Comprehensive Financial Planning and Case Analysis
Domain 8 tests integration. You are given a client case with competing goals and must produce a coherent plan, not a series of disconnected product recommendations.
Method
- Establish facts: family, health, income, assets, liabilities, cash flow, tax position, existing cover, goals, and attitudes.
- Quantify goals and rank them by urgency and importance: emergency fund and protection first, then debt reduction, education, retirement, and estate.
- Test affordability: compare total savings required with available surplus.
- Identify conflicts: funding a child's education may reduce retirement savings; a large mortgage may limit insurance affordability.
- Use scenario analysis: base case, poor returns, early death or disability, long life, inflation.
- Recommend, implement, and set review triggers such as a new child, job change, inheritance, or market fall.
Worked example
A couple earns 1,200,000, spends 800,000, and saves 400,000. They have 100,000 in liquid savings, 2,000,000 of debt, no life cover, and two goals: 3,000,000 for retirement in 25 years and 1,000,000 for education in 10 years. Emergency needs are 6 months of essential spending, say 300,000; the liquid gap is 200,000. A protection gap of 2,500,000 should be covered before increasing investment risk. The remaining surplus can be split: fund the education goal with a 10-year horizon and moderate risk, and fund retirement with a 25-year horizon and higher equity exposure. The planner should show that diverting all surplus to education would leave retirement underfunded by the calculated amount.
Traps
- Solving one domain in isolation, such as an investment recommendation without checking insurance or tax.
- Prioritising a low-urgency goal over an emergency fund or protection gap.
- Using inconsistent assumptions across the plan.
- Ignoring the client's behavioural biases and capacity to follow the plan.
- Presenting a single projection as certain rather than a range of scenarios.
- Failing to document recommendations, alternatives, and review dates.