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Investment Advice and Planning: Current Situation & Profile - Module 1.1 Assets, Debts, Income, Expenses

Edward Ketterer • January 11, 2021
Investment Advice and Planning - Module 1

The beginning to Investment Advice and Planning starts with analyzing exactly what an investor has and has done. This provides a base from which advice and planning can be developed.


When we speak of Assets, Debts (liabilities), Income and Expenses we are speaking of personal as opposed to business Assets, Debts, Income and Expenses. Here we will outline some of the most common when it comes to what to consider when developing a financial plan and providing financial advice.

What is being created here through this part of the “Current Situation & Profile” module is a personal financial statement / balance sheet from which can be determined net worth as calculated by subtracting assets from debts (liabilities). 

When it comes to income minus expenses, we are creating a cash flow statement which outlines how effective expenditures are being handled including paying off debts (liabilities) and the ability to invest for future financial needs and wants. 
As we establish the week-to-week, month-to-month and year-to-year in-flows and out-flows to meet expenses, payoff debt, and grow assets we establish financial continuity whilst at the same time providing a financial base from which funds can be allocated to address potential emergencies. 
We can then create a distribution ratio that outlines funding options to be established on how in-flows (represented as income i.e. salary, wages, dividends, rent receivable etc...) are spread across as out-flows (distributed income) to meet expenses, payoff debt, to meet current obligations whilst setting aside monies for future financial obligations and requirements as savings and retirement funding which must considered a need rather than a want. 
Assets Debts (liabilities) Income Expenses
1. Real Estate 1. Mortgage Loan 1. Salary / Wages 1. Food / Consumables
2. Bank Accounts 2. Investment Loans 2. Bonuses / Commissions 2. Utilities
3. Investment Portfolio 3. Personal Loans 3. Business Profits 3. Insurance
4. Superannuation 4. Credit Card 4. Pensions – Personal and Government 4. Memberships
5. Antiques / Collectables / Art 5. Overdraft 5. Rent 5. Superannuation Contributions
6. Jewelry 6. Education 6. Dividends 6. Savings / Investment
7. Automobiles 7. Automobile 7. Interest 7. Charitable Donations / Philanthropic
8. Electronics 8. Other 8. Annuities 8. Tax
9. Home Furnishings / Appliances 9. Other 9. Other
10. Other

Module 1.1 provides information for the development of a personal financial statement / balance sheet and cash flow statement and is 1 of 4 elements in module 1 that provide a profile from which a client’s financial needs and wants start to form a platform from which Module 2 “Structure” and Module 3 “Strategy” are created.

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