Young Couple | The leading source of data, research, information & resource for investment managers, professional investors, UHNW & HNW investors, and advisors to institutions, billionaires, UHNWs & HNWs. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets? Caproasia - Learn more

This site is for accredited investors, professional investors, investment managers and financial professionals only. You should have assets around $3 million to $300 million or managing $20 million to $3 billion.

5 Reasons Why Financial Planning is More Important than Ever for Clients

Having a Starbucks Latte everyday, dining in a cafe or restaurant, taking a taxi or uber ride home, these are everyday expenditures of a young adult.

Spending a few thousand dollars on the latest series of Louis Vuttons’ or Apple’s products, throw in the occasional 2 weeks holiday and another few thousand dollars is blown.  And not forgetting major life decisions such as buying a car or a house that can run into a few hundred thousand or millions of dollars.

With all these exciting and attractive spending habits, how do clients finance their lifestyle?  We look at 5 reasons why financial planning is more important than ever for clients:

Ads & Announcements

The 2023 Investment Day | HK & SG - Visit & Register here
Where do you invest $250k, $1 million, $10 million, $100 million or $1 billion? Can you generate IRR of 10% / 15% / 20% or more? Private Equity, Hedge Funds, Boutique Funds, Private Markets & more. Taking place on 28th March 2023 in Hong Kong, 4th April 2023 in Singapore, and Virtual Investment Day in April 2023.


No. 1 Not Planning is Expensive

Career Decision
Career Decision

Budgeting is easy: Earn more than you can spend, or always save a portion of your salary.

Budgeting is easy:

” Earn more than you can spend, or always save a portion of your salary “

But financial planning is tough:  What should your client start with? Can your clients afford the fees or sustain paying the fees?

Events that can be expensive for a middle income client:

  • College education costing $20,000 – $50,000
  • Buying a house that cost $400,000
  • Interest Expense on a $300,000 loan at 4% is $215,608.52 over 30 years
  • Renovation & furnishing costing $50,000
  • Wedding & Vacation costing $50,000
  • Large Hospital Bill costing $20,000 – $50,000
  • Death & Funeral Expenses $10,000 – $30,000
  • Lawsuits $10,000 – $50,000

Events that can be very expensive for a wealthy client:

  • College education costing $100,000 – $300,000
  • Buying a house that cost $2 Million
  • Interest Expense on a $2 Million loan at 4% is $1,437,390 over 30 years
  • Renovation & furnishing costing $200,000
  • Wedding & Vacation costing $100,000
  • Large Hospital Bill costing $50,000 – $100,000
  • Death & Funeral Expenses $30,000 – $200,000
  • Lawsuits $50,000 – $500,000


No. 2 Spending and More Spending

Clients in Crisis
Clients in Crisis

By the age of 35, most people carry debts, mainly because of housing.  And if clients have a family, they will be liable for future expenses – being responsible for their children’s upbringing and education or parent’s old age care and medical expenses.

All these means they have to spend on maintaining the well-being of the house and the family.  Is the up-keeping basic or lavish?  Should the family strive to upgrade their lifestyle or keeping living standards to a minimum?

How about daily activities such as travelling to work / school?  Do they use private transport or public transport?  Do they have a coffee from starbucks or from a 3-in-1 sachet?  Do they walk past a retail shop and make an impulse purchase? Everyday, clients are tempted with a multitude of spending opportunities.  Their decisions are made easier with credit cards, mobile payments and heavily discounted or promotional items that flash across their mobile device.


No. 3 Big Debts, Small Debts

Depressing Times
Depressing Times

Big debts or small debts, most clients have no idea how to manage debts.

” Big debts or small debts, most clients have no idea how to manage debts “

In United States, many college students begin their career with university loans.  In Asia, while most parents fund their children’s education, they graduate and chalk up credit card bills or have mortgage loan within 5 years.

Their only way to manage debts: work to pay off the debts.  If they struggle with debt payments, they may make reckless decisions and take higher risks in the hope of getting a windfall to pay off the debts.


No. 4 Emergency / Liquid Funds


In financial planning, the rule of thumb is to keep 6 months of liquidity.  A major flaw in this recommendation is you have to be a good saver to have 6 months of savings for emergency use.  The 6 months of liquidity is likely kept in savings or low interest bearing account, which is insufficient over time to beat inflation.


