Why Engage Us
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Financial Planning - What is it and why plan?

WHY ENGAGE US TO LOOK AFTER YOUR FINANCIAL PLANNING?

Firstly, we work for our clients, not an institution. One of the directors of FM Financial Solutions originally was a salaried Financial Planner with a firm owned by a Superannuation Scheme. However, he left that firm as he was enthusiastic about providing comprehensive financial solutions for an agreed fee, instead of ‘selling’ a ‘superannuation product’, with the firm receiving a commission for that sale. In order to provide the quality, professional and ‘honest’ service that we felt clients were demanding, we established FM Financial Solutions Pty. Ltd.

To ensure that our clients are confident that we do work in their best interests we decided that we could only provide our advice and services for an agreed flat fee. As a result our clients pay us an agreed fee and we either recommend investments with no commissions or we rebate, as additional investment units, any commission we would normally receive from initial or on-going brokerage. This means, that we are not influenced by commissions, so our recommendations are focused on our client’s best interests, and not the interests of the institution providing an investment product or our firm itself. As an additional saving our on-going fee relating to annual service subscriptions is generally tax deductible.

With our Service Guarantee, we guarantee to provide the services that you subscribe to, and all our service arrangements are put in writing and signed by us and our clients.

In the financial services industry, there is significant emphasis on FUM (Funds Under Management) or FUA (Funds Under Advice), why? Because it becomes a measure of how much revenue the firm receives, as most firms receive a commission or percentage based fee based on the amount of money invested by their clients.

For example, 1% of total FUM/FUA of $50m will generate $500,000pa of revenue for the firm.

For FM Financial Solutions, the level of FUM or FUA is meaningless, as we derive our income based not on how much money our client has to invest, but on what services our clients want us to provide to them. As a result, our clients receive the service that they feel they need and are happy to pay for.

Instead of being concerned about FUM or FUA, we instead concern ourselves about helping you, our client:

• To be financially better organised
• To improve your investment returns
• To reduce your tax liabilities
• To manage financial and personal risk better
• To avoid running out of money
• And above all, to achieve and maintain your desired lifestyle

However, we don’t try to be all things to all people and therefore a part of our services includes referring our clients to specialists whenever appropriate. We have developed strong relationships of mutual trust with a number of other professionals, including lawyers and accountants and we refer our clients to these professionals as part of our client’s financial plan.

Whilst we have a policy that we will help everyone who comes to us, we offer specific services with associated fees and have proven expertise in doing so – as a result, on some occasions, we may not be able to provide the services that you may desire for a commercial fee.

When you buy a car or house or any material thing, you have a certain “expectation” of performance. When you are buying a “service” that relates to one of the most important aspects of your life, your money, we recognise that you may not know what to expect and are taking quite a leap of faith. We take our role seriously and will always behave in an honest and ethical manner in all our dealings with you. This is indeed borne out by what our clients say about us. We will set a level of expectation with you from the beginning and throughout our relationship, a relationship that is not ‘transactional’, but based on working with you to enhance your life-style and help you to enjoy your journey through life.

Key benefits of our approach include:

• Flexibility We understand that each client is unique. Your circumstances, life stage, geographic location and other needs can influence the service and benefits to you require.
• Transparency Our programs are structured on dollar-based, pre-determined fees. We give you the confidence of knowing the exact fees you are paying for the various services which we provide.
• Informative Approach All aspects of our service focus on keeping you informed and in control of your financial future. We place special emphasis on all lifestyle issues that may impact on your financial well-being.
• Accessibility We aim to be there working with you day-to-day on the management of your financial life. Focus Providing clients with financial advice, solutions and support is all that we do and is the core service that we offer to you.

What do we consider important when dealing with our clients?

• Passion We love the Profession of Financial Planning and consider the provision of quality advice above all else.
• Service We undertake to provide high quality on-going service to our clients.
• Non-tied Because we are not tied to recommending any particular product we can, and do, recommend only the products and strategies that best suit each client’s needs.
• Education We consider it part of our business to educate and ensure our clients understand their Financial Plan.
  Responsibility We believe we have a responsibility to you to ensure we act in your best interests at all times.
• Ethics We follow the FPA code of practice and ethics and believe that we can only be really successful if we are ethical in all our dealings with you, the client.Interested in becoming a client of FM Financial Solutions?

