Is Financial Planning Worth It?...
Starting Point…
When you go to see a financial adviser (I prefer to call myself a financial planner), what’s on your mind? It’s probably that you want a specific financial issue resolved. ‘I need some insurance’, ‘I want a mortgage’, ‘are my pensions any good’, ‘I’ve got some money to invest’ and so on...
Typically, financial planners ‘sell’ their services as giving advice on things like asset allocation, investment performance, retirement planning, cash flow analysis, insurance, wealth protection, estate planning, etc. These are all the technical parts of the job. They’re VERY important but pretty uninspiring!
Technical Skill or Something More?...
But is that REALLY the benefit of seeing a (good) financial planner? Let’s say you’re looking for a mechanic. What are you actually paying for? Making sure the breaks are OK? Fixing the electrics? Getting rid of dents? Topping up the air-con? Changing the wipers? Reversing misfuelling? (that’s happened to me… twice!).
These are all the technical things a mechanic does but what you actually want is a car that gets you safely and efficiently from A to B. You want the technical stuff done well and for a reasonable price but, ultimately, you just want to know you’re safe and that the car’s not going to break down. Make sense?
It’s a bit like that with financial planning. Of course, you expect the technical side of things to be done well (and for a fee that’s not going to make you cry!) but is there something deeper than just the technical stuff? I think there should be.
What Should You Be Paying For?...
To me, good financial planning is less about financial products (the technical stuff) and more about weightier issues. Things like guidance, helping you identify your goals in life, peace of mind, a sense of security, a feeling that someone has your back and an assurance that you’ll be OK, whatever life throws at you.
Fundamentally, it’s about giving you a sense of structure around your financial life and an understanding of the choices you have at your disposal. It’s BIG stuff! Surely, after health and family, knowing you’re looking after your money in the right way and making sound decisions with it is the most important thing. Am I wrong?
What REALLY Counts!...
In my view, good financial planners play a number of pivotal roles in the lives of their clients, none of which are on the typical job description or list of services. Here’s a few:
A Guide: Most people know what they want or, at least, what they
DON’T want out of life. What’s often missing is a
sense of how they might get there. A financial planner
helps you to guide and plan, showing possible
pathways and the trade-offs involved in each option.
A Teacher: Many people’s sense of what drives investment returns
comes from the day-to-day ‘noise’ in the press. It’s all
about short-term returns and markets going crazy. A
financial planner shows you what drives long-term
investment returns and connects this to your life.
A Coach: It’s easy to make financial resolutions. Save more, spend
less, grow wealth, leave a legacy. It’s not so easy
keeping them. A financial planner ensures accountability,
keeping you on the right path and pulling you away
from the ledge in anxious times.
An Organiser: Our lives are busy. Jobs and family commitments leave
little time for getting our finances straight. A financial
planner takes care of this complexity and frees you to focus
on what really matters to you.
A filter: One of the (many) problems with the world is mis-
information. We’re overloaded with the stuff and it’s often
wrong. The challenge is finding the RIGHT information in a
form we can digest. The right financial planner becomes a
trusted source and an information filter.
A Counsellor: Few big decisions in life are simple. There’s always
competing arguments. Financial planners who can help cut
through things to get to the issues that matter to you are
VERY valuable. Yes, it’s your life, but you need someone
outside your circle to keep you focused and true to yourself.
Convinced?...
I could probably go on but, hopefully, you see my point. These are all high value roles. Roles that can help you look at things differently. That help you understand your money is just a part of your overall picture and nothing more than an enabler to get you where you want to be.
Going back to our mechanic, a financial planner isn’t simply trying to fix your car. A financial planner is looking to ensure you and your family reach your desired destinations safely and efficiently, hopefully, while enjoying the journey along the way!
And how do you put a price on this? Well, that’s tricky because it depends on where you are in your life and how much you feel you need this sort of support. Our clients tell me they really value these aspects to what we do for them and they feel they get great value. It’s not for everyone but I’m certain most people would benefit!
I hope this was useful. If it was, that’s great. If it wasn’t, I’d love to hear why (but be nice!). If you think someone you know might benefit from reading it, by all means forward it on. It’s a message I’m pretty passionate about. I just wish more financial planners were!
Until next time…