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Financial Planning for IFP London

Financial Planning for IFP London



Richard Allum's slides from his presentation on financial planning delivered at a meeting of the IFP in London on 1 May 2012.

Richard Allum's slides from his presentation on financial planning delivered at a meeting of the IFP in London on 1 May 2012.



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  • Beginners to experts Not telling but sharing
  • Alan Dick 2 types of adviser
  • Guesses
  • NOT about products
  • Nick Cann Doesn’t have to be complicated
  • Only 3 answers to cash flow Just got enough = close monitoring Not enough (red) = risk, savings, spend less Plenty = less risk, gifts, IHT
  • Tom Cruise - Jerry McGuire Show me the money Brings money to life Might not take this approach with clients BUT it’s what they want to know
  • Guesses
  • Know - paraphrase - check understanding - record Connect - show me Am I on track or not Personal funding ratio
  • Carl Richards Behaviour Gap
  • Carl Richards Behaviour Gap
  • Talk through each & how done Share process & efficiencies
  • Before do cash flow.. Fact finding skills are different
  • Gathering data No barriers Engage client quickly
  • Question skills Needs v wants Vanguard examples Financial v emotional ....
  • Primary objective Record Livescribe
  • Main ones Linear or stochastic When will you die Source & audit trail
  • 3% inflation
  • No debts
  • Secondary ratio 7% Cash reserve Making sure always got access to £ when needed
  • Spending creep State benefits Knock on effects
  • Presentation Live dynamic
  • Bedrock of service Paraplanners drive
  • Administrator involved too
  • Charging Place a value
  • Bring money to life
  • Over reliance on tools Capacity for loss Detailed discussion with client Full understanding
  • Stop this happening What rate of return is needed?
  • Impartial! Use them all Talk about them
  • Crystal Excelsius

Financial Planning for IFP London Financial Planning for IFP London Presentation Transcript

  • Financial planningRichard Allum CFP APP
  • Those that can’t see thefuture.....
  • Those that can’t see theycan’t see the future…
  • “A professional service forclients who need objectiveassistance in organising theirfinancial affairs to achievetheir financial and lifestylegoals”
  • Is cash flow planning compulsory?Institute of Financial Planning
  • Lifetime planningEstate planningSavings strategies
  • Investment riskShortfallsGetting real
  • Creating ways to helppeople make more senseof money
  • Framing ContextEngagement
  • “Financial plansare worthless”
  • “The process ofplanning is invaluable”
  • Planning process1. Establish goals & objectives2. Gather data3. Analyse information4. Develop plan5. Implement plan6. Monitor and adjust
  • Things in common1. Clear service proposition2. Platform & investment process3. Agendas4. Questionnaires5. Team approach6. Charge
  • Data, objectivesand assumptions
  • “One of the keys to successfulfinancial planning is learning tolet go of precision.”Carl Richards @behaviorgap
  • No objectives..no plan!• Clear & concise• Prioritised• Timescales• Agreed & written down• Reviewed regularly
  • Financial objectives• Increase my spendable income• Pay less tax• Improve retirement income• Increase investment returns• Pay off mortgage
  • Emotional objectives• Increase my financial security• Achieve financial independence• Safeguard my family• Understand more about my money• Give more to charity
  • As a minimum maintain thelifestyle I want under anycircumstances however longI live
  • Key phrases• So what?• Why?• What would need to happen for...?• Can you afford to do the things you want?• Do you have enough time to do them?
  • Assumptions• Inflation• Earnings growth• Investment returns• Tax• Mortality• Capital conversion
  • Real value of moneyAssumption Notional RealNAE 4.5% 1.5%Savings 2.0% -1.0%Investments 6.0% 3.0%School fees 6.8% 3.8%House prices 3.0% 0.0%
  • AssumptionsIn principle, simply as a planningassumption.....If you can’t fault the assumptions, it’sreasonable to accept theconclusions......
  • Net worthAsset ValueProperty £500,000Cash savings £68,000Investments £142,000Business interests £250,000Personal effects £50,000Pension funds £230,000Total £1,240,000
  • Liquidity ratio Cash & investments 21% £210,000
  • BudgetSource Amount per monthFixed expenses £2,150Variable expenses £1,100Total expenses £3,250Gross income £6,500Net income £4,575Disposable income £1,325Spendable income ???
  • Plan structure• Cohesive document• Logical progression• Language• Style & content• Action plan• Presentation options
  • Reviews• Essential• Review everything• Assumptions• Process• Presentation
  • Manage expectations
  • Key rolesAdviser ParaplannerLeads relationship Gathers dataPresents plan AnalysisProvides advice Prepares plan
  • “A poor financial planner is a poor financial planner”David Norton
  • Cash flow planning
  • Show client.....• If on target• What return is needed?• How much more ..... is needed?• When (or if) they can stop work• How much they can give away
  • Making sure you don’t runout of money!
  • Multiple scenarios• If all goes to plan• Someone dies• Serious illness• Retire early• Sell business.....
  • Risk profiling
  • A solution• Robust, repeatable process• In-depth discussion• Full understanding of risks• Don’t rely on risk profile tools• What return is needed?• Is any risk needed?
  • Investor behaviour
  • “We took risks, we knew we took them; things have come out against us, and therefore we have no cause for complaint.”Robert Falcon Scott
  • Cash flow tools
  • The market
  • The market
  • Calculators
  • Excel
  • Calculators
  • Goal seek
  • Solutions
  • Benefits• Better client relationships• In control• Greater fee income• Generational planning• No market moans!
  • Useful resources
  • A good read
  • www.moneyscopehq.com