To view the FM Financial Solutions advice process in detail, including time commitment, service programs and potential fees please click PROCESS & FEES. Then contact us on (02) 9518 7822 to arrange an initial consultation and discuss engaging the services of FM Financial Solutions.

OUR SERVICES

We believe in providing comprehensive financial advice that is both professional and free of influence from providers of investment or risk products. We specialise in creating tailored financial strategies for our clients who value their time and require professional financial management to build and preserve their wealth.

We provide strategic advice that’s right for our client’s circumstances. A complete in-depth analysis and understanding of our client’s lifestyle goals and financial circumstances form the foundation for the development of the required financial strategies. Importantly, we work with our clients to develop their financial plan, and provide ongoing services to monitor our client’s financial plans.

We provide advice and service with respect to:

Life Style Planning
Cash Flow Management
Investment & Portfolio Management
Personal Risk Management
Debt Management
Estate Planning
Taxation Planning
Retirement Planning

We can also provide specialist advice with respect to:

Government and semi- government superannuation schemes, including defined benefit plans.
Complex Superannuation and Pension planning.

Life Style Planning

Setting Goals…the Centre of your Financial Plan

We all have a ‘life-style’, some are happy with theirs’, others aim to keep improving their lifestyle. Financial Planning is all about helping you to protect your existing life-style, and if desired, helping you to improve it.

A definition of life-style: a manner of living that reflects the person's values and attitudes.

Everybody will have a different view of what constitutes a good life-style, it could mean working only 3 days per week to be able to spend more time on the golf course or with the family. For another, it could mean being able to travel to Europe each year, buy a bigger house, upgrade the car, pay for children’s private education.

"Obstacles are those frightful things you see when you take your eyes off your goal." Henry Ford (1863-1947)

However, there may be many obstacles in the way of achieving what you desire in life, we work with you to overcome such obstacles by helping you to keep your financial plan on track.

Cash Flow Management

FM Financial Solutions considers ‘Cash Management’ to be the ‘centre’ of anyone’s financial plan. Without the careful allocation of cash (through the use of a budget) you increase the risk of not having the ‘money when you need it’. A consequence of not managing your cash properly is not saving, not investing and incurring debt – leading potentially to not being able to live the life-style that you desire!

Cash Management consists of first determining your ‘budget’:

What is a budget?
You can think of it as a roadmap to navigating your finances. You wouldn’t even think of driving cross-country without first knowing which highways to take, so why do people think that they can just ‘wing’ their spending and expect to reach their desired destination? A budget is simply a tool that is used to plan spending and savings.

Who needs a budget?
The answer is — everyone!
Budgets can and should be used by everyone (even the Government has a budget), regardless of age or financial status.

Why do I need a budget?
Most people are oblivious of their spending habits—they simply know that the money is gone at the end of the month but rarely have an idea of where it went. A planned, well thought-out budget cannot only help you identify potential problem areas, but also help you plan for unexpected emergencies.

How do I create a budget?
A successful budget needs to have categories for all major expenses such as: Housing, Automotive, Debts, Clothing, Food, etc. Each of these categories should then be broken into sub-categories. For example, Housing can be divided to include Rent/Mortgage, Maintenance, Electricity, Gas, etc. These are then added to show the total Housing requirements.Categories should also be set up for miscellaneous expenses that you typically don’t think about: the morning coffee or daily newspaper. All of these need to be taken into account and planned for.

When you are planning your budget it is helpful to be aware of your spending history for each category, such as, knowing whatyour utilities typically run for in an average month. Knowing what you have to spend each month is half the battle; the other half is knowing what you can spend on other items.

A few tips to remember:

1. Don’t spend more then you earn.
2. You should never put anything on a credit card that you know you can’t pay off at the end of the month. We understand that emergencies do arise but with proper planning these can be taken care of without going into debt.
3. Remember to pay yourself first. This means treating savings as a form of budgeted expense, with money transferred into a separate savings vehicle where it can't be touched. The savings vehicle could be a high-interest bank account or maybe a managed fund savings plan. Whichever you choose, the aim is to send your precious savings where they can be put to work rather than spent.
4. Maintain a ‘cash reserve’. We recommend to have at least between $5,000 and $10,000 available as a cash reserve.
5. Don’t forget to budget for those items that may not occur every month, for example car repairs or Christmas and birthday gifts.
6. Budget for entertainment. Just because you are on a budget doesn’t mean that you have to sit at home and watch TV every weekend. It is OK for you to have a life! In fact we encourage you to enjoy yourself now, just do it sensibly, put into your budget money for a night out, dinner and a movie, a show. But Make sure that you stay within your means and don’t get carried away. Also, occasionally look for less expensive alternatives, maybe get take-away and rent a movie instead of going out.

