M9: THE FACT-FIND AND FINANCIAL PLANNING
Ø What is a fact- find?
o Identify a client’s financial planning needs;
o Quantity them; and
o Prioritize them based on the resources available for investment.
Ø A fact-find shows the current financial position of the person, where they stand today and their anticipated future changes
Ø A fact-find indentifies a client’s financial planning needs and points towards those needs that are the priority for the client.
Ø Objectives of a fact find are as follows:
o Identifying needs
o Gathering client data
o Analyzing client cash flows and
o Providing for anticipated changes
Ø Identifying needs: the prime objective fact-finding is to identify client needs in the areas of:’
o Protection
o Savings
o Investment
o Health insurance
Ø Gathering client data: this requires
o Knowledge of the personal details of each client, their dependants, finances and employment status.
o Existing health and life insurances and any existing pension provision.
o An understanding of the client’s personal aims, desires and objectives for the future.
Ø Analyzing client cash flows: Can be derived from
o Detailed analysis of client’s income from al sources and expenses.
o detailed review for the client’s existing capital resources
o liabilities that must be offset against them
o a positive balance indicates the likely amount available for financial planning purposes.
o If there is little or no surplus, little can be done unless the client is able to reschedule debts or reduce outgoings.
Ø Providing for anticipated changes
o Anticipated changes which will affect the client’s financial position
o Each change will have an impact on the amount that can be contributed in future.
o This helps to define the amount to which clients can afford to commit themselves now.
Ø Using – a fact find
o This most common form of fact – finding is a structured questionnaire. Fact finding involve the following:
o Structured interview: the steps are as follows:
§ Making the client feel comfortable and relaxed
§ Explanation of the fact-finding process and its prupose
§ The information fathering session
§ A discussion of priorities and the client’s personal concerns.
§ An agreement, in principle, of the main problems to be addressed by the adviser‘s report
Ø Fact finding forms: a fact- finding form is divided into separate sections covering the client’s details. These sections include:
o Personal details
o Family details
o Employment details
o Financial details
o Existing insurance and investments
o Monthly income and expenditure analysis ‘financial planning objectives and considerations
o Viii) future changes.
Ø Please note: where joint financial plans are required for, say, husband and wife or two business partners, the same information will be required for each person.
Ø Personal details:
o The client’s date of birth and state of health, including smoking habits and/or drinking habits will indicate eligibility for insurance polices and the premium rates to be paid.
Ø Family details:
o This information prompts questions n the extent of which clients need to provide protection against their own disability or death for their dependants’ benefit.
o Names, ages, state of health and occupation of the following will be record:
§ Spouse
§ Children
§ Parents
§ Other dependents
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