The 7 Key Elements To “Real” Financial Planning

It doesn’t matter your age or career status, everyone should be thinking about their life in retirement.

We all want an Awesome Independent Retirement. But unfortunately, far too many Australians are not making the right decisions today, which will undoubtedly hurt them down the track.

Don’t worry, this isn’t completely your fault. The reality is that many financial planners don’t actually do any financial planning. In fact, you’ve probably already come across the ‘financial industry triads’ – the big banks and insurance companies with their armies of salespeople dressed up as financial advisors or financial planners trying to sell their products. It might sound counterintuitive, but some financial planners are simply ‘investment salespeople’ posing as planners.

The role of a REAL financial planner is to firstly, understand what you want to achieve, then map out an actual, actionable plan to get you there. We call this “real financial planning” and it is all about getting a clear picture of your circumstances and building smart strategies to help you reach your financial goals.

To get a better understanding of what ‘real’ financial planning looks like, we can break it down into seven key elements.

1. “Real” financial planning requires a genuine written financial plan

Many studies have shown over the years that you are nearly 50% per cent more likely to achieve your goals if you write them down. In real financial planning, having a written plan is the cornerstone of the entire process.

It’s imperative that you know exactly what you want to achieve, then you can start planning how you’re going to get there.

A good way of looking at a written financial plan is that it is similar to developing a business plan. You wouldn’t start a new business without first doing a deep dive into how you’re going to grow that business and what steps you’re going to need to take to make it happen. It’s exactly the same when planning how you’re going to build towards your retirement. Everything starts with a written financial plan.

2. Your written plan is the your ‘northern star’ for all important financial AND investment decisions

Once you’ve got a written plan in place, it must guide all your important decision making. This process keeps you on track and will help you avoid trouble further down the line.

Over the course of our working lives, we are often going to be tempted to look at various investment opportunities or even things like expensive purchases or overseas trips.

If you’ve got a written plan in place, you can assess whether an investment is keeping with where you’re trying to go.

For example, it might be a good time to purchase an investment property. However, if that property is going to increase your debt and weigh on your cash flow, then it might not be the right time for you personally. It’s all about tying your actions into your overall long-term plan.

3. Your investments are important, but they are NEVER the main focus

One of the biggest mistakes many people make is thinking that financial planning is simply selecting the ‘right’ investments.

Investments are a critically important piece of your Awesome Independent Retirement’s puzzle. However, they’re the fuel that makes the engine run that pushes you towards your goals – but they’re never the main thing.

The vast majority of the financial planning industry likes to put their attention on certain investment opportunities. We see this with stockbrokers or even investment newsletters. The focus is on investment analysis, which is vastly different from financial planning.

Putting too much emphasis on trying to select the right opportunity without considering if it’s right for your goals is one of the key reasons most people never achieve what they are trying to do.

4. Your plan has a list of strategies

A proper financial plan makes sure you’re only using the right types of strategies to reach your unique goals.

At McGregor Wealth Management we use a ‘strategy map’ methodology that lays out the types of strategies appropriate for each of our clients. Surprisingly, most of our clients’ financial plans are not complex or complicated – they’re simply a mix of the basics, executed correctly.

5. The plan is reviewed regularly

The reality for most people is that life is going to throw us the occasional curveball. Whether professionally or personally, our circumstances change.

While a key step in the real financial planning process is putting a written plan together, we understand that things change and we’ll need to address the plan as we go.

As your career or business develops, it’s likely that your income will grow and that will mean we might need to make some adjustments.

When we review a plan, we review your current situation and assess whether the strategies are moving you towards your goals. If either your circumstances have changed, or your goals have changed, or the strategies aren’t pushing you in the right direction, then we review and revise everything to get you back on track.

6. The plan covers all the important things: insurance, wills, loans, etc. not just the fun things

While it might be fun to watch the value of our investments grow each year, real financial planning is often about dotting the i’s and cross the t’s.

That means its important to be regularly reviewing all the small things that could ultimately make a big difference. For most people, that means monitoring your mortgage rates, updating your will regularly and have the right types of insurance and levels of coverage.

7. A clear action list is in place at all times and reviewed regularly

The final element to real financial planning is a having a clear action list in place to tells us WHAT we need to do, and WHEN.

As a part of the review process, this action list must be updated regularly and is often the first port of call, when making any decision.

Unfortunately, most financial planners don’t do “financial planning”. However, if you sit down with your financial advisor and work through these seven key elements, you’ll be well on your way to achieving the retirement you deserve.

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Can We Help With Your Investment Strategy?

Over the past 20 years, the team at McGregor Wealth Management has helped hundreds of hard-working families save tax and maximise their investment so they can accelerate their wealth.

Unlike most financial advisors who focus on market-based investment strategies (often driven by alliances with big financial institutions), the we take a more holistic and client focused approach to help you accelerate your wealth, so you can maintain (and ideally improve) your income and lifestyle in retirement.

Our process is simple and begins with a Free Wealth Potential Strategy Session, during which…

• You’ll get a clearer picture of where you are right now in your financial journey, and what you can do in the next few years to save tax and maximise your returns (Note: Many people are shocked to discover how much positive difference our strategies can make to your wealth position in retirement)
• You’ll gain clarity over what you want your retirement to look like, and a realistic plan to get there without spoiling your current lifestyle
• You’ll learn about legitimate ways to redirect tax dollars, so you not only keep more of what you earn, you leverage it into passive income for retirement
• And you’ll explore strategies to quickly boost your super and savings, so you can maximise your investments, accelerate your wealth, and retire sooner and richer
• Although many participants realise there is a ‘gap’ between where they are currently, and where they’d like to be, they are relieved to discover there is a realistic way to close the ‘gap’ and achieve a more exciting ‘wealth potential’.

By simply going through this exercise, many people feel more in control of, and optimistic about, their financial future.

To explore how we can help you understand your wealth potential, get in touch to arrange a Free Wealth Potential Strategy Session.

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