FM Financial Solutions can sit down with you and help you prepare a workable budget, to help you get on track to achieving your financial objectives. As part of this service, we will firstly determine how much income you receive, then we review your annual expenditure pattern, to work out where the money goes, and then finally provide you with advice and the ‘tools’ to manage your in-flows and out-flows.

Our Premium Budgeting/Cash Flow Management Service takes your cash-flow worries from you, so that you can get on with your life and your career, leaving FM Financial Solutions, to manage your expenses and income, and investment program.

Cash Flow Management
The movement of cash across every aspect of our lives can bring joy, frustration, happiness, confusion and sometimes ignorance all at the same time! Combine this with the ongoing burden of taxation and we come to one of the biggest areas of client financial frustration. We can, and do, ensure that our clients clearly understand the importance of monitoring and tracking money, as without it, the foundations of a successfully implemented plan can fall apart.

But what is cash flow management? Many of our clients are earning good incomes, however they often feel like they have no control over their month-to-month expenditure. Perhaps they even use their home loan as a means of managing their lack of cash, the result is that their loan balance never seems to get any lower.

We focus on assisting our clients to take control of their cash position. We recommend the following three main steps:

1. Identify total yearly expenses.
2. Break expenses up into different categories (based on frequency and whether they are fixed or variable in nature).
3. Create an easy-to-manage banking structure so that you are completely aware of how much you are spending, where and when.

Our Cash flow and Budgeting Program is tailored to your individual circumstances and requirements and is designed to provide you with control, confidence and a strong sense of financial peace of mind.

Investment & Portfolio Management

At the core of any successful financial plan is the accumulation of assets. It has been said that 'planning is to investment as position is to property' and as such, after identifying what you would like or need to do with any accumulated wealth, we work with you to create an investment strategy to identify the various ways you can create, protect and maximise your wealth.

The focus we have on understanding your current and future cash flow requirements means that we work hard to understand what rate of return you need from your assets to achieve your lifestyle goals. Our investment and portfolio management options are then tailored to suit your needs.

We then provide you with comprehensive portfolio reporting, using best of breed technology, so that you are informed about the performance of your portfolio overall and by individual investment, your net asset position and most importantly how the accumulation of assets is progressing against the objective or targeted asset level.

At times we will also suggest changes to the portfolio aimed at increasing the return of the portfolio while at the same time attempting to manage the level of risk and volatility.

As part of our investment philosophy, we research and recommend money managers which aim to grow your money and protect capital instead of simply following the benchmark index (for example the S&P/ASX 300 or MSCI ex Australia). Our aim is to thus have your portfolio perform in an absolute sense (ie. perform as good or better than cash) when the investment markets are experiencing negative returns, rather than just returning a lower negative number. As a result when the markets are experiencing positive returns, your portfolio will also perform well, though possibly not as well as a manager that ‘hugs’ the index though the ‘index hugger’ will also suffer more at the hands of a falling market!

It is important to remember that investment returns are not guaranteed, that taking on some risk for a sufficient premium is appropriate and that you should always diversify your assets and never sell when the market has fallen &as this will mean a paper loss is all too real!

Personal Risk Management

A well-structured financial plan is more than just building wealth. It's also about managing future risks. The common belief "it won't happen to me" results in many people having a sound plan for wealth creation but not an adequate plan to protect their ability to generate income for themselves and their family.

While you will need to think hard about some difficult issues, it is possible to cut a meaningful path through the life insurance jungle. It starts with an understanding of the fundamentals and a grasp of the basic types of cover available:
Some of the available types of insurance are:

• Death Insurance
• Income Protection or Continuance
• Trauma
• Total and Permanent Disability (TPD).

Organising your lifestyle insurance portfolio - which includes life, trauma, income protection and total disablement insurance - can seem like a difficult task at first. It's all about considering the consequences of things you hope will never happen, finding your way through a jungle of competing and confusing products, and coming to terms with the real possibility of never seeing anything tangible in return for the money you spend – in fact we hope that you will never need to claim on your insurance!

