People tend to focus on the investments side of the wealth management equation, but a sound financial plan should really be your starting point. Everything follows from knowing what you are investing for, when you need results and what it will take to achieve your goals.
Many of our users begin thinking that investment management advice is all they need. They are variously experiencing investment “vertigo” from managing significant amounts, have come into a lump sum of money or want to make their retirement savings work harder. Invariably, however, most realise they need to form or revise their financial plan first.
Why you need a financial plan
Investing without an investment strategy is never wise, and that itself needs to be built on clarity over what you are investing for, the time-horizons you have in mind and which investments are best suited to achieving your personal set of short, medium and longer-term goals. Your financial plan will address all these questions.
A sound financial plan will ensure your wealth is working as hard as it possibly can, and that all your savings and investments are pulling in the same direction
A haphazard approach to saving, investing and spending is unlikely to help you realise your ambitions. You may put money to work for too short or too long a time, take on more or less investment risk than is called for and get hit by tax liabilities far in excess of what you could have paid. In contrast, a sound financial plan will ensure your wealth is working as hard as it possibly can, and that all your savings and investments are pulling in the same direction. Looking at family wealth in the round will pay this wisdom forward to ensure the security of future generations too.
Drawing a route-map towards your goals
Financial planning addresses every element of your financial circumstances and the full spectrum of your financial goals. These may be long-term and serious, like saving for an attractive – and sustainable – standard of living in retirement; or, they may be shorter-term and more pleasure oriented, like funding a dream holiday home.
A thorough assessment of your financial position and objectives completed, next comes the strategy for achieving those goals in the time-frames required. Last of all is the selection of investments intended to get you there, and the best ways to hold them. Financial products are only the vehicle for your journey, whereas a robust financial plan is the route-map that should steer your every move.
Financial products are only the vehicle for your journey, whereas a robust financial plan is the route-map that should steer your every move
By now, you will be thinking about just how unique your situation and objectives are, and what a huge a range of variables have to be taken into account (which will themselves change over time). Your financial “personality”, like how much risk you feel comfortable with, also has to be included in that mix.
There is, therefore, as much art in financial planning as there is science. Taking advice from a qualified, experienced professional whose questioning skills will draw out your true attitudes is vital. Self-assessment or automated “advice” are unlikely to give a full picture (this feature covers robo-advice risks).
Top Tip
There are myriad perfectly legitimate ways to mitigate Income, Capital Gains and Inheritance Tax, and neglecting to do so is depriving yourself of gains that could be invested to generate even greater returns.
Lee Goggin
Co-Founder
Key financial planning pillars
Considering the following pillars of financial planning will give you a firm handle on what your route-map should cover, giving you a good idea of what a professional adviser will want to discuss at the start of a relationship and on an ongoing basis. Regularly reviewing your plan – and how well your wealth management provider is serving it – is good practice.
1. Understand your exact financial position (and how might it change)
Everyone should periodically work out their net worth (meaning all of their assets minus all of their liabilities) and then assess how their income streams and spending might change. It’s easier than you might think to miscalculate here so speaking to a third-party will help ensure nothing is forgotten.
2. Get clarity on your full range of financial goals
A huge array of worries and financial ambitions bring wealthy individuals to our site seeking professional wealth management advice, including, but certainly not exclusive, to those outlined here. Whether you are entirely new to wealth management, feel like you could be getting a better deal or just want to know what you could be doing to make your wealth work ever harder, why not see which advisers would suit your needs.
Our fast, no-obligation matching service means you have nothing to lose, and potentially a very great deal to gain. Join the thousands of wealthy individuals who have seized their chance for a better financial future – today!
3. Carefully consider your time-horizons
Working backwards from the time you wish to retire, pay for university fees and so on can be a very useful exercise. This will also reveal how feasible your plans are at your current rate of savings or investment returns, which leads to point four below.
4. Get realistic about investment risk
Managing wealth well is all about appropriate risk levels, and that might sometimes mean you have taken on slightly less risk than you need to achieve your goals. Time-horizons are a huge factor here, as your ability to recover from investment setbacks is greater the further away your deadline lies. Another is the asset allocation for your investment capital.
5. Take tax very seriously
Robust investment returns are vital, but so is ensuring tax is kept as low as possible. There are myriad perfectly legitimate ways to mitigate Income, Capital Gains and Inheritance Tax, and neglecting to do so is depriving yourself of gains that could be invested to generate even greater returns. Your must plan to buy, sell and structure your investments in the most tax-efficient ways.
Inspired to start (or review) your plan?
Financial planning can be complex, but its benefits are so compelling that you really should be inspired to start the process of getting one in place – or reviewing one you fear might not be fit for purpose any more. You may even find discussing all these issues with a professional who loves working through this kind of complexity to be quite enjoyable. Knowing you are working towards your goals in a well-thought-out way will certainly bring great peace of mind.
Financial planning can be complex, but its benefits are so compelling that you really should be inspired to start the process of getting one in place – or reviewing one you fear might not be fit for purpose any more
If you seek a wealth manager that can offer financial planning advice, you are certainly in the right place as most of the firms we work with do. Simply indicate as much when you complete our short online assessment and begin the process of meeting the best-matched wealth managers for your profile and needs. Alternatively, if you would like to discuss your requirements further with our expert team, please don’t hesitate to get in touch.
