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Returning to SA – Financial Planning

Personal Financial planning, and financial responsibility is one fo the greatest goals of all of us. To be truly financially independent, and have your financial ducks in a row, is not just a goal to strive to, but also an enormous challenge.

There is a magnitude of challenges facing each of us financially, and trying to make sense of all of the conflicting information is, on its own, already a daunting task. However, there are many aspects of financial planning that are core to each and every individual, and by focussing on these, it will make the planning process a lot simpler.

The process of relocating back to South Africa has, in itself, a lot of challenges. Relocation is never an easy undertaking, and even more so when moving to a different country. All the decisions and logistics involved make this a daunting prospect. Things like accommodation, transportation, employment, physical location, to name a few, are some of the core decisions. Add to this the financial planning implications when you have arrived in South Africa, it becomes imperative that the correct choices are made. Also, the economic and financial landscape differs dramatically between the UK and South Africa, and cognisance must be taken of this when arriving in South Africa. Bank lending and interest rates, Consumer inflation rates, state pension, Income Tax, National insurance and National Health are just some of the aspects that differ enormously between the two countries. Therefore, it is very important for someone to understand the differences, but also the impact that it will have on your financial planning position.

Financial planning in South Africa has evolved enormously over the last few years, and the focus has been placed on Financial Services regulation. This regulation has the effect of ensuring that the clients’ needs are viewed as central in any financial advice process, whether it be pure advice, or advice backed-up by product implementation. This is an important change as, unfortunately, the financial services industry in South Africa has long been plagued by a reputation of misselling, misrepresentation and product and commission driven sales. Regulatory bodies like the Financial Services Board (FSB), the Financial Planning Institute (FPI), ASISA, to name a few, has changed the way in which advisers interact with clients, and protects the interests of clients above all else. This change has forced advisers to change our processes and the way we run our businesses.

The upshot of this regulation is that the client is empowered to make the correct decisions which are based on actual client needs. These decisions, and the advice behind it, are constantly being scrutinised by the various regulators to ensure that the client is protected. The FPI recommends a six-step process to financial planning. These steps have been implemented to ensure that the benefits as listed above are at the centre of the process. The six-steps in Financial Planning are as follows:

  1. Establish and define the relationship with the client.
  2. Collect the client’s information.
  3. Analyse and assess the client’s financial status.
  4. Develop the financial planning recommendations and present them to the client.
  5. Implement the client’s financial planning recommendations.
  6. Review the client’s situation.

This article represents the first of a series to educate and inform you about all the various aspects of Personal Financial planning that must be taken into account when returning to South Africa.