Lesson 16 - Lake Shore Middle School



AOF Financial Planning

Lesson 2

Introduction to Financial Planning

Student Resources

|Resource |Description |

|Student Resource 2.1 |Worksheet: Financial Planning Terms |

|Student Resource 2.2 |Answer Key: Financial Planning Terms |

|Student Resource 2.3 |Example: Sales Manager Job Description |

|Student Resource 2.4 |Note-Taking Guide: The Financial Planning Process |

|Student Resource 2.5 |Reading: The Financial Planning Process |

|Student Resource 2.6 |Assignment: Writing a Job Description |

|Student Resource 2.7 |Descriptions: Interview Roles |

Student Resource 2.1

Worksheet: Financial Planning Terms

Key Terms

Student Name:_______________________________________________ Date:___________

Directions: Fill in as many of the definitions as you can for the terms below.

| |What do you think it means? |Were you correct? |

|Cash Management | | |

|Investments | | |

|Tax Planning | | |

|Asset Allocation | | |

|Risk Management | | |

|Retirement Planning | | |

|Estate Planning | | |

Student Resource 2.2

Answer Key: Financial Planning Terms

Directions: Use these definitions to refine the ones you wrote on Student Resource 2.1.

Cash Management

Where should your paycheck go? Cash management is about deciding where to put your precious earnings. Money can go to living expenses, savings, investments, and toward discretionary purchases (like that new pair of shoes!).

Investments

Have you heard the phrase “Put your money to work for you?” Well, if you’d like your cash to grow, rather than just sit in a checking account, invest it! You can buy stocks, bonds, and mutual funds with the hope that they’ll continue to get more valuable in the future. Just remember that riskier investments, like stocks, don’t guarantee a return!

Tax Planning

If you work for a paycheck, you’ve certainly noticed that Uncle Sam (and others) take out some of those earnings in taxes. By understanding tax laws, you can make sure you don’t pay more than your share.

Asset Planning

Assets are those things that you own. They can include big things, like cars and houses, and little things, like a pencil. Special types of assets are things that people invest in, like stocks, bonds, and mutual funds. In general, it’s a good idea to spend money on assets that grow in value rather than on those that lose value quickly.

Risk Management

You never know what’s going to happen in life, no matter how hard you plan. Luckily, there are insurance companies available to try to take some of the pain out of the disasters that befall all of us at some time or other. By paying these companies a small sum on a regular basis, insurance companies agree to come in and help you if you are in financial need (for example, you put a giant dent in the family car or you broke your leg trying the latest dance move).

Retirement Planning

What do you want to do when you retire? You’d better make sure you have the money to do it! One of the most important things we can do in life is to prepare ourselves for that time when we no longer can (or want) to work. While most of us will get some of our tax dollars back through Social Security payments, it is critically important to have other sources of financing for our retirement years.

Estate Planning

There is an old saying that the only things certain in life are death and taxes. We’ve already talked a bit about taxes. Estate planning is making sure that your financial affairs are in order when you die. Prudent planning ensures distribution of assets per the wishes of the deceased while minimizing tax burdens such as estate, income, and trust taxes

Student Resource 2.3

Example: Sales Manager Job Description

SUMMARY

The sales manager is responsible for overseeing all aspects of sales in her assigned region, including identifying potential customers, managing the customer database, and conducting sales calls.

PRIMARY RESPONSIBILITIES

• Research potential sales prospects in the region

• Identify strategies for generating customer leads and referrals

• Maintain relationships with current customers

• Follow up on new leads and referrals resulting from field activity

• Create sales materials, including brochures, advertisements, etc.

• Prepare presentations and proposals for sales leads

• Other duties as assigned

ADDITIONAL RESPONSIBILITIES

• Assist research and development department in gathering customer feedback

• Facilitate new product focus groups

• Train new sales employees

KNOWLEDGE AND SKILL REQUIREMENTS

• Great customer relations skills

• Strong public speaking skills

• Knowledge of the industry

• Demonstrated ability to create persuasive reports and presentations

EDUCATION REQUIREMENTS

• High school diploma highly preferred

WORKING CONDITIONS

• Requires travel 60% of time, including significant air travel

• Must be able to lift up to 60 pounds

Student Resource 2.4

Note-Taking Guide: The Financial Planning Process

Student Name:_______________________________________________ Date:___________

Directions: Use the following note-taking guide to help you organize the information that you learn from the presentation. For each of the following six steps listed on the left, use the column on the right to describe the duties involved.

|The Financial Planning Process Step:|The financial planner’s duties in this step: |

|Establish the client–planner | |

|relationship | |

| | |

|Gather client data and establish | |

|financial goals | |

| | |

|Analyze data | |

| | |

| | |

|Develop a plan for achieving goals | |

| | |

| | |

|Implement the plan | |

| | |

| | |

|Monitor the plan | |

| | |

| | |

Student Resource 2.5

Reading: The Financial Planning Process

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Because every client is unique, it is important for financial planners to follow a series steps to ensure that the client’s needs are being met.

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Fundamentally, the financial planning process consists of six client-centered steps that repeat during the course of the relationship between financial planners and their clients. Financial planners should check with their clients periodically to make sure the financial plan they created together doesn’t need adjustments based on changes in finances, altered goals, or other factors.