Monthly Expenditure 6 Months Liquidity
$1,000 $6,000
$3,000 $18,000
$8,000 $24,000
$15,000 $80,000


For most people, the additional savings are also quickly spent on financing important milestones in life:

  • Holidays / Celebrations
  • Education
  • Wedding
  • Housing
  • Car
  • Raising Family
  • Taking care of Parents
  • Medical & Health

This brings about an important question: How should clients manage cashflow?


No. 4 Beating Inflation

Portfolio Projection
Portfolio Projection

For every single individual, it is impossible to beat inflation. That is not how inflation works.  An individual’s desire do not cause inflation. Many individuals desiring the same thing, causes inflation.

Because everyone wants the same thing, a lack of supply means the one who can spend the most will get the item.  The increase in price is the “inflation rate” everyone else can’t match up.  This is why majority of the population can’t beat inflation.

Even if they do, the maximum period most can do that is usually 2 economic cycles.

Read More: The Paradox of Investing to beat Inflation

But with good financial planning, clients can enjoy the benefits of beating inflation by simply not deflating their assets from unnecessary financial penalties  Some examples:

  • Get into Tax-Deductible Schemes
  • Get into Subsidised Financial Schemes
  • Reduce or avoid paying fees / taxes/ stamp duties
  • Look for efficient (cost, time, value) transactions


No. 5 Balancing between Dreams and Reality

A musician who has only $500, would spend $500 for a concert ticket or a musical instrument while a professional would keep $500,000 for retirement.  Dream chasers do not do much financial planning while a professional might do lots of financial planning.  Both have different goals in life.

Financial planning moderates between dreams and reality.  Would the musician really want to live on the financial edge everyday?  What if the musician is struck by illness?  Or perhaps a savings plan could yield a larger sum to buy a better musical instrument or get enrolled in to a top grade music school.  Would the professional be happy accumulating a large savings and living well, but miss out all the things he or she could have done in the lifetime?

Financial planning is not only about ensuring that the clients’ financial well-being are taken care of, but also to free up resources such as time, and to do the things he or she can do.

” Lost Time is Never Found Again “

~ Benjamin Franklin


These are 5 reasons why financial planning is more important than ever for clients.


Related Articles:


2021 Data Release
2020 List of Private Banks in Hong Kong
2020 List of Private Banks in Singapore
2020 Top 10 Largest Family Office
2020 Top 10 Largest Multi-Family Offices
2020 Report: Hong Kong Private Banks & Asset Mgmt - $4.49 Trillion
2020 Report: Singapore Asset Mgmt - $3.48 Trillion AUM

Register Below
Latest 2022 data & reports, insights & news
Every Saturday & Sunday 2 pm
Direct to your inbox
Save 2 to 8 hours per week. Organised for success

For Investors | Professionals | Executives

New to Caproasia?
Join 10,000 +
Learn More | Sign Up Today

For CEOs, Heads, Senior Management, Market Heads, Desk Heads, Financial Professionals, Investment Managers, Asset Managers, Fund Managers, Hedge Funds, Boutique Funds, Analysts, Advisors, Wealth Managers, Private Bankers, Family Offices, Investment Bankers, Private Equity, Institutional Investors, Professional Investors

Get Ahead in 60 Seconds. Join 10,000 +
Save 2 to 8 hours weekly. Organised for Success.

Subscribe / Sign Up / Contact Us

    Mailing ListFree TrialSubscriptionMembershipEvents

    Professional InvestorPrivate WealthFamily OfficePrivate BankingWealth ManagementInvestmentsAlternativesPrivate MarketsCapital MarketsESG & SICEO & EntrepreneursTax, Legal & RisksHNW & UHNWs Insights

    Caproasia | Driving the future of Asia
    a financial information technology co.
    since 2014

    Web links may be disabled on mobile for security.
    Please click on desktop.

    Previous articleTop Headlines in the Last 7 Days (2nd – 8th May 2016)
    Next article9 Legendary Quotes on Diversification covering capital markets, investments and private wealth in Asia. Our users manage, advise & invest $25 trillion assets in Asia