Here at Clear Vision FP we are slightly obsessed with ensuring we add value to our clients affairs. However, I appreciate it isn’t always clear what value a (good) financial planner can add. In my view, there are six key areas that the added value falls under. These are…
- Setting and achieving goals;
- Investment management;
- Efficiencies – cost savings;
- Tax planning;
- Behavioural coaching;
- The ‘other’ stuff.
When someone contacts us for the first time, there is often a trigger point. It might be a big birthday, a life event (retirement, inheritance, etc.), hearing of something someone else did with their finances or just frustration with their current adviser.
One of the key value points that a financial planner can add straight away is to help clarify the clients goals. This will include the original trigger point but will often encompass other things that, either the client wasn’t aware was a priority, or wasn’t aware was relevant to the discussion.
For instance, a client may contact us to review their pensions, because they have heard lots of people with final salary pension schemes are transferring out. However, by the end of the first meeting, what they want is a comprehensive plan that addresses how they use their pensions (and other assets) to ensure they can retire in comfort in 5 years time, followed by a strategy to pass down money to their children early.
Part of a good planning process is giving clients the time, opportunity and permission to explore and clarify their goals. Life is so fast paced and busy that we often don’t have time to think about the future. When we do, it can seem overwhelming and difficult to comprehend. Having someone who asks the right questions, listens to the answers, asks pertinent follow up questions and helps you to qualify and quantify your life goals is incredibly valuable.
You may ask why? The simple answer is, if you know where you want to get to, you can plan how to get there and have more chance of achieving the future you desire. We’ve all drifted along through life and suddenly a year has gone by. We haven’t started the hobby we wanted, we haven’t gone on the dream holiday we promised ourselves and we haven’t spent more time with our loved ones.
Once we have a clear picture of what you want to achieve, we have the ‘destination’ for the financial planning journey. We can then put together a strategy for how to use your money to meet your goals and plot the ‘route’.
Incidentally, this shouldn’t be a one off exercise. Life happens and what can seem important in the first meeting can be eclipsed by a series of events. A good financial planner will work with you to establish your new goals, quantify them and adapt your strategy to suit.
In my view, this is the whole essence of financial planning. The rest of the value add is purely a product of the mechanics in achieving your goals.
Next time, we will be exploring the value add from investment management.