One of the questions many people ask us is: “what does a financial planner do?”
It’s easy to assume that a financial planner is just there to deal with specific money issues. You have a financial problem; they will help you to deal with it.
The truth is quite different. Financial planners are there to be a trusted long-term partner, helping you to get where you want to be in life. To them, money and wealth are a means, not an end.
Before answering the question “what does a financial planner do?” it’s important to look at the difference between a financial adviser and a financial planner.
Financial advice vs financial planning
For years, many people have used ‘financial adviser’ and ‘financial planner’ interchangeably. In basic terms, both will give you some advice as to what to do with your money. However, that’s essentially where the similarity ends.
If the first question a person asks is about your money, they are probably a financial adviser. They typically provide transactional advice so, for example, if you want some guidance on where to invest your money, they might sell you an investment product. They might start a pension for you or arrange your life and Critical Illness cover.
Other than the occasional review of your ‘products’, that’s likely to be the limit of their relationship with you.
If the first question a person asks is about your life, or your hopes, goals, or ambitions, they are probably a financial planner. Financial planners take the time to get to know you. They talk about you, not your money, because that’s what’s important.
As you probably guessed by our name, we’re strong believers in the transformative effects of financial planning. So, what does a financial planner do?
Helping you to achieve your life goals
Despite our status as financial planners, you’ll perhaps find it unusual that our main focus is not your money.
We see money as very much the means to an end, not the end in itself. When we meet you, we’ll ask you questions that you probably won’t expect from a financial professional:
- What ambitions or goals do you have?
- What would you like to do with your retirement?
- What’s important to you?
- How do you want to spend your time, both now and in the future?
- What keeps you awake at night?
Only be finding out what makes you tick – what you want to achieve with your life – can we work with you to help you meet those goals. It’s not so much what you should do with your money, but why.
A couple of examples to show you how we can help
One of the ways that a financial planner can help you is to ensure that you don’t run out of money in retirement.
Unlike a financial adviser, who may ‘sell’ you an annuity or drawdown plan, a financial planner will create a plan that allows for sustainable withdrawals, taking all your assets and your personal circumstances into account.
A financial planner will also be an invaluable partner when markets, laws, or your goals change. They will model scenarios and modify your plan to identify the right course of action, helping you to deal with both good fortune and unexpected bumps in the road.
How our financial planning process works
So, we’ve established that our role as financial planners is to help you to live the life you want to live, both now and in the future. So, how does this process work?
- Helping you to decide what you want from life
Our initial meetings focus on understanding you and your goals. We’ll chat about you, your career, your family, your worries, and your dreams.
Only then will we roll our sleeves up and get working. We’ll obtain information about your existing financial arrangements, create an income and outgoings profile, create a long-term strategy, and explore your attitude to risk and reward.
We also use sophisticated cashflow modelling tools to model a range of ‘what if?’ scenarios. We can show you, in graphical form, how your financial future will look based on a range of assumptions and taking market volatility and growth into account.
You’ll be able to see your present and future commitments, whether you have ‘enough’ to retire, what your future lifestyle might look like, and whether you can leave the legacy you want to your children or grandchildren.
Once we have a good idea of where you’re at now, and where you want to get to, we’ll make some recommendations.
- Putting our advice into place
The next step is for us to implement the plan. That might involve completing paperwork, establishing trusts, and liaising with providers – keeping you in the loop at all times.
- Reviewing and improving
Things change. Your life, career, goals, and health can all change suddenly, which is why it’s important to regularly review your financial plan.
If changes need to be made, we’ll adapt the plan, make alterations to your arrangements, and reduce costs where possible.
In 2019, a major report from the International Longevity Centre underlined the power of regular reviews with a financial planner. Individuals who received professional financial advice between 2001 and 2006, and then again in 2014 to 2016, had nearly 50% higher average pension wealth than those only advised at the start.
Get in touch
If you’re currently working with a financial adviser and you feel you’d like more out of the relationship, it’s time to consider a financial planner.
An initial chat is always at our expense, so please get in touch to find out more about how we can help you live the life you want. Contact us today or call 01372 404417.