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The first step in the financial planning process is for the financial planner to establish a relationship of trust with the client. Because financial planners deal with some very personal information, it is important for clients to trust their financial planner. Clients must feel confident with the financial planner’s industry expertise as well as his commitment to keep the clients’ private information confidential.

A financial planner must be able to advise, counsel, and listen to the needs of his clients. Most clients are concerned with financially emotional issues, such as education funding, debt, retirement, and premature death. Most clients express concern and anxiety over these topics and often don’t know how to use financial goals to address these concerns. Financial planners must be good listeners; they must ask the right questions to learn what financial issues clients are most concerned about and to help them prioritize their needs.

Financial planners use a variety of methods for getting to know their clients better. Not only will they have meetings with the client on the phone and/or in person; they will also use fact-finding forms, counseling techniques, and questionnaires to get to know their clients. Financial planners must also explain the services they will be providing to the client and the compensation they will receive for those services.

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The second step in the financial planning process involves gathering relevant data and establishing realistic and appropriate financial goals for the client.

There is an amazing amount of data that needs to be gathered before a financial planner can help his client work towards their goals. The information must be up to date and accurate(otherwise the financial plan will not accomplish the client’s goals. Examples of data to be gathered include a list of annual income and expenditures, tax returns, insurance policies, bank statements, brokerage accounts, and any other financial statements that enable the financial planner to have a clear understanding of the client’s current financial situation.

Once the data is gathered, financial planners should begin working with clients to discuss the necessary steps for helping them achieve their financial goals. Financial planners must encourage their client to express their financial concerns, hopes, and desires. The financial planner should then restate the goals into specific, measurable, attainable, and time-bound terms. This is one of the most important parts of the goal-setting process. Financial planners must question clients and review their financial data to learn exactly what they are trying to accomplish.

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Once the financial planner has gathered all of the client’s data and has set realistic financial goals, the financial planner then must analyze the data to make sure that the goals are realistic and achievable. This process takes time and involves an intensive and methodical analysis of the client’s financial situation. Sometimes goals must be re-evaluated and adjusted based on the analysis. For example, the client may have to postpone retirement, hold off on making large purchases, or start aggressively tackling debt.

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The financial plan should describe the financial planner’s findings and recommendations. Financial planners must remember that the goal of the plan is to communicate to clients exactly how their goals will be achieved. Its format and content should be easily understood and specific, and it should accurately describe the strategies that will be used to best meet clients’ needs.

Most financial plans should address each one of the following major planning areas: insurance planning, risk management, employee benefits planning, investment planning, income tax planning, retirement planning, and estate planning. It is not uncommon for a financial planner to consult with other experts to help create and implement the financial plan.

Keep in mind that although financial planners should base the plan on the clients’ financial goals and the specific strategies for achieving those goals, planners also have a responsibility to make clear to their clients alternative ways for them to meet their financial goals, as each strategy has its own advantages and disadvantages that the client should be aware of.

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Part of a financial planner’s job is to make sure that the plan is successfully put into action. Sometimes additional professional expertise is needed to carry out the plan—for example, a plan might require the review and advice of an estate planning specialist. Part of the financial planner’s duties is to make sure that the appropriate professional experts are consulted to see that the complete financial plan is carried out.

Once the financial plan has been implemented, the work of a financial planner is not over. He must periodically monitor the performance of the client’s plan and evaluate whether it can be improved. He should review changes in the client’s circumstances as well as changes to external factors that might affect the client’s financial plan.

Student Resource 2.6

Assignment: Writing a Job Description

Student Name:_______________________________________________ Date:___________

Directions: Use this planner to record what you learn from the interview, making sure you get information in each category—ask questions if you need to. Then, use the information you’ve gathered and use the assessment criteria at the bottom of the resource as you write your job description.

|Primary responsibilities | |

| | |

| | |

|Additional responsibilities| |

| | |

| | |

|Knowledge/skills | |

|requirements | |

| | |

|Educational requirements | |

| | |

|Working conditions | |

Before handing in your assignment, check to make sure it meets or exceeds the following assessment criteria:

• The job description describes the primary and additional responsibilities in a detailed and accurate manner.

• The job description describes the required knowledge areas and skills in a detailed and accurate manner.

• The job description describes the educational requirements in a detailed and accurate manner.

• The job posting is written neatly in complete sentences and uses proper spelling and grammar.

Student Resource 2.7

Descriptions: Interview Roles

Directions: Read the descriptions of the interview role your teacher assigned you.

Greeter

• Make sure the guest has a comfortable place to sit that is visible to the whole class.

• Welcome the guest at the school office or at the classroom (see teacher for directions).

• Escort the guest to his chair.

• Escort the guest out at the end of the interview.

Master of Ceremonies (Emcee)

• Kick off the interview by briefly describing the course and the purpose of the interview.

• Call on students who raise their hands with questions.

• Keep your eye on the time, and end the interview 10 minutes before the class ends.

• Thank the guest for her participation and ask the class for applause.

Scribe

• When terms come up in the interview that are difficult to spell, the scribe will write them on the board, asking the guest for the correct spelling.

• The scribe is also responsible for writing a thank you note to the guest. The teacher will provide a card, envelope, stamp, and the guest’s address.

Audience Member

• Show the interview subject respect: listen carefully, look at them, and refrain from distracting them by making unnecessary sounds or movements.

• Raise your hand and wait patiently to be called on to ask a question. Expect that not everyone will get called on.

• Write down key information about the answers the guest gives.

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