Our widespread access to resources and analysis tools enables us to assist with every aspect of your financial needs including,
Risk Planning (life assurance, critical illness and disability)
Business Needs Analysis
Advice on Wills and Trusts
Regular portfolio reviews, provide updated market information and trends, both locally and internationally. Together with our independent analysts we constantly monitor and re-balance your portfolio to accommodate any changes that may affect your ideal outcome. This will simplify the confusion that the entire investment spectrum process may present. In addition we have designed specific solutions according to your risk tolerance, life stage and needs.
The practical planning process Just a few years ago a survey was performed on a representative sample of 65 year-olds and the following startling facts were uncovered:
47% were dependent on relatives
31% were forced to continue working
16% were dependent on a state pension
6% were financially independent.
It is safe to assume that this situation has not changed much since, as the ravages of inflation and taxation have worsened over the years. These figures clearly illustrate the dire need for retirement planning, and would intimate that almost every person we meet would require some kind of advice regarding their future retirement. Retirement planning is more than simply contributing to a pension, provident or retirement annuity fund. The knowledge required to assist you in the planning of your retirement is a mixture of tax law, compound interest and time value of money calculations and investment strategy. We can also advise you in respect of your personal planning for retirement at different stages. Thus we can say that there are three stages of personal financial planning retirement advice.
Planning for retirement
A person who is say 36 years old will probably need advice on how to make sure that they have sufficient “retirement capital” on retirement date to ensure that they will be able to retire with an income that will enable them to live comfortably after retirement.
Planning at retirement
A person who is close to their retirement date may want to know what impact income tax will have on their retirement benefits, whilst a person at retirement may want to know how much tax free lump sum is available, how much to take as a lump sum versus an annuity and what type of annuity to choose.
Planning after retirement
A person who has already retired will need investment advice in respect of his retirement capital. The person planning their retirement may make sure that the retirement funds of which they are a member will provide the level of income that is required after retirement. If not, additional provision must be made by way of contributions to another retirement fund or another suitable investment vehicle. One of the first things that we will do is to determine the value of the retirement capital that you will have available on retirement date. We will then use financial planning software to compare it with the amount of capital you will need to provide your expected level of income after retirement. Determining your retirement goals It may be very easy for you to state that you require 75%, or 80% or even 100% of your income before retirement to be able to maintain your standard of living after retirement. This does not, however, mean that you has any real perception of their own needs or goals at retirement. To ensure your active involvement in planning for your retirement we will:
determine your current income requirements
determine your anticipated income requirements at retirement.
Wewill, however, take into account other circumstances which may change when you reach retirement, eg. your bond may have been repaid or your children no longer be dependants. Source: The South Africa FINANCIAL PLANNING HANDBOOK 2010
Investment planning focuses on identifying effective investment strategies according to an investor’s risk appetite and financial goals. There are a wide variety of investment options, including shares, bonds, property, bank deposits and offshore investments. Through investment planning, a Financial Advisor can identify the most appropriate fund selection and portfolio mix to suit each individual.
How it Works Investment planning begins after you have taken into account your current and expected income level and have laid down your financial goals. The important aspects of investment planning are: Capital growth versus regular income: Investors aiming at long-term goals focus on capital growth. A long-term investment will allow you to tide over rough times without changing your plans. Shares, Unit Trusts and real estate represent investment options for capital growth. On the other hand, if you’re investing to meet a short-term goal or to give you a regular flow of funds to complement your present salary, you should opt for income investments. These investments generate a regular flow of income in the form of dividends and interest and include fixed-income investments, such as bonds and cash (money markets). While making a selection, you should consider the tax implications and associated risks. Risk: Every investment option represents a unique risk-return trade-off. Typically, more risky investments offer higher returns in order to make it worthwhile for investors to take on the additional risk. Investment planning should take into account an investor’s risk appetite, which dependents on your current income level, savings, lifestyle and responsibilities.Determine your investment profile: This can be done by considering your risk appetite. There are mainly four types of investment profiles:
Conservative (Low Risk Tolerance): Such portfolios comprise mainly (about 70%) of income assets, such as fixed interest and cash.
Balanced (Average Risk Tolerance): This refers to portfolios with an equal emphasis on growth and income assets.
Growth (High Risk Tolerance): Such portfolios comprise mainly (up to 80%) of growth investments, such as shares and foreign currencies.
High Growth or Aggressive (Very High Risk Tolerance): This refers to portfolios with more than 90% of the funds in growth investments.
Review your investment plan with your Financial Advisor regularly: This helps in fine-tuning a portfolio to suit your current financial situation and a change in risk preference.
Benefits of Investment Planning Investment planning helps you:
Generate income and/or capital gains.
Enhance your future wealth.
Strengthen your investment portfolio.
Save on taxes.
