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2010 4th Edition (Other Editions)


Your financial plan document should contain not only the plan strategies but also all pertinent data relating to the development of the plan. While order and style of presentation may vary, the plan document should include at least the 13 essential elements described below. This does not necessarily mean your plan will be lengthy, as each area should be addressed so that it suits your personal situation.

  1. Personal data, including relevant personal and family data for those covered under the plan.
  2. Your goals and objectives, including their priority and desired time frame for achievement, where applicable.
  3. Identification of issues and problems, including education costs, taxes, major illnesses and other factors that are or may develop into a problem. You and your advisors may identify these areas.
  4. Assumptions used in plan preparation, such as inflation, investment growth, mortality rates, and other assumptions, should be clarified and confirmed.
  5. Balance sheet/net worth. An analysis that includes, but is not limited to, a schedule listing assets and liabilities with a calculation of net worth and itemized schedules of liabilities and assets to be included, as appropriate.
  6. Cash flow management. Statements and analysis that include, but are not limited to, a statement of your sources and uses of funds for all relevant years, indicating net cash flow, as well as a separate income statement, where appropriate.
  7. Income tax. A statement and analysis that include the income taxes for all relevant years covered in the plan. Projections should show the nature of the income and deductions to permit calculation of your tax liability. The analysis should identify the marginal tax rate for each year and any special situations.
  8. Risk management. An analysis of your financial exposure relative to mortality, morbidity, liability and property, including your business if appropriate. This section should list and analyze current policies and problems, including life, disability, medical, property/casualty, liability and business coverage.
  9. Investments. A listing of your current investment portfolio and an analysis or discussion of its liquidity, diversification, and investment risk exposure. In addition, the suitability of the investments in relationship to your goals should be addressed, including risk tolerance, risk management of investments, suitability, liquidity, diversification and personal management efforts.
  10. Special needs such as retirement planning or education planning. An analysis of the capital needed at some future time to provide for your specific needs. The analysis should include a projection of resources expected to be available to meet these needs at that time.
  11. Estate planning to identify assets to be included in your estate, and an analysis of the control and disposition of those assets. Tax planning maybe needed for assets outside Hong Kong.
  12. Recommendations in writing to specifically address your goals and objectives, all issues and problems identified in the plan, and actions necessary to compensate for any shortfalls.
  13. Implementation schedule to prioritize a list of actions required to implement the recommendations, indicating responsible parties, action required, and timing.

If any area of the financial plan is not within the range of the financial advisor's expertise, a professional has the responsibility to coordinate with other advisors and document this in the financial plan report.

The analysis that is called for in all the elements of the plan should consist of a review of pertinent facts, a consideration of the advantage(s) and/or disadvantage(s) of the current situation and a determination of what, if any, further action is required. The plan should include a summary statement providing the advisor's comments on the analysis and recommendations, where appropriate, for each element of the plan.