By Simon Humphrey
How therapeutic can a financial planning session be?
Whilst I am not suggesting we financial planners are therapists, we do provide a safe space for people to express their thoughts and feelings about their financial situation. And in the same way you may not find your ideal therapist the first time around, I think it is a good idea to meet with several planners before settling on one that feels right.
Another similarity is that you are not fixed in one session! In fact, I believe the best relationships last for many years because as life changes, we are here to help you work through those changes with confidence. Having someone you know, like and trust at your side will make you feel more secure than going it alone.
                       confidence + security => freedom + happiness.
What specifically brought you here today?
When I meet people for the first time they are often unsure of the specific reasons they came. Conversely, they are very often sure about what they don’t want. They don’t want to feel anxious about their financial situation. Talking about it is the first step to doing something about it.
I have yet to meet someone who asks to see me because they say they want to improve their mental wellbeing. But that, is in fact, what everyone I see desires. Feeling insecure about your financial future is not good for your mental wellbeing. It alters your viewpoint because it can seem like you are seeing the world through a muddy lens.
The process of financial planning helps us see more clearly. It helps us focus on what we need and avoid the things that don’t serve us well. Often we need to move from a state of deficit to a state of balance. When we are out of balance we sense something is missing and that can make us feel anxious.
                       yin yang, equilibrium.
What else can financial planning do for me?
Although there are a lot of similarities, everyone is different so there is no one-size fits all. There is no off-the-shelf solution. This is why it takes time to craft your personal plan. It should be built from knowing where you are today and where you want to get to in the future.
If appropriate, you will be encouraged to save for your future in the most effective way that suits your individual circumstances. When you think of pensions reframe that as a pot of money that allows me to have the financial freedom to do things I want to do when I don’t want to work for a living anymore!
It’s not always about saving money. If you have already saved enough and are now in full-on spending mode then we will explore ways to help you spread the love in the most tax-efficient way! Having a plan that ensures your chosen beneficiaries get to keep the lion’s share of your hard-earned that you left for them just makes good sense.
Your plan should be reviewed at least annually and additionally when something big happens. ‘Life happens’ as they say so we also need to build in contingencies in case the worst happens so your plan can continue for your loved ones.
Knowing you are not leaving behind a financial mess for someone else to clear up is a good feeling which is why we also check our clients have an up-to-date will and powers of attorney in place. This should not be understated as the trouble this can cause families could result in years of distress and hence poor mental health.
                       organised affairs = peace of mind = added value.
What about the Hard Facts like assets, debts and investments?
Hard facts that are a statement of what you own or owe, or share are always considered, and it is vitally important that nothing is omitted from your personal balance sheet. Similarly, your income and expenses need to be recorded accurately.
Think of it like navigating. We need to get from here to there but if we start with incorrect information, our chances of getting to our chosen destination are compromised. To assist financial planners help you make the most of your money they need to have the complete picture.
Pure financial planning does not involve any financial advice. This may sound confusing, but the central idea of financial planning is to map out your personal plan and not to sell you products! In pure planning the term we use is guidance. It may be that you do not require financial advice.
Financial advice is a regulated activity that involves advising on regulated products such as investments. It involves selecting an appropriate investment wrapper such as a pension or ISA for example. Anyone advising in this area must be a regulated adviser working within a regulated firm. It’s the law.
                       strong foundations = stability.
Fear of missing out (FOMO) can be dangerous for your health & wealth.
FOMO by its very nature is unlikely to serve you well. Behavioural finance is the science that explains why are not wired to make good financial decisions on our own. Research has shown that the pain of losing is roughly twice a strong as the joy of winning. This is one reason that a bad experience can be so hard to get over.
We all have many inbuilt biases we need to avoid if we want to be successful at investing. This is why I would always recommend using professional investment managers whose job it is to manage risk on a daily basis. They are paid to do it on your behalf professionally and without emotion.
I know many clever people who have lost small fortunes trading their own money. Buying and selling at the ‘wrong time’, making costly errors (fat finger!) Holding onto to losing positions for too long. Taking profits too early. Trading for the wrong reasons and without any plan.
                       trusted custodian + risk management = safety.
Which age group benefits the most from financial planning?
At a recent Christmas party, I was chatting with a 30-year-old explaining the benefits of financial planning. After a little while she said; ‘wow, why didn’t I know that?’. You don’t know what you don’t know! The onus is on us to educate ourselves but it is a shame that managing personal finances is not a compulsory part our school curriculum.
I summarised by saying that building good money habits whilst you are young can only lead to good things! Everyone, no matter their age, can benefit from financial planning.
During 2023, I have had more people in their twenties reaching out to me than any prior year and I think it is because they are starting to hear good things about what we financial planners do, and they desire to make the personal connection rather than use faceless online robo-advice. What a turnaround!
The more complex a person’s life the greater the need to get some professional help. This often goes hand in hand with having more wealth and generally speaking, the more you have, the more management it requires. Another way of looking at this is, the more you have, the more you have to protect (from excessive taxation for example).
It is good to talk!
It is often said that people don’t like to talk about their money and I believe that is true to the extent that they don’t want their personal affairs to be made public. Discussing your personal finances with a financial planner is a private affair and your personal details are protected by law. It is a safe place.
Simon helps people do more with their money to help them achieve their goals and aspirations. He is a financial planner and adviser at Agile Life Financial Planning a partner practice of St James’s Place Wealth Management.
Feel free to contact me by email to arrange an introductory telephone call. The first meeting whether in-person or virtual is complimentary and there is no obligation to take things further. It is used to work out whether I can help you with your particular requirements.
My costs & services disclosure document will be provided at the first meeting.
Visit our website to check out the service areas we help people with and you can also sign up here to be kept up to date with news and tips: www.agilelife.uk
Check out my client testimonials here: https://www.vouchedfor.co.uk/financial-advisor-ifa/ealing/032303-simon-humphrey
Contact me via email at: simon.humphrey@sjpp.co.uk