The purpose of succession planning is to ensure that the wishes of a client are carried out and that a client’s chosen beneficiaries benefit on the death of that client in a manner that is in accordance with their intentions. Estate planning, which embraces succession planning, is directed at planning around the death of a client and seeks to ensure that succession takes place in a way that minimizes taxes and costs, and adequately protects the inherited assets. The need for a client to have a valid will is also obvious if a client wishes are to be known and implemented. Furthermore, a client may have decided to make use of “a trust” during their lifetime as part of an estate duty plan., or a client might want to form a testamentary trust on their death. We must be aware of the requirements necessary for the formation of both an inter vivos and a testamentary trust, and have some knowledge of the provisions of the Trust Property Control Act. The primary objective of estate planning is to produce a cost-effective plan that is in accordance with what a client, after relevant consultation, wants to achieve. All of the client’s relevant personal circumstances must be taken into account in considering a plan that is relevant for the client. The wishes and desires of the client must, therefore be properly incorporated into any trust that the client has established and also the will of the client. An estate plan must be seen as a plan that caters for the needs of the client while that person is alive, as well as catering for the needs of those whom they wish to benefit on their death. Most importantly, an estate plan must be commercially sound. Commercial soundness must always be the overriding guiding principle in any plan, whether estate duty, capital gains tax or income tax is sought to be minimised. In short we put the client in the centre of the planning process. Estate planning also should not be seen in isolation from retirement and other planning of a client’s affairs. All of the needs of a client should be taken into account. For example we should put the appropriate cover in place in the even of illness or disability and. where applicable, take out business assurance. We would also take into account the client’s group benefits, as well as savings and investments. Source: The South African FINANCIAL PLANNING HANDBOOK 2010
Financial Needs Analyses
What is a Financial needs analysis?A Financial Needs Analysis is the cornerstone of your financial plan. Unless you have established your needs and goals, your plan may be unrealistic. The first step towards getting your finances in order and being able to meet your financial goals is a properly constructed financial plan. This does not mean sitting down and drawing up a wish list. It means properly analysing your current financial position, your financial needs and wants, and how you plan to achieve your financial goals. The best way to do this is by having your Financial Adviser carry out a Financial Needs Analysis for you. This is not an elementary calculation , but a very thorough investigation of your financial affairs. Laying the foundation The key to the success of any financial plan is to know what you need and how much you can afford. The affordabilityof any plan is essential. It is unlikely that you will have sufficient money to meet all your needs and wants. A financial plan is all about balancing your needs and wants and prioritising what is really important. Balancing act Life is a balancing act of many risks. Financially, the main risk for everyone is not having enough money to meet your needs when they arise. There are some risks that you can manage on your own, such as having sufficient funds to pay for the education of children from your earnings; and some risks that you need to share with others, such as the risk of you dying before you’ve saved enough for the education of your children. You need life assurance to cover your dependants in the event of the unexpected, ie. your death or disability. There is no one plan that will suit everyone because there are five crucial factors that will independently affect everyone’s financial needs in a different way and to a different extent. These are:
Your Dependants; and
Many people make the mistake of simply guessing at a savings plan and how much life and disability assurance they need – and to make the matter worse, they think they can make the guess only once or twice in a lifetime. The result is that your financial plan can be totally out of line with what you and your dependants need at any given life stage. For example, you may have too much life assurance, but too little disability assurance, and your savings plans may be nowhere near adequate for important things like paying for the education of your children or your retirement. The solution to constructing a cohesive and affordable plan lies with a Financial Needs Analysis. A Financial Needs Analysis, will identify:
What you need to achieve
What you already have in assets
What you can afford and where to use your financial resources to the best advantage
Most people need the following:
Income protection or risk assurance against dying or being disabled;
Goal savings. This will include all your financial goals, whether short or long term;
Retirement savings. This should be treated separately from your other financial goals because of its importance; and
Health assurance. Your medical scheme as well as hospital and chronic disease assurance must be measured to see if they meet your needs.
The question is “How much money can you allocate to each of the above; and what will this buy you?” The best place to start is with how much risk assurance you need against dying or being disabled . When you decide how much risk assurance you need, you must take the following into account:
Disability. What you need if you become disabled;
Dependants. Whether you have dependants, how many, and their needs if you die or become disabled;
Your assets. The more assets you have, the less you need in assurance. If you are wealthy, you do not need as much risk assurance as someone with low accumulated wealth but a high income;
Your liabilities. What happens to your debts if you die or are disabled? The more money you owe, the more risk assurance you will probably need and the greater the necessity for a properly constructed, targeted savings and investment plan;
Your income and spending. Your current and future income and spending will determine the design of your financial plan, allowing you to decide on risk and/or investment priorities and what you can leave until later when you are earning more. A computer-based analysis tool will allow you to make changes to your financial plan to see what happens under different scenarios;
Your health. If you are healthy, you can take a greater chance of meeting your risks through your income than someone who is unhealthy;
Your current risk assurance. Assess your current cover for death and disability to see if you have too much or too little, bearing in mind any benefits you will receive from a retirement saving plan, whether it is employer sponsored or attached to a retirement annuity; and
Time period. You need to break your risk assurance into different periods. For example, you do not need life assurance to cover the education of children until you are 70. When assessing your life assurance needs, remember that you should aim to leave your dependants an adequate amount of money. Rather than leaving them immensely wealthy, you should use as much as possible to improve your wealth, particularly for your retirement.
Getting your priorities right Once you have assessed your life assurance and disability needs, the following priorities should follow:
Healthcare. Many people forget about healthcare cover until they fall ill or have a major accident. Then it is often too late;
Retirement savings. Never under-estimate your retirement savings plans or leave them out of any Financial Needs Analysis. You need to check whether your investments are on track to meet your targets at the retirement age you’ve set for yourself. Owing to variations in inflation and investment performance, you will find your retirement plans will need constant adjustment;
Goal savings for needs such as education of children; and
Goal savings for wants, such as an overseas holiday
A Financial Needs Analysis is not something you do once and find all the solutions to your problems. You need to review it on a regular basis, particularly when your circumstances change. The following are prime occasions for a Needs Analysis:
If you haven’t had one done in the past five years;
When you get married;
When you have children;
If you have been divorced;
If you have lost a spouse;
When you are about to retire; or
When you have started your own business.
Address: Suite 6, 22 on Main 22 Old Main Road Gillitts 29°47'17.1"S 30°46'40.9"E Telephone: 031 765 3204/9 FSP Number: 4679