A financial planner is not like the "financial adviser" of old, the new financial planner is not just concerned with funds and insurance, but is supposed to be focused on overall strategies rather than specific products.

Financial planners are like General Practitioner doctors, concerned with overall financial well being, as opposed to being a specialist that only specialises in a very limited range of skills. Financial planners can help you work out how much to put aside on a regular basis to achieve your financial goals, they can explain the benefits vs risks of strategies like superannuation and gearing and help you decide which one is appropriate for you.

A financial planner is very different from other types of financial adviser. Financial planners are the generalists that tie all different types of advice together, the specialists are accountants, stock brokers, tax lawyers and estate lawyers. A financial planner deals in most of the things that each of these specialists deal in, though usually not in the same depth as the specialists, only financial planners help coordinate the "big picture".

An accountant specialises in tax, auditing and preparing financial statements, accountants rarely have a significant amount of formal training in investments as such, generally one goes to an accountant for advice related to taxation and business management. Despite the common belief that accountants are capable of doubling as investment advisers, while they do understand tax, investment is a different subject entirely. Securities analysis and portfolio theory are not taught in accounting courses, so an accountant is usually no more qualified to advise on portfolio construction than someone in a non-financial occupation.

A stock broker is rarely concerned with taxation or other issues, the job of this specialist is to facilitate transactions in shares, bonds and other investments. There are two types of stock broker, full advice and no advice. The full advice stock broker gives recommendations about which stocks to buy and sell. A no advice broker doesn't make any recommendation about stocks to buy or sell, but simply takes and processes orders. No advice stock brokers operating on the Internet charge very small amounts for transactions, usually less than $50, however a full advice broker may charge a minimum amount many times greater.

Stock brokers are investment specialists, but usually they only concern themselves with shares. The investment training of a financial planner is oriented toward taking a broader view of investment, a view where other asset classes such as property trusts, cash management trusts, mortgage funds and more are considered. The basic training of a financial planner and a stock broker are in terms of investment strategy initially very similar, but financial planners are interested in long term wealth creation by a variety of means, while stock brokers focus on buying and selling stocks.

One difference between financial planners and stock brokers is how they construct a conservative portfolio. We've seen the recommendations of a number of stock brokers and it appears that while a financial planner's conservative portfolio consists of mortgage funds, cash, bonds, property trusts and some shares, often brokers tend to consider a portfolio of bank stocks to be conservative, as opposed to a portfolio of biotech stocks which is aggressive.

A tax lawyer can help you with strategies to reduce tax. These lawyers draw up trust deeds and other documents, and they give advice on the appropriate use of structures such as companies, trusts and other entities. A tax lawyer may or may not be also an estate lawyer, handling issues related to wills, power of attorneys, testamentary trusts and other issues related to handling deceased estates and business succession plans.

It is not the job of a financial planner to personally prepare a tax return, buy and sell shares directly on the stock market, draw up legal documents or audit self managed super funds, but the financial planner must know enough about each of these things to know when they may be appropriate strategies to use, and provide a referral to the appropriate specialist to carry out the extra work (again, think of a financial planner the way one thinks of a GP, giving a diagnosis and then writing a referral for you to see a specialist).

The reason why you go to a financial planner is because you want to know that everything is taken care of, your insurance, your mortgage, your investments, your superannuation, your estate planning, your tax planning and other things are all wrapped up in one comprehensive plan, so nothing is left out.

So what exactly is in a financial plan, and how is it produced?

The first step is a comprehensive fact finding interview. This is also a session of getting to know each other. Good financial planners aim to have you as a client for life, as opposed to just wanting to sell you something right now, so while being businesslike the adviser also wants to have a conversation as well. In this session the financial planner will find out where you presently have your money invested, and possibly why, what insurance cover you have, what preparation, if any, you have made for estate planning, your attitude to risk, your expectations of return, your ability to commit to a structured investment program and much more.

If the first interview was not sufficient, and more information is required, you or the planner are going to have to dig up this extra information, things like how your employer super is invested, what your insurance policies cover etc. You may need to see the financial planner a second time, or the extra details can be given over the phone.

Once all the required data has been collected, the financial planner will have a number of calculations to make. A financial planner has to consider a great many things when making investment recommendations, things like the tax consequences of investment strategies, risk and return, the amount of capital you have on hand and your capacity to save money in the future, your current and future spending requirements, social security entitlements, insurance requirements and so on. There is significantly more to it than just picking funds.

Even if you do not want a financial plan (ie a comprehensive strategy), even limited investment advice may still require a lot of work. The difference between the way amateurs and professionals construct a portfolio is that amateurs focus more on picking individual assets, and professionals focus on overall portfolio management including asset allocation and savings strategies. How asset allocation is managed in the future, and how well disciplined the investor is in adhering to a proper strategy is much more important than trying to identify a few good investments, not that investment selection is given little thought - both are important.

The financial planner starts by considering the time you have to invest. Short term objectives require low risk investments, there is no point investing in something volatile like the stock market where the average expected return over a short term is far less than the random swings in prices that are normal for such an investment. On the other hand, over the longer term the short term swings become less important, and the expected return from such investments is usually very high, so a portfolio designed with high return in mind is possible since if you hold for many years the risk will be less.

On top of the time frame, there are also issues that relate to the economy itself, present interest rates and the outlook for inflation will have a say in the asset allocation between shares, property and interest bearing investments. All this is taken into account before we even start to consider factors such as your personal ability to accept investment risk.

Not all financial planners offer a truly comprehensive financial planning service, many choose to restrict themselves to only offering advice in a more limited fashion. We are holistic financial advisors, which means we offer advice on virtually all matters of personal finance.

We work through a great many things to help you reach your goals, looking at your mortgage and showing you the most tax efficient way to set up your bank accounts, calculating how much insurance you really need and how to get it at the most economical prices, explaining wills and testamentary trusts, figuring out at what rate you'll need to contribute to superannuation and the best way to allocate money to reduce risk while attaining the best possible returns, structuring your assets in a manner to ensure a larger social security payment and how to get the most money out of super by explaining the most tax efficient way to draw an income stream.

It is also our policy to help clients understand all these things, so we provide educational materials and detailed explanations of how the tax and superannuation systems work, investment skills and help with meeting savings targets.