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What does a financial plan look like?

Aug 16, 2021

I often write about the importance of having a financial plan – knowing your goals and how you are going to achieve them. But it is about more than just a financial plan. It is also about how you want to live your life and whether that plan reflects your values.

I came across a great blog by financial planning company Client Care about the three things you need to know about your financial plan. I felt it was worth sharing.

Three things you should know about financial plans

If you’ve ever asked someone whether they have a financial plan and been met with a blank stare you are not alone.

Too often do we speak with prospective clients who have no idea what a financial plan is, how it is made, and what it does for them.

Possibly the worst part is that those clients have often dealt with another adviser.

1. Your financial plan should include the obvious and not-so-obvious things of your life

Everyone with an adviser should have a financial plan that they have been part of creating. This plan should cover all aspects of a client’s life such as the obvious: education, retirement, and risk planning but should ideally look at far more than this.

A well-structured financial plan would also include life transitions, investment strategies, and cashflow planning.

These are some of the vital parts of any financial plan that need to be discussed in depth with your adviser both initially and in your annual review meeting.

2. You need to understand your financial plan

It’s great if you have a financial plan (or are on the phone right now with your adviser to get one!) but do you understand it? Do you have access to it at any time to check up on important information?

Your financial plan will lay out future actions that you need to take and how they will affect your plan such as: how often you replace your vehicle and at what cost, when are you able to reduce your risk cover, and how trade-offs such as working longer, saving more, or targeting a higher return can make a difference to your desired outcomes.

All of this information should be easily accessible either online, on paper, or through a visit to your adviser so that you can stay on track and make informed financial decisions.

3. Your financial plan is fluid

A financial plan is fluid and needs to be reviewed annually; you want to work with an adviser who has this as part of their business and relationship process.

Annual reviews allow you to make adjustments to the plan if necessary. Maybe your child decided not to go to University, or perhaps you need a new car sooner than you thought. These annual reviews allow you to check in with your adviser about all the things that life is going to throw at you—the bad and the good!

Without this review process, you are most likely not going to get to where you want to be because you are not adjusting for the changes that are affecting your finances.

If you need to ask your adviser whether you even have a financial plan, then you’re doing it wrong (and so are they!).

A good adviser will make sure you have a financial plan in place that works for your specific needs and take the time to show you how it works.

You should have a clear understanding of your financial plan and the journey ahead of you as you build your life and make changes to that plan when you need to (along with your adviser).

Next time someone asks if you have a financial plan, your answer should be: “Yes, and I understand it too!”

This post was reproduced with permission from Client Care. Client Care was founded by Dirk Groeneveld in 2002 and focuses on lifestyle financial planning. Dirk’s passion for helping others with their life-plan has resulted in a business that aims to educate as well as advise.


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Maya Fisher-French author of Money Questions Answered

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