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

1. Financial planning
Richard Allum CFP APP

3. Those that can’t see the
future.....

4. Those that can’t see they
can’t see the future…

5. “A professional service for
clients who need objective
assistance in organising their
financial affairs to achieve
their financial and lifestyle
goals”

6. Is cash flow
planning compulsory?
Institute of Financial Planning

7. Lifetime planning
Estate planning
Savings strategies

8. Investment risk
Shortfalls
Getting real

10. Creating ways to help
people make more sense
of money

11. Framing
Context
Engagement

12. “Financial plans
are worthless”

13. “The process of
planning is invaluable”

14. Planning process
1. Establish goals & objectives
2. Gather data
3. Analyse information
4. Develop plan
5. Implement plan
6. Monitor and adjust

15. Things in common
1. Clear service proposition
2. Platform & investment process
3. Agendas
4. Questionnaires
5. Team approach
6. Charge

16. Data, objectives
and assumptions

17. “One of the keys to successful
financial planning is learning to
let go of precision.”
Carl Richards @behaviorgap

18. No objectives..no plan!
• Clear & concise
• Prioritised
• Timescales
• Agreed & written down
• Reviewed regularly

19. Financial objectives
• Increase my spendable income
• Pay less tax
• Improve retirement income
• Increase investment returns
• Pay off mortgage

20. Emotional objectives
• Increase my financial security
• Achieve financial independence
• Safeguard my family
• Understand more about my money
• Give more to charity

21. As a minimum maintain the
lifestyle I want under any
circumstances however long
I live

22. 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?

23. Assumptions
• Inflation
• Earnings growth
• Investment returns
• Tax
• Mortality
• Capital conversion

24. Real value of money
Assumption Notional Real
NAE 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%

25. Assumptions
In principle, simply as a planning
assumption.....
If you can’t fault the assumptions, it’s
reasonable to accept the
conclusions......

26. Net worth
Asset Value
Property £500,000
Cash savings £68,000
Investments £142,000
Business interests £250,000
Personal effects £50,000
Pension funds £230,000
Total £1,240,000

27. Liquidity ratio
Cash & investments
21%
£210,000

28. Budget
Source Amount per month
Fixed expenses £2,150
Variable expenses £1,100
Total expenses £3,250
Gross income £6,500
Net income £4,575
Disposable income £1,325
Spendable income ???

29. Plan structure
• Cohesive document
• Logical progression
• Language
• Style & content
• Action plan
• Presentation options

30. Reviews
• Essential
• Review everything
• Assumptions
• Process
• Presentation

31. Manage expectations

32. Key roles
Adviser Paraplanner
Leads relationship Gathers data
Presents plan Analysis
Provides advice Prepares plan

33. “A poor financial planner is
a poor financial planner”
David Norton

34. Cash flow planning

35. 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

36. Making sure you don’t run
out of money!

37. Multiple scenarios
• If all goes to plan
• Someone dies
• Serious illness
• Retire early
• Sell business.....

38. Risk profiling

39. 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?

40. Investor behaviour

41. “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

42. Cash flow tools

43. The market

44. The market

45. Calculators

46. Excel

47. Calculators

48. Goal seek

49. Solutions

54. Benefits
• Better client relationships
• In control
• Greater fee income
• Generational planning
• No market moans!

55. Useful resources

57. A good read

58. www.moneyscopehq.com