other financial institution. Why? Financial advisers who are part of financial institutions who offer their own financial products (eg. life insurance and investments) will likely be restricted to a small selection of products that they can offer their clients. This means that if you went to Bank XYZ seeking advice and the financial planner at Bank XYZ identified that you need income protection it is likely that they’ll be restricted by the XYZ Bank to only provide you with advice to obtain an XYZ Income Protection policy. The problem is that your XYZ financial adviser might know that a better policy for your situation can be provided to you by ABC Life Insurance, but because they are part of the XYZ institution, they can’t offer this policy to you.

The good news is that not all financial advisers in Australia are part of large corporations and therefore are better able to provide you with a wider selection of investment and insurance products from a range of providers in Australia. These financial advisers tend to be known as “boutique” or “privately-owned” financial planning firms as ASIC restricts the use of the word “independent”. These small boutique financial advisory firms are in the minority as many have been bought out by the larger institutions and do not have the massive monetary resources of their competitors, but they are out there and can offer you great financial advice. Financial Spectrum is one such privately-owned financial planning firm based in the Sydney CBD.

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Financial Spectrum -
About the Author:

Financial Spectrum are a team of financial advisers based in Sydney, Australia. We are independently owned and stand out from the crowd in our approach to creating and managing your wealth.

We are fee-for-service and don’t rely on commissions.

Experts in:
- financial planning
- estate planning
- funds management
- insurance
- structured investments
- taxation planning
- property investment
- business succession
- crisis planning
- superannuation

For more top articles and free ebooks about financial planning and investing, visit http://www.financial-planner.com.au

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5 financial tips to keep you ahead of 90% of the population

You are never too young to start financial planning. In order to stay ahead of what I call the “Traditional Spending Curve” (TSC) you need to start planning your future as early as possible – here are 5 steps you can take to stay ahead of the curve and be better off financially than 90% of the population

I think most people will agree that financial planning can be a great tool in helping you to build a nest egg for retirement. The only problem is that most people dont start their financial planning and budgeting until after they graduate from college and get a job. For most people their financial planning consists of a 401k from their employer and maybe a personal IRA on top of that.

You might be saying well there is no point in planning your finances if you are still in school and dont have any finances but that is where it is actually most important. This is where you have the opportunity to get ahead of what I call the Traditional Spending Curve(TSC)which is basically the level of necessary spending you must engage in at any particular time in your life. When you are young it is very low because your parents pay for everything but as you get older it goes up as you start to pay for your own meals, or cell phone bills etc. It takes a substantial leap when you move out and have to pay rent, utilities etc. Naturally the amount you save is inversely proportional to the amount you spend so ideally the more you can save when you are younger when your expenses are lower the better.

When I say stay ahead of the curve what I mean is that if you wait until you are out of college and out on your own and working to start saving then you may have missed the boat already because then your expenses are very high and it is harder to save money for a house. And the biggest problem people run into is that houses often appreciate faster than they are able to save. So they get stuck paying rent and never have enough saved to put down 20% on a house and are always stuck behind the curve.

So here is a list of things you can do to stay ahead of the curve:

1) Get a job while you are in high school and save every penny you can. You may not be earning much but youll find if you have a few thousand in the bank when you get out of high school youll probably be ahead of over 90% of your fellow students (and most adults too!).

2) Drive the cheapest car you can stand. Dont make the mistake a lot of kids make when they take all the money theyve saved and spend it all on a down payment on a car and then they have no more savings and a car payment! If possible try getting by without a car by hitching rides from friends or family or taking the bus, or borrowing a family car from time to time. The money you save can make a huge difference when you get to #5.

3) Get a college education this one is obvious – in this day and age its really not an option anymore its a necessity. According to the US Census Bureau a college graduate will average about $20,000 more per year than someone with just a high school diploma which can translate to about $1,000,000 of extra earnings over a persons lifetime. So get a college degree and more specifically get a degree that will teach you a skill to get a job. Majoring in art might be very interesting to you but it probably wont help you find a very good job. Specific majors include: accounting, engineering, nursing, law etc.

#4 Live at home for a few years after graduation. This may be the hardest one to follow but it is the MOST IMPORTANT. In order to stay ahead of the traditional spending curve you need to save as much as possible when you dont have many expenses. Well, the problem is that youre not really making a lot of money until you get out of college and get a decent job so its hard to save a lot of money. Then when you move out you have a ton of expenses so its still hard to save a lot of money. However, if for example you live at home for a few years after you graduate and get a job then you should be able to save half of your income or more. So if you are a college graduate making about $45,000 a year living at home you should be able to save about $20,000 of that or more annually! In a few short years if you budget wisely then you could have $50-$100,000 saved up and ready for you first and most important major investment.

#5 Buy a House- Hopefully by now youve saved your money you earned in high school and college working part time and saved about $20,000 a year for the last 3 years by living at home with your parents. This is when you buy your starter home. Lets say you are single and making about $50,000 a year. So to be safe you buy a condo or townhouse that is 3 times your gross income or $150,000 and you put down 20% which is $30,000. You are still left over with about $10-20,000 and now you have an asset that will appreciate as you pay it off.

You will be one of very few 25 year olds that has his or her own property with 20% equity and over $10,000 in the bank. As your house value grows so does your equity and your ability to upgrade as you save more and increase your earnings potential.

As youve seen all this was possible because you started planning for your future while you were in high school. If you had waited until you were already out on your own and paying rent it would be much harder to achieve the savings necessary to buy a house. Many people are well into their 30s and still struggling to save enough money to buy a house.

You might be saying this is all fine and dandy but its too late Im already behind the spending curve well you can still improve your finances with financial planning but this article is really geared toward high school students and their parents. This should really be taught in every high school in America but since it isnt its your responsibility to teach it to your children if and when you have them.

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Alessandro Perilli

I am an Accounting Major at West Chester University. I have also run my own home-based business for several years where I use the same cost cutting practices to stay ahead as I use in my everyday life.

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