Would you embark on a long and treacherous journey without a map? No! In the same way it’s wise to have a financial plan that’s flexible to meet changing circumstances. This also brings opportunities for financial planners.
We may think we have everything planned out in our lives and expect it all to be quite straight forward. The typical circle of life would be: graduate from school, get a job, buy a house, marry, have children, send the kids to school and retire.
In between these big milestones life can take surprising turns. Therefore, it is important for both financial advisers and their clients to regularly review their circumstances in order to make the best of every change.
Changes can come in many forms - getting a job overseas, a promotion, sales bonus, getting engaged, the arrival of babies or a big inheritance - there are many reasons to review and modify our financial objectives and with that, the savings and investments we make. That is why it is beneficial for financial advisers to provide reviews to their existing clients on a regular basis. This helps to deepen relationships and keeps you in the forefront of any big events in your clients’ lives.
Regular reviews are critical to the success of any financial plan as they help to keep track of the direction of travel and progress of the strategy. If there are any new developments it allows you and your clients to respond promptly by making the required changes.
You may also consider conducting reviews during key financial events, for example, at the beginning of each year when most people receive their bonus and have salary reviews or immediately before a birthday when the cost of protection benefits will rise. It’s always good to use this opportunity to see if a savings top-up or lump-sum investment would be beneficial for the client’s long term saving and investment goals.
To do a top-up with an existing client may be easier than processing a new application as the clients are ‘buying’ as opposed you are ‘selling’ to a new customer. It may also involve less paperwork as customers may not need to go through the application process again when they do a top up under the normal circumstances.
For some top-ups cases, Financial Needs Analysis (FNA), Risk Profile questionnaire (RPQ) and Post-sales Calls (PSC) may not be required. However, we suggest advisers should take note of the guidelines issued by the Hong Kong Federation of Insurers (HKFI) and conduct regular FNA and RPQ for policy owners, especially when the client’s circumstances have changed significantly.