The Benefits Of A Personal Financial Plan

In Ireland, a Financial Adviser is an individual whose primary focus is usually to sell financial products such as pension plans, investments or life assurance in return for which they are paid commission by a financial institution. There is nothing wrong with this approach as long as the client understands that it is usually a once off transactional matter for a product purchase providing the client has a real need for such a product.

Financial Planners on the other hand start from the perspective of a deep understanding of a client’s needs as well as their current ownership of financial products before addressing issues such as the availability of cash resources at different times in a client’s life as well as the tax and legal planning matters that arise over time.

Financial Planners can help clients to identify short and long term goals before assisting in drawing up a plan to achieve such goals before executing on the plan. Goals vary but can range from saving for children’s education, working through debt repayment, funding for retirement or even making decisions on charitable donations. A Financial Planning service is normally remunerated by the client paying a fee to the financial planner

Some Financial Planners specialise in different areas such as post-divorce planning, estate planning or retirement planning and may have additional professional qualifications in such areas.

Financial Planning embraces a range of services extending from a full root and branch review of all financial matters with time periods covering up to later life to a particular review that may be just focused on a specific matter such as impending retirement or an investment analysis. Each financial planner will also have to take into account issues such as tax residency and domicile, any non-Irish financial products as well as any goals or aspirations of the clients. In our experience the pricing of a detailed financial plan can start from €3,000 (+ VAT) and go higher if unusual circumstances apply. The fee for a once off analysis for a specific need can start from €1,000 (+VAT) and, again, may end up being higher if the matter being reviewed is somewhat more complicated than normal.

 In all instances, a prospective client needs to agree the fee level in advance of any work being carried out. If the financial planning process becomes somewhat drawn out where, for example, separate third party advisors may be required then it is normal for part of the fee to be paid to reflect work to date even though the financial plan may not be finalised.

A good financial plan will need to consider your personal goals and aspirations as well as the current and likely state of health and finances of you and your family. A foundation piece will address the areas of Taxation, Wills and Enduring Powers of Attorney. From that future planning for personal protection, retirement as well as saving and investment needs will be reviewed, all in a very detailed and analytical fashion. From these an estimate of your future expenditure and income will lead to the production of a Lifetime Cashflow Analysis through which you should get a far better understanding of how the various financial products will assist in your own financial future.

The production of a full lifetime financial plan will usually require several meetings with the client. If the client has a life partner, that person should be included in these meetings as most likely the potential outcomes will need to be considered by them as well.

At the end of the financial planning process the client should have a clear understanding of how their financial future might look like. Not that anything is ever written in stone as a financial plan will need to be reviewed each year or more often if changes in health, career, business or relationships occur.