1.1 This Week's Focus This week's topic is - Overview of the financial planning industry This week provides an introduction and overview of the financial planning industry. The focus will be on factors driving the need for financial planning services, the development of the financial planning industry and industry overview. You will look at the source of future growth in financial planning and realise the value of financial planning advice. This week's objectives By the end of this week you should be able to: · identify factors driving the need for financial planning services · explain the development of the financial planning industry · define financial planning business models · outline the source of future growth in financial planning · explain the value of financial planning advice.
1.2 Introduction of Financial Planning Financial planning is the process that takes into account the client's personality, financial status, and the socioeconomic and legal environments, and leads to the adoption of strategies and use of financial tools that are expected to aid in achieving the client's financial goals (Warschauer 2002). A broad range of professionals provide financial advice to retail clients including: · Financial advisers. · Customer service staff at general insurance companies. · Customer service staff at banking institutions. · Insurance advisers. · Stockbrokers. · Accountants. · Employees of superannuation funds. Financial planning involves a synthesis of a disparity of areas such as superannuation, taxation, estate planning, trusts, home ownership, investments, debt and risk management, social security benefits, and annuities. These areas are considered as part of a comprehensive six-step process (adapted from Certified Financial Planner Board of Standards Inc. 2009) as outlined below: 1. Establishing and defining the client-planner relationship (service offered, remuneration details). 2. Gathering client data (income, debt, assets, liabilities, risk tolerance) and identifying client goals (short-, medium- and long-term). 3. Analysing data and identifying financial issues. 4. Developing and preparing a plan (recommendations). 5. Implementing a plan. 6. Monitoring and reviewing the plan (in line with economic and lifestyle changes). In this video, Christina and Richard Taylor describe their day-to-day lives, life goals and aspirations. They talk about how a financial planner has helped them realise their goals and made them aware of things they hadn't previously considered.
1.3 Need for Financial Planning Services Over the past decade, there has been an increasing demand for the services of financial planners. This increase in demand has come about because of a number of factors: · Government policy, which places greater responsibility on the individual for their financial wellbeing, and a decrease in government willing to accept responsibility in the long term. . An increase in the compulsory superannuation guarantee. All employees are obliged to save for their retirement and are becoming more informed about the choices available to them. . An ageing population-a large percentage of the population is concerned with both financial and estate planning issues, particularly Australia's 'Baby boomers' as they approach retirement. · The privatisation of Australian companies and floating of shares has brought thousands of