2. Prove you have explored the range of alternative plans and strategies with the client.

These strategies may include the need to work longer and harder, spend differently, change jobs or perhaps set up a business. The overall goal is to improve the client's lifetime cash flow position.

The advice will look at whether to spend more or save more. The goal is to allocate spending between now and the future on a rational basis.

The advisor can then determine the level of financial risk that the family is prepared to accept in pursuit of its goals. Generally risk is translated through to the amount and type of risky assets such as shares and property held compared to safe assets such as cash in the bank. Some may choose to hold more non-risky assets even though they might have less chance of achieving their future goals. Critical here is both an education of the client - illustrating what can be lost - and an understanding by the client of the impact on their plans if that loss occurs.

This is an iterative process, most clients have neither unlimited time and nor unlimited money and therefore the advice process eventually results in the establishment of a series of life goals, their prioritization and the activities and timetable to their achievement.

3. Prove you know the products that you have selected to meet the client's strategy.

Once you have decided on the strategy and relevant products you need to understand those products so you can argue that they appropriately meet your client's needs.

You may use external research to assist you make those decisions but the advisor is responsible for the final recommendation. The key issue, revealed by the current global melt down, is to understand how the product or service will behave when the markets fluctuate. Many products work well in good times but have a history of failing in bad times. A good understanding of economic history is needed when stress-testing products.

A word or two here about understanding products. One problem that advisors have had is fitting 'Alternative' Investments, Hedge Funds and Structured Products into a traditional portfolio construction methodology.

The answer, of course, is that you cannot do so.  Let's look at why.