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A practical approach to financial planning

Sep 28 2016 16:24
Carin Smith

Somerset West – Trust is one of the most important aspects of the relationship between a financial planner and his client, according to Wouter Fourie, a Certified Financial Planner (CFP).

“If there is no trust in the process between you and your client, then there is no business, only costs and your business will go down," said Fourie at a retirement and investment event hosted by the Financial Planning Institute (FPI) at the Lord Charles Hotel in Somerset West.

“On top of that, if clients do not understand you, they will not trust you. So my approach is to keep it simple. The financial services industry has sown confusion with its vast number of products.”

According to Fourie, a financial adviser should listen to his clients and speak at a level they understand. He also finds it is useful to present information to clients in visual form. This can then be followed by a detailed document.

He emphasised the importance of having a process to follow with clients and prospective clients in terms of financial planning.

He uses a 6-step method:

Step 1

Establish and define the professional relationship. Inform the prospective client of your competency. Also describe the process of financial planning to the client and show the value proposition you are making. Document the process, make it visual.

It is also important to inform the client about the risks involved and to determine the client’s risk profile.
“Explain the different costs involved and what a client will actually be paying,” said Fourie. “Construct a portfolio for the client.”

Step 2

Collect information about the client and his goals and dreams.

Step 3

Analyse and assess the client’s financial status.
“Only on approval of our quotation will we proceed. We provide a written quotation for services to be rendered and have three different fee models,” said Fourie. “Clients must see the value add.”

Step 4

Develop the financial planning recommendations and present them to the client in writing and if the client argrees, he signs off on it.

Step 5

Implement your financial planning recommendations.

Step 6

Review the client’s financial plan periodically.

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