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From financial needs analysis to drafting a will

ARTICLE BY

  • Kobus Wentzel
  • Executive Head: Distribution
  • 1Life

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As a financial adviser, your advice process starts with the financial needs analysis or FNA, and it ends with estate planning and a will.

The FNA determines at which stage the client is at in their journey towards wealth. It takes into account the life-stage of the client and in the case of our FNA at 1Life, and it also models affordability on top of life-stage planning. This means that with us, each client’s journey is unique and our FNA takes not only the client’s life stage product needs into account, but also optimises affordability.

Estate planning, simply put, is the process of arranging and managing a client’s assets during their lifetime so their estate is transferred in accordance with their wishes. Although estate planning is mostly seen to start with the drafting of the will since it serves to extend the client’s legacy to the generations that come after them, it really starts much earlier.  In fact, it starts with the FNA. 

And, if one looks at it carefully one can see that the FNA and the will, almost act as bookends to the entire financial planning advice process.

Consider the FNA

Looking more carefully at FNAs, we realise that technology has made FNAs a lot easier to complete because no manual calculations are required.

However, these still have a few drawbacks. They tend to either focus on only one aspect of personal finance – insurance or investments, and the recommendation of how much to spend on insurance or to invest ignores how much a client can afford. 

This means that financial advisers have to spend time manually adjusting the FNA’s output to find an affordable amount and to make sure clients have adequate insurance and investment savings for their life-stages. 

There’s another drawback in many FNAs – they ask a lot of questions. For advisers, this means spending time with a client completing an FNA and following this up with a discussion on the outcome of the FNA. In addition, the client needed to sign, in person, the Record of Advice. This acknowledged that they understand the outcome of the FNA and accompanying financial advice. This is a time-consuming exercise that we believe can be shortened.

We can do better: 1Life’s FNA 

1Plan, a revolutionary FNA, supports the financial adviser through the advice-giving process. There are only five questions a client needs to complete. 1Plan then uses these answers and big data to come up with an affordable monthly number. No tweaking or adjusting is required. Based on the client’s life-stage, 1Plan will calculate how much of that affordable monthly number should be spent on risk products and how much on investing. 

“Other FNAs tell you how much you need. Ours tells you what you can do with what you have,” says Laurence Hillman, CEO of 1Life.

1Plan is quick and easy and uncomplicated. It calculates a realistic number so clients can be confident their goals are achievable. In addition, our straight-through underwriting complements this since we can now approve a client’s application in under 35 minutes, provided they have no serious health issues

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