Choosing the most suitable life insurance policy can be a daunting task. FM Financial Solutions can help you to structure and put in place an insurance cover to suit your goals and lifestyle needs. We act as a buyer on your behalf and liaise with the insurance providers to ensure that our clients have the most suitable cover at a price that will suit their individual needs. As we choose not to accept commission from insurance companies, we are able to reduce the initial and on-going cost of insurance (the premium).

Knowledge speaks, but wisdom listens - Jimi Hendrix

We believe that knowing that you need insurance is not as prudent as actually having insurance….at the end of the day it is not the cost of the insurance that you should consider important, it is the cost to you and your family of not being able to maintain the life-style that you desire should the worst happen.

Debt Management

Albert Einstein said the most powerful invention he ever saw was "compound interest." Those that understand it, earn it. Those that don’t, pay it!

It is common for people to become discouraged about budgeting when their debt management attempts result in painful failure. Many conclude that they have no self-discipline because they are unable to live within their budgets. The real failure, however, may be with the budget or debt management plan itself and not with the person. In order for a budget (or debt management strategy—you’ll soon see that these are nearly synonymous terms) to be a complete, it must have six ingredients.

If any one of the essential ingredients is missing, what may be called a “budget” really isn’t a workable, trustworthy, solution. The chances of achieving the goals of a debt management system are greatly diminished if one or more of the ingredients is missing.

Keep reading and you’ll soon see that our debt management model that follows is simple, easy to use, and clearly explains the essential ingredients of debt management strategy and your financial freedom.

• One: Determine your total debt position
• Two: Comparison and evaluation of your debt options
• Three: Corrective action
• Four: Adequate income
• Five: A debt management Monitor

FMFS DEBT MANAGEMENT MODEL

One: Determine your total debt position
It is important to determine exactly what debts you owe and to whom. Part of this analysis includes working out which debts are costing you the most, as well as the priority of debt repayment.

Two: Comparison and evaluation of your debt options
We will review what your options are, including debt consolidation, talking to creditors, and looking at alternative providers of finance.

Three: Corrective action
We will then recommend a ‘plan of action’ aimed at reducing your debt in the shortest period of time. As part of this stage, we will review your income and your expenditure patterns (please refer to ‘Adequate Income’)

Four: Adequate Income
We will assist you to determine whether or not you have an adequate income to meet your needs. It may seem obvious and even a little silly to list adequate income as an essential ingredient, but too often it is thought of as the only ingredient. A popular statement is, “I don’t need to budget; I just need more money.” A complete budget can help a budgeter determine whether or not an income is genuinely adequate. Usually, more income means working longer hours, whereas a complete debt management strategy may well increase the amount of money available, without any increase in hours-of-work, or if you so choose, reduce the number of hours of work needed to achieve the desired outcome. Either way a good plan should result in you getting better value for your dollar/hours-of-work.

If income is the sole focus of a debt management program, it is never adequate; there is never enough income. Far more can be spent than earned.

It is important that you live within your means, as not doing so may be one cause of your indebtness…

"I'm living so far beyond my income that we may almost be said to be living apart." - e e cummings (1894-1962)

Five: A Debt Management Monitor
Keeping on track to achieve your objective of being debt free is an essential ingredient in managing debt. By helping you to ‘monitor’ your debt position and assisting you when necessary to keep your repayments and other expenditure on track, we can assist you to reduce the time that you are in debt, and therefore the cost of being in debt, which effectively increases your ‘income’ or ‘available money’.

Estate Planning

No one likes to consider, yet alone plan for life’s eventuality – the end of life itself, however putting in place a ‘plan’ can reduce (though not eliminate) the impact of your death on your loved ones and reduce the potential for conflict and family disharmony.

Estate Planning is a process that includes the preparation of legal documents (ie Wills), as well as the structuring of assets (trusts/superannuation/companies/joint or individual ownership etc), determining who your beneficiaries are, and if they have special needs (eg. children with disabilities or spendthrifts). As part of this process you can identify what assets will actually form part of your estate (for example a jointly owned asset will not form part of your estate). In addition, an estate plan may include provisions for appointments of preferred guardians of young children in the event of losing their parents.

Your Estate Plan should distribute your assets to whom you want, the way you want, and when you want. Your estate plan should be structured so that assets can be passed to your beneficiaries with a minimum of tax and cost. Your estate plan should also allow you to plan for the possibility of your own disability.

