Over the years, more than five now ? count 'em ? I've commented on a lot of financial (and emotionally related subjects), but have trod lightly around my chosen profession, that of helping clients build solid financial foundations through planning for their financial future. And regrettably, as echoed by many other planners globally, the sad case of Terry Schiavo demonstrates again that preparing for the future is a very wise thing to do.

What is financial planning anyway?

It is the establishment of a one-on-one relationship with a knowledgeable and experienced qualified professional who will, in a proscribed documented format,

Assess your personal situation (with feedback from you);

Review and Analyse your financial, and non-financial data;

Present written objective recommendations with strategies to solve financial problems;

And provide guidance on how best to implement your financial goals.

Regrettably, the term financial planning has become a generic commodity these days. It has also become a marketing hook for everything financial, from selling a mutual fund to purchasing a home; so much so that in many cases the perception of what planning can actually accomplish (or not) has become blurred.

Does everyone need a financial plan and how do you know whether you do (or don't)? Some in the industry would say, yes, others would argue definitely not. A good advisor will exhibit certain common professional traits when preliminarily assessing whether a prospective client actually needs to proceed through the financial planning process. Many websites even have self-assessing questionnaires for individuals to peruse at their leisure.

What kind of information should I be looking for? Start with these questions, and if you answer yes to more than a couple, you may need to work with a professional.

Cash Flow Projections: Are you the kind of person who feels your finances are totally out of control? Do you have neither time nor inclination to refine management of cash, accumulate savings, and start a serious long-term investment program? Do you have a savings allocation for contingencies and liquidity?

Assets - Are your assets producing for you, or are you wasting opportunities. Don't forget, you are your most valuable asset.

Liabilities - do you have high debt? Do you want to restructure your loans to be more manageable? Are you struggling with education needs?

Significant Impending Life Events: Are you experiencing significant changes, such as any of the following, listed in no particular order?

? Lump sum or annuity pension distribution decisions

?Retirement

? Significant changes in lifestyle creating demands on Current portfolio, which will require an objective review

?Divorce

?Serious disability, or illness

?Recently widowed

?Beneficiary of an inheritance

?Proceeds from sale of real estate

? Proceeds from sale of securities / investments

?Settlement of a Personal Injury lawsuit

?Redundancy

?Immigration to another domicile

?Special needs child

? Personal relative Eldercare, and accompanying long-term maintenance of real property

Risk management: Do you have any life insurance? Property and casualty? Do you have any idea how much you should spend and what you really need? It may be more than you think in both cases.

Investing: Do you want to invest? Any idea how to invest? Do you know what your investment knowledge level is? Or do you just want to pass the entire job over to your advisor.

Estate and trust planning: Do you have a will? Does it have a medical health care directive in it, or a power of attorney? We won't live forever, you know! Of course, we are very sure that we will never leave this dear earth as a young person, either.

Personal Goals : client has several financial goals that he / she wishes to achieve and needs guidance and counselling.

Should I Pay Fees? The debate regarding the method of compensation for obtaining a plan remains largely unsettled, with basically two opposing methods. The first group feel that financial plans should be free, but that statement is really a misnomer because the client will pay a fee to purchase a product, be it investments or insurance. This method may work quite well for the client whose ultimate goal was to simply purchase an investment anyway.

But what of the client who has a specific life issue or financial problem that cannot be solved by buying an investment product, or one who is not at the stage where they even feel comfortable investing, or even one who has as many investments as they absolutely need, but still desire some very personal financial consulting. These clients (and many more) fall into the advocates of the second camp, those who provide separate-from-any-financial-product independent financial advice for a fee.

How much for an independent financial planner, that is the real question? Fees will range according to needs assessment, amount of analysis and consulting needed. They may be flat fee costs, such as $1,000 for complex retirement and investment planning, or hourly charges as needed, generally in the $300-350 per hour. What you pay should provide clear cut value for money. And if you think that this seems expensive, consider two things: Every mutual fund investment purchase made has a commission attached, i.e. invest $10,000 in a mutual, 5% ($500) of that pays your advisor. Secondly, no planning at all may ultimately generate huge fees to 'fix' the mistakes in a portfolio of losses, or to sort out an estate.

How do you know if paying a fee for financial planning is worth it? In the last analysis, what you receive in terms of any described financial plan, should be advice that is specifically tailored for you. It should be easy to understand, but not so generic as to have little relevance to your life needs; short and simple to read, not 10 - 50 pages of pie charts and numbers (bet you never thought your financial life could be so extensive) ; easy to implement by yourself - or if more complex tied to the planner/advisor working with you along the way; and give you a comfortable feeling, a feeling of real serenity that your personal financial plan structure will get you to where you want to go.

Next week - the components of a comprehensive financial plan.

Martha Harris Myron CPA/PFS CFP? is a VP and Senior Sales Manager at The Investment Centre, Bank of Bermuda member HSBC group where she provides investment advisory services and financial planning, especially for clients contemplating lifestyle / career changes and retirement.

She can be reached at 299-5578 Confidential email can be directed to marthamyron@northrock.bm

The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/ sell investment products or financial plans. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.