One of the biggest benefits of seeing a financial planner is also one of the most overlooked. When you’re trying to sort out your money, whether this be to think about buying a home, retirement, divorce or even taking a big holiday, it helps just to have someone to talk to – someone who knows what they’re talking about.
Are you fine with finance? Or does it make you a little bit phobic? (Be honest). A lot of us are afraid that we don’t understand our own money, and even more afraid of admitting it. This is when it can help to think of your financial planner as a kind of counsellor.
It’s good to talk!
The first thing most of us want to know is: what, out of all the available information, is relevant and helpful to me? Before you can even begin comparing Individual Savings Accounts (ISAs), pensions, insurance and so on, you first need to grasp the many different options and understand what they could mean for you in practice.
A planner can do far more than just help you compare different products. Where they come into their own is in helping you build those financial decisions into your life.
Even if you aren’t the sort to make long-term plans, a talk with a financial planner can help you sort out your priorities. And since most of life’s priorities involve money to some extent, a financial plan will mean you are better equipped to pursue them.
Got a problem?
Like a counsellor, a financial planner won’t necessarily help you solve it. Or rather, you may go in seeking the answer to a particular problem, only to discover that the real issues lie elsewhere. It’s common for people to become blinkered about their own lives, and to get wound up about a particular issue.
By talking everything through with your trusted financial planner, they will help you to see the bigger picture and explore possibilities you never considered before.
David on the financial couch
Consider David. He’s 52, runs a business and is hoping to take early retirement. However, he is worried he might run out of money, so is thinking the family may have to move to a smaller house. His wife Lisa doesn’t like this idea and persuades him to see a financial planner with her.
The financial planner finds their finances in good shape: David has a healthy income, and both he and Lisa have decent pensions and some savings in ISAs. But it emerges in their discussion that David is concerned about his children. The eldest is already in higher education, but the others are 16, 14 and 8, and he hopes for them all to attend university in time. He knows it will be expensive to support them, which is why he feels he will need more cash in reserve and may need to work for longer.
Now armed with the root cause of David’s anxiety, his financial planner can address it directly. David wants to help his children through higher education – a specific goal. The planner makes a suggestion: one of the biggest costs for a student is accommodation. David could potentially buy a flat (with an interest-only mortgage) for his elder daughter to live in when she goes to university. His daughter can rent out the spare rooms, and if her sister and brother end up going to the same university they can use the flat too. When the flat is no longer needed it can either be sold or retained as a source of regular income. Either way, David gets to reclaim the money he used to support his children’s education, and may even end up profiting from the arrangement.
There is nothing especially fancy going on here – David might well have thought of the same plan himself. The difference is, the planner has been able to look at David’s overall financial position and give a highly informed assessment of its feasibility, with likely costs, rewards and risks mapped out at each stage. The planner can also help David to put this plan into motion – for instance, he could significantly boost his savings by transferring them into his pension now, (in order to gain valuable tax relief and tax free growth) then withdraw a tax-free lump sum in three years’ time to fund the deposit on the flat – just in time for his daughter’s return from her gap year.
David leaves with a definite plan in mind, his uncertainties ironed out and his anxieties laid to rest – and Lisa’s glad they get to stay in the family home.
If you have a financial dilemma or some anxieties about your future security, just find a financial planner you feel will suit you and talk. A good financial planner will listen to your concerns and help you determine your goals without immediately going into product solution mode. Just like a doctor won’t give you a prescription without first determining a diagnosis and a good financial planner won’t recommend any financial products without first helping to determine goals and priorities.
If you feel pressured into buying a financial product at your first meeting, you should walk away – that is selling NOT sound financial planning and counselling.
If you have financial questions, concerns, or are looking to develop a plan to help you achieve a specific goal, please do pick up the telephone.