It's often said that many couples spend more time planning their wedding than they do planning their financial future.

Wealth and financial independence obviously don't happen by accident, but they do happen with planning, discipline, systems and support.

And that's why financial planning is so important.

What is financial planning?

Financial planning is the process of:

- defining your financial goals such as buying a house, additional investment properties, shares and other investments to build up your asset portfolio and net worth

- defining your lifestyle goals which are the reasons underpinning your financial goals such as living where and how you choose, funding education for children, family travel and ensuring you have an independent and comfortable retirement

- creating a plan of action with steps to take to achieve those goals

- monitoring progress and taking corrective action as needed to stay on track

Why financial planning?

Let's face it. Managing your finances, savings and investments is more complex today than it ever has been. There are so many options which are changing all the time, so it's not always clear which are the right choices for your own situation.

It's a full-time job to stay up-to-date with all of these complexities, which is why the financial planning profession exists. We all need help to reduce the complexity down to a simple plan that is right for each of our individual family circumstances.

And once you have your financial plan in place, it's important to update it on a regular basis. Things change. Whether you're approaching a major life event-think births, marriages, divorces-or you're dealing with an expected event such as the death of a loved one, or illness or injury, it's crucial your financial plan and financial affairs are adjusted to deal with your new circumstances as they change.

6 things to look for in a financial planner

We've all heard and read of financial planning horror stories in the media. To protect yourself, it's crucial your financial planner has these traits:

1. Independence: Don't take advice from 'financial advisor' who works for a bank or financial institution who will, therefore, only recommend their employer's own savings and investment products. That's a guaranteed way to get biased financial advice because these 'advisors' are, in reality, just sales people selling financial products. They are striving to hit their sales targets, not to set you up for a financially prosperous future. Also avoid getting 'financial advice' from someone who only recommend one type of asset class such as only real estate or only shares.

2. Fee For Service: Avoid using financial advisors who are rewarded on commissions where they earn a percentage of what they get you to invest. Fee for service financial advice ensures unbiased, non-commission-driven advice because your financial planner is rewarded for the services provided-just like a lawyer or accountant. When a financial adviser is paid by the fund he or she is recommending, conflicts of interest can arise. Paying a financial adviser a fee for service removes any incentive to recommend a fund for any reason other than the merit of that fund. You need to be the only one paying your financial advisor.

3. Qualifications: Financial planning has evolved into a highly regulated profession and industry. Qualifications and licences are necessary. When considering using a financial planner, ask for proof of their qualifications-copies of degrees, diplomas and certificates-and then do your homework on who issued these and what the qualifications entailed.

4. Experience: Ask the financial planner for case studies and references so you can check out their track record in helping people in similar circumstances to you. Ask them how long they have been a financial planner; what attracted them into financial planning; and what they enjoy most about it. You're looking for someone who is in it for the long haul, not just as their career but as their vocation.

5. Communication skills: First and foremost, your financial planner should be a great listener. They should let you feel heard and not interrupt you. Your financial planner should also speak your language and not use jargon and acronyms that make your eyes glaze over. Being able to explain complex topics in simple and relatable ways is a crucial skill for a financial planner. How can you make important decisions about your money, when the proposed strategy has not been explained in an easy-to-understand way?

6. Accessibility: Make sure the financial planner you choose is available throughout the year to answer your questions as they arise. You don't want a relationship where you only communicate once a year, because you need to keep other up-to-date of changes. 

4 signs you need a financial planner

It's fair to say that while not everyone needs a financial planner, most people do.

Here are 4 signs you would benefit from using a financial planner:

1. Lack of a plan: If you don't have a written financial plan with clear and realistic goals, specific dollar amounts quantifying where you are now and where you want to be at defined points in the future, specific dates and specific practical actions, then you need a financial planner.

2. A feeling of overwhelm: If the complexity of the modern financial world makes you feel overwhelmed to the point where you don't take action, then you need the guidance and support of a financial planner.

3. Not getting ahead: If your net worth-the total of your assets (house, investments, cash) less the total of your liabilities (mortgage, credit card balances, other debts)-is not increasing each year, then you need to put a plan in place to achieve that. A financial planner will provide that.

4. Lack of a financial mentor: If you don't have a trusted person in your life who you can talk with about your financial affairs 'warts and all', and who can give you wise, unbiased advice, then you need a financial planner. We all need someone to check in with speak to before making a big purchase or investment decision.

Practical examples of advice a financial planner can provide

A financial planner can advise you on a range of practical areas including:

  • How to budget and better manage your income to boost your savings
  • How much you need to save each month to reach your goals
  • What rate of return you will need to earn to achieve your goals
  • What investment risk is appropriate, given your goals and risk tolerance
  • How much to keep in your emergency fund
  • What type of mortgage and bank accounts you should have
  • Whether you should pay off your mortgage or refinance
  • What types of insurance you need and your ideal level of cover - this includes life insurance, income protection, disability and long-term care and sometimes property, health/medical and other insurances
  • What changes might improve your tax situation - this would then be discussed with your tax accountant
  • What types of retirement strategies and financial accounts to use
  • Estate planning advice on how to structure your affairs so that your assets end up going to the people you want them to - this is about much more than simply having a will

Where a good financial planner starts

A good financial planner takes the time and has a thorough process to first make sure they fully understand you and your goals before making recommendations.

If you meet with someone who quickly starts talking about a financial product-even if they call themselves a financial planner-run a mile. They are probably just a financial salesperson. A good financial planner first gathers account statements and data on all aspects of your financial life.

Your next step

It's a big decision to choose a financial planner who is right for you.

If you'd like to discuss with us your options on the financial planning front, just get in touch and we'll make a time to step you through our approach to financial planning. Of course, there's no cost or obligation for this initial meeting.

Wedding plans are important. Your financial plan is even more important.