What should my financial planner be doing for me?

There is much confusion around what service a financial planner should be providing. Many financial planners still see themselves as investment advisers, which shouldn’t be their primary role, in my opinion.

You see, the primary focus of a good financial planner should be to make a plan (as the name suggests) with their clients to ensure financial independence. As I said in my previous blog, what should be really important for YOU when saving for the future is, can you do all the things you want during your lifetime and never run out of money?

If you don’t know the answer to this question, your “planner” probably hasn’t made a plan with you…..

So, what is a financial plan?

A financial plan is a living plan, which is regularly reviewed and provides a cashflow of your future. This cashflow is based on your current income, spending, saving and investment habits. Within your plan you can lay out your personal and goals as well as your dreams in terms of everything you want to BE, DO and HAVE (I will come back to this in a moment).

Your plan will tell you whether you can achieve all these things and never run out of money. If you cannot, then we figure out a way to either help you get there, or you decide whether or not a particular dream is that important. The only way to get to where you want is with a plan. Warren Buffett stated, “An idiot with a plan can beat a genius without a plan.”

Now, back to BE, DO and HAVE.

We work on your future planning with three things in mind. We want to focus you on setting goals, that are important to you, and these come under the headings of BE, DO and HAVE. I will list what I mean by this, but will leave BE until last as it is more involved:

DO (experiences)

The questions to ask yourself under this heading are related to what you want to do with the rest of your life – for example:

How may holidays do I want to take a year, how long for, what type of place do I want to stay in and how much is that going to cost?

What hobbies do I want to do, how often do I want to do them, what will this cost?

Do I want to retire / move abroad, when, what will I want to do in new country (rest, work, live there part time / full time)?

HAVE (material items)

The questions to ask yourself under this heading are related to what you want to do with the rest of your life – for example:

What house do I want to have as a home, by when, where, what does it look like, how much will it cost?

Would I like to have a holiday home, where, what does it look like, how much does it cost?

How often do I want to change my car, what type of car do I want to have, how much will it cost?

Would I like a boat, helicopter etc, which one, how much will it cost

BE (emotional and spiritual)

Do I just want to be secure in my financial future, what does this look like to me?

Do I want to be able  help my children get onto the property ladder, how much do I want do be able to give them?

Do I want to be able to help my wider family, who and how and how much?

Do I want to be able to give back to society, through charity, impact investment or time and what does this look like?

With each of the questions you ask yourself, put a deadline (date) on the goal and also aks your self how important is this?

There are many other questions you will want to ask yourself. The above are just to get you to start thinking.

Building your personal plan and cashflow

Once we understand your BE, DO and HAVE, we will start building your personal plan and cashflow forecast. We use specialist financial planning software called CashCalc. We build your plan by detailing your current income, spending, saving and investment habits. We will together select assumptions on growth of your income as well as investment growth and inflation. We then build your BE, DO and HAVE goals into the software.

These details, once input into CashCalc, will provide a clear cashflow forecast and the start point of your plan. We can then understand whether your current habits will enable you to achieve everything you want and never run out of money. If the amount you have left will create a large inheritance tax liability, you may wish to “dial up the fun” or gift money away earlier – we can then model that into the cashflow.

If your cashflow is not positive, we can rectify this through saving and investment habits, looking at how to increase your income, or look at goals you can live without.

It is important to regularly review your plan as goals and circumstances change. Remember, the MOST important thing about planning is to ensure you can life in the comfort you have made a plan to enjoy life without having to worry about whether you will run out of money.

Without a plan you are simply guessing.

In my next blog I will write about the art of goal setting and how creating a strong enough “why” is important

If you would like to learn more about planning for your future, we would love to hear from you.

Thank you for reading.

Mark Parello
Managing Director
mark@daintreewm.com