Basic Financial Concepts


When hiring a financial planner it is the basic financial concepts that set a professional financial planner apart from another financial planner advisor who may have been trained to focus on only some of the financial concepts. A financial planner program prepared by a personal financial planner will help you set and reach your personal short-term and long-term life goals.

Legal aspects. Select a financial planner you can trust and who understands contracts, knows the laws that govern them and can explain the procedures of a breach of contract. Your financial planner advisor should be able to distinguish between real and personal property and between personal and corporate valeurs.

Estate planning. Your estate financial planner understands the civil-laws related to restate and to insurance issues. S/he is able to properly explore estate-planning concepts, examine advanced risk-management techniques and apply them the right way.

Insurance. The insurance expertise of your financial planner and his or her financial planner resources help you make the right choices. Decisions can indeed be difficult since the industry offers a vast selection of products and services including life insurance, disability, accident and sickness insurance, investments, underwriting, pricing, claims, planning taxation and risk management.

Finance. Your financial-planner prepares your net worth personal financial statement and analysis along with the cash-and-debt management issues that stem from it. S/he takes into consideration the time value of your money and the influence of macro and micro economic factors in the financial calculations of your personal finance.

Taxation. Your personal financial planner organizes, evaluates and analyses your financial information and then designs and implements your financial plan. Your personal plan could include concepts such as portfolio-management, tax-planning strategies, administrative provisions, tax implications of residency, income splitting attribution rules and taxation trusts and businesses.

Investment. Your financial planner helps you take smart investment decisions based on your needs. S/he will analyse the risk-return relationship of your investments, explain exchanges and clearinghouses, measure your mutual funds performance and determine a fee structure.

Retirement. Financial independence and security in retirement is a central function of financial planning. Financial planner standards require that your financial-planner identifies your retirement planning opportunities and potential sources of revenue during retirement.

Remember, your personal financial planner must understand the legal requirements related to financial planning, must properly explain your rights and your responsibilities and must establish an ethical and trustful relationship with you.

Montreal PROFESSIONALS KIT

Basic Financial Concepts by Rachel Louise Barry

Thanks to the CIFP, learning about the basic financial planner standards and putting them into use is not as complicated and as stressing as it may seem at first.

The duties of a financial planner begin with putting in writing the terms of your engagement.

You and your financial planner will determine the scope of your financial planning association, establish the responsibilities toward each other, set the time frame and agree on a financial planner fee.

The engagement is then signed by both parties.

Your financial planner will then discuss with you your needs, your priorities and your goals. S/he needs to gather all your financial information before she can make any recommendation and will require a signed agreement before s/he can implement any financial planner program or investment.

Your financial planner will then analyze the information you supplied, evaluate your financial situation and determine if all your goals, your needs and your priorities can be attained and to what extent.

After having clearly identify your goals and properly evaluate your financial situation, your personal financial planner will analyze various suitable financial strategies. S/he will then give you his or her best recommendations and provide you with a personalizedfinancial planner report.

Now, you and your financial planner will discuss the content of your financial planner report, exchange comments, ask questions, bring changes and agree on time frames and mutual responsibilities. Your financial planner will then go ahead, take action and implement your financial plan.

Last but not least, you and your financial planner will meet on a regular basis to re-examine and re-evaluate your financial plan.

It is important to regularly assess the progress of your financial plan, make sure the results are according to plan and bring all the necessary changes when and where they are needed.

Remember, it is the integration of the six fundamental financial components - financial management, tax planning, asset management, risk management, retirement planning and estate planning - that distinguishes financial planning from product recommendation.