When life is busy, whether you are establishing a career, planning a new home or having a family, it can be hard to look ahead even for the next few years. Perhaps we all wish for a crystal ball, but the next best thing is an astute financial planner.
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A financial adviser can do so much more than recommend what to invest into and how much to invest. They will help you establish clear goals and plan to achieve those goals, ensure the plan can be adjusted when the unexpected happens, and be at the end of the phone when you have a query or concern.
Advisers can also use technology such as cash flow planning tools to help us visualise a plan and answer questions or concerns we may have, such as these three below.
1. There’s so much I want to do in my life outside of work. Will I ever be able to afford early retirement?
“Many people would love to retire early,” says Lloyd Davies, chartered financial planner and director of rockwealth Aberdeen. “But how do they know if they can afford to do so?
“If you work this scenario back, at what age would you like to retire, what would retirement look like, and what are your costs of living likely to be (in today’s terms)?
“An adviser can then help establish the required pension provision and work this back to today to establish if there is a shortfall and if so, how this can be made up through increased saving, investing in assets with greater returns potential, etc.
“Of course, there are unknowns ahead which you must be aware of but, whether those are personal like the death of a spouse or wider economic issues such as the pandemic, advisers have access to cash flow planning tools which allow the strength of the plan to be tested against different scenarios.
“Absolutely key to the process is revisiting your plan regularly to ensure it is on track or establish what changes need to be made.”
Starting early is always recommended, don’t bury your head in the sand. “I would always suggest that everyone can benefit from financial advice,” says Lloyd. “And the earlier you begin to plan the greater chance you can achieve your goals.”
2. How can I help my adult children without landing them (and/or me) with tax penalties?
“Inheritance tax and laws around gifts is another area people get bogged down in and we can take you through every aspect of that,” says Lloyd.
“Many people would like to help their children meet the costs of studying or buying a home. But their concern is how much they can give before they’re taxed, or if it will leave them struggling.
“There are many ways lump sums or regular amounts can be gifted without creating an immediate tax liability but it is important to seek advice to understand your options and the potential implications of each. As with pension planning the tools available to advisers will allow them to demonstrate that gifting is affordable and will not leave the person making the gift short of funds.”
3. What you should I do with my portfolio when considering the possible implication of war on my savings?
We’ve lived through a pandemic and now we’re watching a war unfold, so it’s little wonder that Lloyd is getting enquiries from clients concerned about their portfolios.
“For many longstanding clients I must sound like a broken record during periods of falling markets,” says Lloyd.
“Whilst it’s never pleasant, during periods like the start of the pandemic or the early weeks of 2022 most clients need to sit tight and do nothing. If the portfolio was set up correctly at the outset it should remain appropriate even during a period of falling markets (however uncomfortable that may feel) and will provide the desired returns over the long-term.”
Tips from rockwealth Aberdeen to help you find the right financial planner
Finding the right financial planner is important as the client/adviser relationship is a long-term one. The adviser will get to know you, your partner, your family and other professional connections over a period of time.
You need to find someone you will be comfortable working with, who you can be honest with and who you are prepared to challenge and be challenged by.
In an initial meeting you will have many questions but try to think not just about the planning but also the individual: do you think you could work with this adviser over the long-term?
“I always consider that initial meeting to be at my cost,” says Lloyd, when considering how he approaches meetings with prospective clients. “I will explain who I am and how I work, the process, the charges and the next steps.
“I want to know what has brought the individual or couple to seek advice, find out about their current position and what they want to achieve. I will answer any questions the potential client(s) has and I am always conscious as to how big a decision they are making and allow them all the time they want. There is no pressure to reach any decisions at the first meeting.
“An adviser is not just for a one-off transaction but the long-term and can add huge value over many years. But it is vital you find the right adviser.”
Find out more about the benefits of financial planning with rockwealth Aberdeen.
