To keep things simple our guidance will follow our Seven Key Financial Planning Areas in turn. We've refined each of these Areas relentlessly over the last two decades to make sure that your Plan is not only comprehensive and effective, but also highly personal to you.
- What could stop you achieving your goals?
- How will you organise your money?
- How will your debts be repaid?
- How should you invest?
- What will you leave behind?
- Contribution
- Quality of life
1. What could stop you achieving your goals?
This is the first Key Area of financial planning for a very good reason. We've learned from experience that being successful with money is as much about what you don't lose as how much you make.
There are some setbacks that could take years to recover from, and which can strike without warning at any time. It makes great sense to have a strategy in place to deal with these risks so that you're prepared for the future.
Some of these risks - such as redundancy, business failure or financial market collapses -can only be addressed by proper planning.
Others - such as ill health, property damage or even death - can be dealt with by suitable insurance. We don't believe in overloading you with policies, so we're just as likely to suggest that you cancel unnecessary premiums as take out new ones. But we will help you to make sure that, as far as it's possible, you're protected against the major calamities in life that could throw you seriously off track.
2. How will you organise your money?
Controlling your cash is at the heart of your Financial Plan. Your future wealth will be determined by your ability to generate excess cash, and how you choose to spend or invest it. It is also vital to have a cash reserve fund available to avoid the need to draw on long term funds.
This Area is crucial to the success of your Plan, because it is concerned with the day-to-day management of your money. We'll ask you to tell us about your income and your spending so that we can calculate what your financial future looks like, and we'll help you to decide your priorities so that you can make really effective decisions.
We'll also make sure that you've got more than enough money set aside to pay for the things you've planned in the next few years. That means when you decide to invest some money for the longer term, you'll know that you'll be able to leave it to grow without the daily worry of having enough to spend.
Each year, we'll work through all of your various tax allowances and benefits with you to make sure that you're making use of them efficiently, and we'll help you with the paperwork that's an inevitable part of building your financial future. Our Team will be on hand to answer your questions or to guide you as to the best way to save, invest or spend.
3. How will your debts be repaid?
If the return on the thing you bought with borrowed money exceeds the cost of the loan, then borrowing makes sense. Used wisely, credit can boost your assets and investment values by gearing up returns. But paying excessive credit costs to meet normal consumer spending will eat the heart out of your finances.
There are times when it pays to borrow, but in general it is sensible to repay debt as quickly as possible. We'll help you to analyse what debts and loans you have, and then work with you to create a repayment schedule that works for you.
When you need to borrow, we can call on experts in the field to help you to get the best deal for you. We'll help you to make sure that any loans are structured in a way that dovetails with your Plan, and gives you the highest probability that you'll achieve your goals.
We'll also not hesitate to let you know when the borrowing you're considering is more likely to knock you off track, and help you to really think through what's most important to you, using your personal goals and values as your guide.
4. How should you invest?
If you're going to become, or to remain, financially free then you need to have a properly constructed investment strategy. You'll hear an awful lot of hype from investment companies, most of which is what we call 'financial pornography.'
We use that phrase because it's very easy to become seriously distracted from your goals and do considerable damage by following messages and ideas that seem attractive 'in the moment.' Yet the principles of great money management are actually fairly boring by nature. That's why sticking to them is hard.
It's also why we're convinced that you need a partner to help you along this path. We've proven to our own satisfaction over many years of experience, study and practice that the hardest thing to do for most of us is to do the simple things consistently. Our investment process isn't hard to understand, and can be summarised in a few words;
- Be clear about the distinction between short term and long term money.
- Invest the long term money in a mix of assets (cash, shares, property, bonds, commodities, currency, etc) that offer good diversification.
- Employ proven money managers who have a track record of successful investing in each type of asset you select.
- Rebalance the mix of assets periodically.
- Repeat this process at regular intervals.
Doing this isn't hard (although very few people do do it!). Doing it regularly and consistently in the midst of a sea of financial pornography is hard.
That's why you need a good financial planner as your guide.
5. What will you leave behind - Legacy Planning
For most people, Legacy Planning means ensuring that your assets pass to the people that you would wish by having the right documents in place, and minimising death duties and taxes. Whilst these are important, we'd rather think about the Legacy you're creating today.
It's essential to make sure that you have a Will, and you'll also need to consider setting up arrangements that will enable your family or representatives to handle your affairs if you fall ill or become incapable. But, as Values-Based Financial Planners, we'll also work with you to identify the Legacy you leave today, both financially and in the form of your personal values, memories and philosophies that are important to you, your family and friends.
Often these things - which are at the core of who you are as a person - go unrecorded. If it's important to you, we'll help you to pass on these 'intangibles' in a tangible form, by recording and transcribing your history and values as a document or audio or visual record for your family.
Going through this process has an added benefit, in that it can help to reinforce and strengthen family bonds, and open new lines of discussion. It's a very enjoyable process for us, too, and brings an additional dimension and understanding to our business relationship that helps to inform and guide the work that we do for you.
6. Contribution
There is plenty of evidence to suggest that your level of happiness and satisfaction in life is directly related to the contribution that you make to the world. That's why we consider this to be an important part of your Plan.
Contribution may be about creating a planned strategy for giving to causes that you feel strongly about, and using charitable tax breaks wisely. But it could be much more.
Maybe you'd like to get involved in a charity or community activity, or help a project by volunteering your time or skills. Perhaps you'd like to set up your own charitable fund, controlled by you, with a clear focus based on your own views and experiences.
Or perhaps we'll just help you to recognise and nurture the contribution that you already make to the world in your own, personal, quiet way.
Either way, this is a conversation we'd like to have with you. We've got plenty of ideas and experience that will help you to create a Financial Plan that is about more than just you, and recognises that building your financial capital is not the end objective of good financial planning but one of a series of steps towards a truly fulfilling, purposeful life.
7. Quality of Life
Improving your Quality of Life is a theme that runs through the core of your Plan. It is the natural end result of good planning, properly implemented, with a clear end goal in view.
As your Plan develops and falls into place, you will begin to experience the sense of ease and confidence that our clients tell us is the result of working with us. You'll feel in control, prepared for all eventualities, and on track to achieve your goals.
Your life will become much simpler, and you'll be able to use the time that you've freed up to focus on the non-delegatable areas of your life that can make a profound difference. Over time we'll complete a number of exercises with you that will help you to focus on these areas, and to consider what actions will make a real difference to you. We'll work with you to help you to make real progress towards having a great life, and keep you focused.
This is a relationship that we'll both enjoy, and which will develop and mature over time. We're looking forward to working with you! Why not call us to talk through how to start making your life simpler?