Areas that we work with clients include:

• Helping you to determine what assets may potentially constitute your estate, and who your nominated beneficiaries will be.
• Reviewing the appropriateness of considering testamentary trusts and superannuation pensions for the distribution of assets to dependents.
• WILL reviews and completion/updating (done by client’s existing legal advisers or FM Financial Solutions’ Professional Partners).
• Enduring Powers of Attorney to make financial decisions when one loses mental capacity.
• Enduring Guardianship to make life-style decisions when one loses mental capacity.

And what can this achieve for you?

• Peace of mind knowing your assets will be distributed as per your wishes, with as little conflict amongst beneficiaries as possible.
• Peace of mind knowing that your beneficiaries will be appropriately looked after in the event of your death, and if you have children, that a suitable person will be nominated to care and nurture them, and provide for them until adulthood.
• Reduction of unnecessary costs (including possible court costs) and potential taxes upon death.

  “I am not dying, not anymore than any of us are at any moment. We run, hopefully as fast as we can, and then everyone must stop. We can only choose how we handle the race.” - Hugh Elliott

Taxation Planning

“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing”. Jean-Baptiste Colbert

Paying tax is part of being a member of a society and enables us to have amongst other things: national security (defence force), education (schools/universities), justice systems (courts/police), infrastructure (roads/transport) etc.

However as Albert Einstein once said - “The hardest thing in the world to understand is the income tax”.

FM Financial Solutions is not a tax agency and does not provide specific tax advice. However we are bound, when providing you with financial planning services, to consider the tax implications of our advice and explain them to you. Our advice is aimed at increasing your wealth and legally minimising tax payable. For example, we may recommend that you salary sacrifice, (part of our service is to make sure you we understand how this can reduce your tax liability), into superannuation in order to increase the size of your future retirement benefits.

Retirement Planning

"When I retire I'm going to spend my evenings by the fireplace going through those boxes. There are things in there that ought to be burned."
Richard Milhouse Nixon.

No matter what your idea of retirement is, be it travel, playing golf, enrolling in a photography or and art course, you will need to continue to fund your basic as well as your desired life-style needs, which means that you will need money and the ability to continue to generate it.

FM Financial Solutions believes in starting your retirement planning as soon as practicable, ie NOW—no matter what age you are. Seeking advice just before your retirement could mean that you missed out on the opportunity to increase your wealth and thus the potential to enjoy a long and financially secure retirement.

Retirement Planning, like all financial planning, is about:

• Determining your objectives - when you wish to retire, how much will you need to live your desired life-style, what would your initial and on-going capital expenditure requirements be and so on.
• Calculating what you will need in order to achieve your objectives.
• Considering the resources at hand to achieve your objectives and then determining if you have enough
• If not, we then aim to help you employ your resources and appropriate strategies aimed at increasing the potential for you to have the retirement that you desire…no matter what form your retirement will take.
• Reviewing the achievement of your retirement goals in the light of your changing personal circumstances and the ever-changing superannuation legislation.

Hence the best time to consider your retirement planning is NOW…the alternative time is:

“The best time to start thinking about your retirement is before the boss does”. Anonymous

FINANCIAL PLANNING– WHAT IS IT AND WHY PLAN?

Why is it important to plan?
The quality of life that you want now and in the future is determined by how well you manage your financial resources. In most cases, you have a level of control over the following four ‘limited’ resources:

1. The time you have to devote to work and leisure
2. The money you have and will continue to earn
3. Your willingness to limit personal and property risk through insurance and:
4. Your ability to accept higher levels of financial risk when seeking higher financial rewards.

Often due to the nature of only having ‘limited’ resources available, we all need to compromise. For example, you may wish to holiday overseas each year, however, to do so may result in you needing to work more so that you can afford to take your holiday, the compromise being that you have reduced your current leisure time, in order to afford your overseas holiday in the future. Funding the cost of an overseas holiday, without going into debt, is just one example of how we need to compromise at times, in order to ensure a more secure financial future.

What others have said about planning:

“All you need is the plan, the road map, and the courage to press on to your destination." Earl Nightingale

“Planning is bringing the future into the present so that you can do something about it now.” Alan Lakein

“Good plans shape good decisions. That's why good planning helps to make elusive dreams come true.” Unknown

We aim to help you to identify your aspirations, determine a priority and time-frame and then develop a ‘road map’ for you to follow. Along the way, we help you stay on the road, and suggest changes to ensure that you safely negotiate the bends, as life is constantly changing.

What is the alternative to not planning?
Do Nothing…and wish that your or your family’s financial security will magically happen…or put another way: “Failing to plan is planning to fail.” Alan Lakein