Managing personal
financial risk

The term ‘personal financial risk management’ sounds rather alarming. While it’s true that the consequences of not addressing certain financial risks can be severe, the process of managing risk is a normal, integral part of a holistic financial plan. An experienced financial planner will help you clearly understand any risks, their potential consequences, and what options you may have to reduce them.

Wealth protection and
risk management

A wealth protection plan is also called a risk management plan, since it’s designed to eliminate or reduce the risks to your accumulated wealth and your personal ability to continue to generate that wealth. Those risks include:

Loss of income due to death, serious illness or injury

Wealth protection in this context means the use of life insurance cover to relieve you and your family of the financial burden of death, disablement, or if illness or accident prevents you from earning an income for a long period. The risk of being underinsured is one that thousands of Australians are exposed to – either from not taking out adequate cover initially, or from not updating the cover as their lives change over time.

There are several types of life insurance, some of which pay a lump sum in the event of a claim while others, such as income protection cover, provide regular ongoing payments. Getting professional advice from a financial planner is essential in navigating the various options and tailoring a protection plan for you and your family’s individual needs.

Estate management plan

An estate management plan makes clear instructions so that upon a person’s death, or they become unable to manage their own affairs, their accumulated lifetime’s wealth goes to the right people at the right time and in the most tax-effective way. While having a valid and up-to-date will is the principal element of an estate management plan, there are other elements to estate planning that might be considered.

Aged care plan

Aged care in Australia is very expensive, and the government expects people to pay for their own aged care if they can afford to. Failure to plan in advance for future aged care expenses –for either yourself or elderly relatives – can carry considerable financial risk.