Financial planning is for everyone, not just the wealthy

When you think of financial planning, what comes to mind? Boring discussions on pensions, wealthy individuals hiding their money off-shore to save tax?

Neither could be further from the truth. Financial planning is used by millions of people worldwide; people just like you. It follows a structured processes, with the planner working with clients to help them achieve the life of their dreams.

Sounds a bit too much? Let me explain how it works.

A financial planner is not simply a financial adviser, although many financial advisers these days call themselves financial planners without carrying out proper financial planning! I’m not sure why, maybe because they think clients want a financial planner? In my experience, they don’t – what people really want is someone to carry out the financial planning process with them, that will help them achieve the life they desire.

I’m sure my clients couldn’t care less whether I call myself a financial planner or not. But if I stopped asking the thought-provoking questions which challenge their mindset, and creating visual plans which allow them to look into their potential financial future, I’m sure they’d have something to say about it.

True financial planning is the process of establishing what someone really wants from life, then working with them to create a financial blueprint that outlines agreed actions on how they can achieve their goals.

But it doesn’t stop there, because we all know that a resolution set on New Year’s Eve is easily forgotten by Valentine’s Day. That’s why financial planners take their clients through a structured, six-stage process, ensuring that people receive a similar experience wherever they go:

  1. Defining the planner and client working relationship. What are the client’s expectations of the planner and vice versa, and how will the planner be remunerated? Clarity builds trust, and strong relationships need trust.
  2. Information gathering. Once terms of business have been agreed and the planner knows what is expected by the client, they begin to piece together the information they need to form a plan. This includes the obvious, such as income, expenditure, assets and labilities; but equally as important is personal information, such as future plans and dreams.
  3. Number crunching takes place. Figures are analysed and evaluated based on the client’s circumstances. The planner looks at income and tax implications, investments and capital gains, and estate planning, wills and inheritance tax. If needed, they pull in the expertise of specialist accountants, tax advisers or solicitors. This process concludes with one of two future outcomes: either the client will run out of money later in life, or there will be too much surplus capital. Both scenarios require careful financial planning.
  4. Draft planning is presented to the client, discussed, and a final plan is completed. This discussion is important, because the more the client engages in the decision-making process, the more they will want to carry out the actions that will move them towards their desired outcomes.
  5. Recommendations are implemented. It’s important to realise that recommendations may not be product-related, which means that financial planning is about the person and not about products.
  6. Once recommendations have been implemented, which may be over a long period of time, the final step is ongoing monitoring to make sure everything is on track. This often necessitates looping back to step one at some point, to once again discuss future hopes and aspirations before repeating the planning process.

You see, financial planning is not about answering questions like, ‘Is this pension better than the other? Is this fund better than that fund?’ Financial planning is about asking deep and meaningful questions which, if acted upon, will move you towards a life which brings you more happiness and fulfilment.

Because after all, you don’t want more money; what you really want is what more money will bring you.

Warren Shute MSc is the current Certified Financial Planner of the Year and author of the bestselling book The Money Plan available on Amazon for £11.99

 
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