FINANCIAL PLANNING 1
What are the types of financial needs that exist in most households?
spending, borrowing or credit, insurance, saving, investment
Is a primary goal to help them achieve many of their lifestyle objectives or needs.
Wealth creation
Is investment advice to create a capital base sufficient to provide income for clients and their dependants after they retire.
Retirement funding
Is about maximising income from the client’s available assets, their investment portfolio, property and superannuation.
Retirement income
Unsecured notes, debentures and asset-backed securities used by companies to raise medium and long-term funds.
Corporate Bonds
Questions that build rapport, show empathy and often begin with ‘So you feel that …?’ or ‘So this experience has left you feeling …?
Reflective questions
A file or document that details aspects of a business and how each situation or task is to be completed and by whom. It should standardise every aspect of the business.
Procedures manual
Normally occur as an alternative to borrowing or credit to fund a future purchase.
Short-term savings needs
Fee-for-Service Models that is another option for financial planners with a range of clients with different needs
Hybrid Style
The business does not have ownership links with a financial product provider such as a bank, superannuation fund, insurer or investment manager.
Non-aligned dealer group
Are likely to have their own areas of specialisation, such as business activity statement and income tax returns, tax advice, business structuring and accounting and SMSF administration.
Accountants
Type of insurance where the risk is temporary because the circumstances that create the risk are for a limited period.
Short-term insurance
It supervises these financial institutions to ensure they meet prudential standards, are in sound financial condition and have adequate and effective governance and risk-management systems.
Australian Prudential Regulation Authority (APRA)
Investment specialists who pool money from individual investors and invest on their behalf.
Fund managers
It requires financial service providers to adequately identify their clients and report suspicious transactions or transactions over a certain threshold.
Australian Transaction Reports and Analysis Centre (AUSTRAC)
The sum of incomes such as wages, salaries and business profits
Income approach
Since 1999 ______ has been responsible for monitoring and promoting market integrity and consumer protection across the financial system.
ASIC
Developed by a 19th century economist and philosopher, Vilfredo Pareto. The principle states that most results achieved by any work group or individual are achieved by a relatively small number of activities.
The Pareto principle
The term used to describe giving financial product advice — the process of developing strategies to assist clients in managing their financial affairs so they can build wealth, be financially secure and achieve their lifestyle goals.
Financial Planning
The return from deposit products will usually be less than that from fixed interest, shares and property investments.
Long-term savings needs
A contract that is usually non-cancellable by the insurer even when the risk of the insured person changes.
Life Insurance
cash, fixed interest, property, equities (i.e. shares), alternatives (e.g. commodities, derivatives, infrastructure).
Approach where the value of goods and services produced by industry minus the costs of production.
Production approach
Usually target larger purchases such as education, travel, home renovations and motor vehicles, where credit is not available or not preferred by the saver.
Medium-term savings needs
Are usually packages based on the planner providing the client with a range of services.
Service-based fee