Financial planning goes beyond choosing the right products

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JIMMY MOYAHA: Sometimes in financial planning, the most important steps are the basic steps, those that happen at the beginning that help you lay the foundation for good financial planning habits. We’re going to take a closer look at one such step and that is a financial needs analysis.

I’m joined on the line by Liberty financial advisor with IWCP, that is the Insurance and Wealth Creation Professionals, Maxine Muller, to take a closer look at this and see what we make of it.

Maxine, lovely having you on our show. Thanks so much for taking the time. What is a financial needs analysis and why do I need one as someone going through a financial planning journey?

MAXINE MULLER: Hi Jimmy, thank you so much for the opportunity today and for having us.

This is such a very important topic to me because sometimes people just think that financial planning is choosing a couple of products and putting it in a basket.

But a financial needs analysis is really about understanding what, at the core, is important to that person, what financial position they’re in currently, what their cash flow looks like, what’s really important to them, what their goals and aspirations are – and then we build from there.

So it takes the guesswork out of it. It really is just about making sure that you build it around the person’s life and not around financial products.

JIMMY MOYAHA: Maxine, how often do I need to do this? Because it sounds very much that whilst it is essential at the start of a financial planning journey because of how dynamic life is, I can imagine it means then that at some point circumstances might change and I might need to do this more than once in life.

MAXINE MULLER: Jimmy, people say that you should do it around milestone events.

I normally tell people that I just focus on it in the month of my birthday as a reminder that a year has passed.

And when those milestone events do happen, it is easy for you to remember, oh my goodness, it’s going to be a big difference.

Me having a new child or me buying a new home or me starting a business, those ones are easy triggers.

But to have that yearly reminder when it’s your birthday, make sure you reach out to your financial advisor and have the financial needs analysis updated because life happens every day, and what part of our lives is not taking our finances into account.

JIMMY MOYAHA: Maxine, when we take our finances into account, we are often confronted with a lot of decisions to make, especially with the ever-changing investment landscape that is out there at the moment in the markets.

There is all manner of new things, like artificial intelligence [AI], that can claim to provide you with reasonable financial advice and financial expertise.

You touched on something quite important earlier around the decisions being made around money being very personal. That also makes them very, very emotional decisions. Can AI replace that emotion?

MAXINE MULLER: Another point that I’m extremely passionate about.

Online platforms and artificial intelligence are great tools. We as financial advisors even enjoy using them, because it gives us a little bit of a deeper insight into the little blind spots that we might have.

But it does exist for refining. It is very heavy on who the person is putting in the information. It is very prompt-heavy.

So if you, as a layperson who is not a financial planning professional, goes and puts this information into AI or any of the other tools, you’re doing it with no base knowledge foundation, and it’s very [easy] to misinterpret the output or for the output to be skewed according to what you actually want it to be.

Although it is a great tool and we all use it for the better of our clients and of our businesses, it’s never going to replace that human insight or that judgment or that emotional understanding, like you said, of a lived experience as a human being.

JIMMY MOYAHA: Maxine, when we look at our financial needs, requirements and perhaps the conversations that we should be having with financial advisors and regulated officials around these financial decisions and these financial questions, what are the next steps after financial needs analysis that can be implemented, perhaps by the person that’s had the analysis done, or somebody who’s looking to get just a better picture of how their own financial planning journey is going?

MAXINE MULLER: The point of having the financial needs analysis is to assess, like you said, where you’re at right now and where you’d like to go.

We will then come up with a proposal on what can fit your current affordability in order for us to take you there.

So it can be from risk mitigation to building retirement investments and other short- and medium-term goals. That’s what it will all encompass.

It doesn’t mean that it’s just a particular product at a particular time. It really is going to change with you over time. No one tells us what to do with the money once we start working, we’re just told to get a great education and start working, but no one actually says do this in order to achieve that.

Two people earning the same salary will have a very different plan based on what their priorities and their goals are. So yeah, it’s something that that grows with you over time.

JIMMY MOYAHA: Maxine, before I let you go, I want to take a look at those individuals who perhaps haven’t had a financial needs analysis done.

You’ve made financial decisions, you’ve entered into financial agreements – whether it’s investments, whether it’s property, retirement planning – you’ve entered into the world of financial decisions without a financial needs plan. Is it too late for me at that point?

MAXINE MULLER: Definitely not. It’s never too late. I know that sounds a bit cliché but it’s definitely never too late.

Life happens every day, and we can always make sure that tomorrow is that bit better.

My biggest advice would be to connect with somebody you can trust, somebody who puts all the information out in front of you that you can clearly and logically follow, and that makes you feel comfortable that you’re taking these steps for you.

It’s going to be difficult, given that we weren’t all raised with the [advice] that you need to have a financial advisor like you do a lawyer or a doctor.

But just like those professionals, we do need to find someone who we can grow with and walk this financial journey with to enable us to live full and financially free lives.

JIMMY MOYAHA: Living full and financially free lives starts with making the correct financial decisions. It starts with financial planning and making sure that you understand what your financial needs are as an individual.

That being said, this conversation, folks, is certainly not investment advice, but if you are looking for investment advice, speak to regulated professionals and get the correct assistance that you require.

We’re going to leave this conversation on that note. Liberty financial advisor with IWCP, Maxine Muller, joining us to take a look at financial needs analysis, financial planning and how important it is in the financial journey.

Brought to you by Liberty. 

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