Overview of Financial Planning


Financial planning cover image

As the population becomes more and more educated, financial service providers are also making a paradigm shift from a product-pushing role to a more advisory role. Financial planning should be the gold standard for anyone providing financial services so that the products sold isn’t just for the sake of selling but assist you to achieve your financial goals.

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Financial planning in a nutshell

OK, no sarcasm: Financial planning is planning your finances.

Wait! Stop! Put your pitchforks away!

You should be wondering how the hell do you even do that, right? For normal people like us, “financial planning” is little more than:

  1. Budgeting
  2. Tracking our spending
  3. Saving up

Essentially, financial planning is a process to help us achieve our financial goals more efficiently. It’s no “golden ticket” but one of its perks is similar to setting your GPS to a destination. You know where to go, and there are many roads you can use; financial planning may point the best course of action to take.

Proper planning requires you (or your service provider) to sit down and look at where you are now and what future goals are important to you. From there, you can plan the path to take and look for ways and vehicles to achieve this target.

Who can be a financial planner?

This is somewhat interesting. There are so many professions that can cross train into financial planning if they so wish! Some that provide this service somewhat in my opinion are:

  1. Bankers
  2. Investment brokers
  3. Insurance agents
  4. Real estate agents
  5. Lawyers

Honestly speaking though, many planners can be found in banks as well as frontline financial service providers. It doesn’t hurt to ask if they know about it or not!

Financial Planning – How does it work?

The Financial Planning Process

Essentially, doing a good financial plan for yourself should include 6 core steps:

  1. Knowing your financial or life goals
  2. Having the right data
  3. Knowing how to analyse the data
  4. Coming up with a plan
  5. Implementing the financial plan
  6. Frequent monitoring

 1. Knowing your financial or life goals

I believe, everyone has a dream they want to achieve. At least, people have goals they want to be successful in! These goals can be simple or they could be grand. Regardless, financial planning looks at the monetary aspect of things. Some goals include:

  • Saving up to buy a house
  • Planning a wedding
  • Accumulating funds to start a business
  • Getting ready for retirement
  • Saving up for children’s education
  • Protecting your family’s income from catastrophic events

And so on.

2. Having the right data

By having the correct data, you make the next step (analysis) easier by ensuring an accurate “financial report card” is generated. Literally, the GIGO (garbage-in, garbage-out) concept applies so if the data is good, the subsequent steps would be all the better.

The data you need to have are, at minimum, things like your income, expenses, assets, liabilities and your risk appetite.

3. Knowing how to analyse the data

This step takes a bit of technical and financial knowhow to do. It’s basically looking at the data you’ve collected and drawing conclusions compared to standards. It is from here that your plan can be cooked up.

Analysis involves calculating and determining financial ratios, the amount of money needed in x years, how much insurance coverage you need and more importantly, the difficulty or ease of achieving your goal.

4. Coming up with a plan

So now you know how good (or bad) your financial health is. Next is to draw up a plan to reach your goals that you’ve set in Step 1. This is the part where you start shopping around for financial products & services as well as investment vehicles to bring you closer towards your financial goals.

The things you’ll likely look into at this point are:

Once you’ve got an idea what you should be doing, it’s time to put it into action!

5. Implementing the plan

A plan is as good as a paper napkin wiped once or twice if you don’t carry it out. This is the crucial point where you can take your financial future into your own hands! Carrying out your plan could be:

  • Cultivating a saving habit so that you can reach a good emergency fund amount,
  • Consistently investing a fixed amount every month,
  • Or simply drop money on a financial product.

I know, “simpler said than done”, right?

Well, with your plan in hand, you know what actions you should be taking. But at the end of the day, only you can make the decision of whether to go for it or not. No financial planner, consultant or genie can force you into it.

6. Frequent monitoring

Unfortunately, the hard work you’ve done to get here is not just a one time thing. You need to revisit your plan and strategies over time to see if they’re working out and adjust to needs. This could be in a month (for severe cases), or normally, semi-annually or yearly.

And what happens when you review? The whole process begins anew! Many things in life change and a lot of things can happen in a year so it’s usually good to check back at your plan from time to time. This way, you can adjust your strategies according to your investment needs or even from changing your financial goals!

Is the plan a sure thing?

The planning itself is dynamic. That is to say with the monitoring, you will be able to adjust according to certain events like how:

  1. Nobody can predict how the financial market behaves. Potential returns are just that: Potential, not guaranteed.
  2. Personal goals change from time to time. Life is pretty dynamic; even different life stages usually translates to different priorities.

As for the “sureness” of it; well, no one can really guarantee you a million bucks in 20 years, right? What the planning does is provide us with the first step in charting a roadmap towards our goals. Some people may exceed their expectations but some may also fall short. However, even for the latter you would still be very far ahead from someone who didn’t plan at all!

How do I get in touch with someone who knows Financial Planning?

As I mentioned above, the most accessible place you can look for financial planners is the banks and within the financial sector. In Brunei, there are also insurance agents who are proficient in financial planning.

And you’re in luck! You can get in touch with these insurance professionals through the contact form here:

Financial Planning Contact Form

They will contact you very soon after receiving a contact request. Why not give it a go? We may learn something new or two!

Conclusion

Once again, I believe that financial planning should a gold standard in the financial industry. That being said, it is relatively young in Brunei.

As the world progress around us, there will be a need for competent financial planners to step up to educate the laypeople. That’s also on top of the main duties of planning towards our financial goals. Safe to say, it’s baby steps and slowly but surely, with good planners coming into the industry, we have a chance at a highly financially literate population.

And that’s pretty exciting.

“If you fail to plan, you are planning to fail!”

– Benjamin Franklin

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