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A financial planning priority list

And why you need one.

If you think having investments, saving money, drawing up a budget (and sticking to it) and some sort of strategy for your retirement is the full story for a financial plan, think again.

Every individual needs a financial planning priority list that covers every aspect of their financial life, beyond the four most obvious aspects. This list will guide you through what is needed. 


Anyone with assets or dependents, should have a will.  In the absence of a will assets are bequeathed based on the RSA Law of Intestate, which is slow and frustrating to any surviving dependents. For a will to be valid it must adhere to this:

  1. It must be in writing.
  2. Drafted / executed correctly.
  3. In the document the intention must be evident that this document serves as the deceased’s will.

Some lesser known aspects are:

  1. Guardians of children cannot sign a will as a witness.
  2. A foreign will is required for direct foreign assets.
  3. Following a divorce, a will must be amended within three months, otherwise the divorced spouse will benefit as normal from the estate in accordance to the existing will.  Within the three months’ time frame, the surviving spouse will be regarded as predeceasing the deceased and will not benefit.  (Section 2B Wills act)

Long-term risk cover

Many people think risk cover only refers to life cover and is only necessary for people with dependents or perhaps a business that will require proceeds from an estate. However, that is not all it refers to. Risk cover also denotes income protection cover in case of illness or an accident and cover for disability or dread disease. Cover for disability or dread disease is maybe not that critical but should be considered against the individual’s family’s health and medical history.

Other issues to note regarding risk over:

  • Consider “later” affordability of cover, based on the chosen premium pattern (normal age rated, aggressive or level).
  • Stand-alone benefits vs accelerators – remember that it is always more difficult to obtain risk cover when you are older, due to an accumulation of medical history.
  • Cover growth vs inflation (again considering with regards to above).
  • Group life cover at employer – ensure the portability of that cover when changing jobs. If not transferable, obtain own risk cover.
  • If one has an extreme medical condition, “group life cover” could be a more affordable and in some cases the only route due to the fact that this typically does not require a medical examination. 
  • If a beneficiary is nominated on life cover, the pay-out is free from executor’s fees.  If no beneficiary is nominated, the policy pay-out goes to the deceased estate (forms part of the residue) and hence carries executor’s fees.  If no beneficiary was nominated, the respective cover amount needs adjustment for the executor’s fee and estate duty portions.

Medical and short-term insurance

The other two key components are medical cover (also gap cover for medical expenses not covered by the scheme) and short-term insurance.  It is important to look at the fine print and not only focus on the perceived affordability of the premiums with short-term insurance.

Tax efficiency

Any sound financial plan should be cognisant of taxes payable and effort should be made to create tax efficiency. Governments the world over are under pressure and are constantly seeking new ways to tax citizens. Make sure of the rules regarding tax deductions, issues like transfer duties, donations tax and the tax regime relevant to trusts and businesses. Capital gains tax has particular rules that investors should be aware of. As the rules change regularly, the assistance of a tax advisor or financial planner can make a significant difference to make tax affairs efficient.


Probably the most talked about aspect of a financial plan is budgeting.  Many individuals still think budgeting only refers to making sure you live within your means.  You should always seek to curb spending, but don’t forget to also look at ways to earn a second income.  Save as much as possible for retirement, for a “rainy day” and for unforeseen expenses.

Retirement planning and saving

Possibly the biggest issue to include in a financial planning flowchart is retirement planning and general saving. It has been widely reported that people are living much longer that when the practice of retirement came into effect.  Against this background of “longevity”, the conventional thinking around saving for retirement is outdated.

Individuals should consider different investment options around retirement.  They for instance have to choose between, for instance, “passive investment” (listed financial instruments) vs “actively managed investment” (e.g. investment property or business activity). The different vehicle options that are available for passive “market-linked” investments include retirement vehicles, discretionary investment and now also the new “tax free savings account”.  The best suited vehicles should be considered based on your own unique circumstances, driven by your taxability and liquidity requirements.

When investing, do not be blinded by economic forecasts (as we have seen in recent examples e.g. Brexit) reliable forecasts, can be very wrong.  Rather invest in the highest quality advice, asset management choices and instruments to achieve your long term investment objectives.

Estate planning and succession

The last aspect to include is estate or succession planning. Think about liquidity at death and things like capital gains and taxes payable, executor’s fees, accrual claims, how a spouse’s massive accrual are settled if he/ she is not the heir of your estate.  Preferably appoint a professional or joint professional executor.  No surviving spouse or child is really emotionally charged for the administration of your estate.


Do you have any questions you would like answered by registered financial planners?



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