When you think of financial planning, what comes to mind? Boring discussions on pensions? Wealthy people hiding their money offshore to save tax?
Neither could be further from the truth. Financial planning is used by millions of people worldwide, people just like you.
A financial planner is not simply a financial adviser. 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 aims.
Financial planners take their clients through a structured, six-stage process, ensuring that people receive a similar experience wherever they go:
- Defining the 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.
- Information gathering. Once the planner knows what the client expects, they begin to piece together the information they need to form a plan. This includes the obvious, such as income, expenditure, assets and liabilities; but equally as important is personal information, such as future plans and dreams.
- Number crunching. 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.
- Draft planning. A plan is drafted, discussed and finalised. 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.
- Recommendations are implemented. Recommendations may not be product-related, which means that financial planning is about the person and not about products.
- Ongoing monitoring. This makes sure everything is on track, often including looping back to step one at some point to discuss again future hopes and aspirations before repeating the process.
Financial planning is not about answering questions about which pension or fund is better for you. It’s about asking deep and meaningful questions that, 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.
Author: Warren Shute is an award winning Certified Financial Planner and author of the Amazon bestseller The Money Plan.