All planning exercises, financial or otherwise, must produce a concrete goal. Without a goal, such planning activity is merely a dreaming exercise. In most cases, it will lead to unhappy client-advisor relationship. A goal sub-consciously instils discipline which help aligns the client’s limited resources towards a direction meaningful to him/her.A meaningful financial goal should have 3 items. First, be quantified into a dollar value; second, has a specific time horizon; third, a priority.This question is designed to enable client to think through meaningfully the purpose of investing, and its eventual beneficiary. FP should facilitate client in this process of helping the client to formulate the goals using credible financial planning techniques.
During the process of formulating the goals, FP should advise the client to place the money intended for investment in a risk free product, like saving deposits.
This financial goal will set the stage for asset allocation, re-balancing and portfolio release point decisions, and be prominently featured in the investment policy statement for subsequent review.
In situation where the FP exits or retires from the business, this information will also facilitate succession planning for the benefit of client and FP.
In situation where the economic cycle is heading south, this information will also be important for re-balancing or portfolio exit decision.
(This input will form the "Objective" in the IPS)
During the process of formulating the goals, FP should advise the client to place the money intended for investment in a risk free product, like saving deposits.
This financial goal will set the stage for asset allocation, re-balancing and portfolio release point decisions, and be prominently featured in the investment policy statement for subsequent review.
In situation where the FP exits or retires from the business, this information will also facilitate succession planning for the benefit of client and FP.
In situation where the economic cycle is heading south, this information will also be important for re-balancing or portfolio exit decision.
(This input will form the "Objective" in the IPS)
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