When I meet with my clients, I start by letting them know that I am a Financial Planner. I am pretty sure, that some of the time, what they hear is Financial Sales Person. There is a real difference.
It is fair to say, that the level of professionalism has increased within the financial advisory community. Since the introduction of the retail distribution review in 2013, the professional qualifications that an adviser needs to be authorised to offer financial advice has been raised substantially. This is reassuring, as you know that when you seek financial advice, you will be speaking to someone who has attained a certain level of qualification.
Perhaps more importantly, this knowledge has to be constantly maintained by continuing professional education.
There is however, a big difference between someone that you sit down with once a year, who lists a number of products that you might be interested in, and someone who helps you plan for your future. Only by ascertaining your objectives, financial and lifestyle, can valuable financial planning be achieved. I make extensive use of Cash Flow Modelling software to map out client objectives and identify shortfalls and potential remedies.
So, a good financial planner will start by asking questions, lots of questions, such as:
What are your medium and long-term objectives?
What will retirement look like and what resources will you need?
What actions have you taken to date in terms of savings and pensions?
What additional resource do you have to supplement previous actions?
What do you consider to be reasonable assumptions in terms of investment returns, inflation, earnings growth?
How much risk can you afford to take and what are you comfortable with?
Are you making maximum use of tax allowances?
In the short term, how well have you protected your situation, and your family, against loss of income, or in the event of prolonged sickness or death?
What tax burden will you leave your heirs on death?
Only when I have a thorough understanding of clients thinking will I start to discuss possible investment strategies or protection solutions. Many of my clients are in business and they have to endure a separate set of questions bespoke to their business goals, as in most cases business and private are inter dependent.
And, of course, it does not end after the recommendations have been made. All the best laid plans will need reviewing on a regular basis. Life has a habit of throwing the odd curve ball from time to time, and a good financial planner will be there to help you make changes as and when needed.
Kristina Bailey Dip FA CeMAP
This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.