Financial needs analysis: what a proper fact-find should cover
A financial needs analysis is meant to size your actual protection gap, not just introduce a product. Here is what a thorough fact-find should ask and why.
A financial needs analysis (FNA) is the fact-finding process a financial adviser representative is expected to go through with you before recommending a product. Done properly, it is the difference between buying insurance that matches your actual situation and buying whatever happens to be the product being sold that day. It is worth knowing what a thorough one should cover, so you can tell whether the one you went through actually did the job.
Why the fact-find comes first
The point of an FNA is to work out what you are actually trying to protect against before anyone talks about a specific product. MoneySense frames this as three broad risk categories: life risks (death of a breadwinner, total and permanent disability, death of a mortgage borrower), health risks (critical illness, major medical bills, long-term care needs, loss of income from hospitalisation), and general risks (loss of belongings, your car, your home, travel disruption). A proper FNA walks through all three before narrowing to what is actually urgent, rather than starting from a single product and working backwards to justify it.
What a thorough fact-find should ask
- Household income and its sources. Who earns what, how stable it is, and what would happen to household finances if one earner's income stopped tomorrow.
- Dependants and their time horizon. Children's ages and how many years of support they need, ageing parents who may become dependent, and anyone else relying on your income.
- Existing cover, in full. Every life, health and general insurance policy you already hold, including group cover through an employer, so the adviser fills a genuine gap rather than duplicating what you have.
- Debts and fixed obligations. A mortgage, business loans, or other debts that would need to be settled or serviced if income stopped, the basis for mortgage-linked cover calculations.
- Existing savings and liquid assets. What could realistically be drawn on in an emergency, since this reduces — but rarely eliminates — the gap that needs covering.
- Risk appetite, if the conversation extends to savings or investment-linked products, since these carry a different kind of risk from pure protection and should not be assessed the same way.
- Budget over the long term, not just a first-year premium, since many protection products carry increasing premiums with age.
What the output should look like
A proper FNA produces a reasoned view of where you are under-protected — by risk category, not just a single number — and can explain why a specific product or sum assured was chosen to close that gap, rather than simply presenting a policy and moving to the paperwork. If a recommendation cannot be traced back to something identified in the fact-find, that is worth questioning directly.
It is also reasonable to expect the adviser to check whether a recommendation would leave you over-insured, or require giving up an existing policy at a cost — MoneySense's checklist for life insurance buyers flags asking whether replacing an existing product causes lost benefits, switching costs, or otherwise leaves you worse off, and a genuine FNA should surface this rather than only comparing the new product on its own.
Red flags in a rushed fact-find
A fact-find that skips straight to product features without first covering income, dependants and existing cover has skipped the actual analysis. So has one that never asks what you already hold, since without that baseline there is no way to tell whether a recommendation fills a gap or duplicates existing cover. And a fact-find that does not leave you time to think it over, or pressures you to sign immediately, is working against its own purpose — you are not obligated to purchase on the spot, and taking time to compare options or consult someone else is a reasonable part of the process, not an obstacle to it.
What to bring to make it useful
Coming prepared with a rough list of existing policies, recent payslips or income figures, an outline of debts, and a sense of who depends on your income makes a fact-find meaningfully more accurate than trying to recall these details from memory during the conversation itself. Our coverage gap check is designed to help with exactly this preparation step, giving you a starting view of where your cover may be thin before you sit down with an adviser.
Questions worth asking your adviser
- Which specific gap from my fact-find does this recommendation address?
- What existing cover did you factor in, and how did you confirm what I actually hold?
- How does this recommendation change if my income, debts or dependants change in the next five years?
- Would this product require me to give up or reduce an existing policy, and what would that cost me?
- Can I see the fact-find notes themselves, not just the recommendation that followed them?
Talk to an advisor
A financial needs analysis is only as good as the conversation behind it, and it is worth going through one properly rather than skipping to a product. Use the portal's advisor matching to find someone who will walk through a full fact-find with you, or ask our assistant to help you prepare the information beforehand.
Sources
This content is educational information from a licensed advisor, not financial advice. Product details vary by insurer — verify specifics with an advisor.
