A great financial planner will work with you to understand your life goals and establish what’s most important to you. Armed with that information, they can help you plan the best way to fund the lifestyle you desire.
We recognise that there is a lot of jargon and unnecessary complexity in the financial services sector. We want to provide clarity and dispel some myths around what’s most important when selecting a financial planner.
1. Understand the importance of being independent
There are two kinds of financial adviser:
a. Restricted advisers can only recommend products from a limited selection or product range, not from the whole of the market. This means they may not be aware of an alternative solution that would be more suitable or lower cost for you.
b. Independent financial planners and advisers work on your behalf to identify the best solutions for you. They can recommend products from the entire marketplace so can select what’s best for you from all the available options.
2. Client-focused financial planning can change your life (yes really!)
Financial planning is about far more than figuring out money in versus money out. The key is to select a financial planner whose primary focus is you and your life. Once they really understand what’s important to you, they are in a stronger position to do a great job with your money.
The nature of your early conversations with a financial adviser or planner will give you a good indication of where they stand on this. Is more time spent getting to know you or discussing your money?
Organising your finances and having a plan can help you feel more in control of your money. A lifetime cashflow forecast can help you understand what’s possible. For example, if you’re planning to downsize in the future and release some money to fund your lifestyle you may find you can spend more on having fun or making gifts to your family in the meantime.
The right financial planner will add positive value to your life, finances, and even your wellbeing.
A recent survey from Royal London found that “advice is game changing”. Not only were people who sought financial advice far better off financially, but their emotional wellbeing also improved.
“At Life Matters, we start by looking at what you want to achieve, by exploring your goals, aspirations, and approach to life. This helps us understand your vision for the future, and then we make a plan to help you attain your goals.”
3. Their approach to investing your money should leave as much in your pot as possible
After costs are deducted, only around 1% of active investment funds beat the market over the long term1. This is because it’s incredibly hard to know in advance the right stock to buy, at the right time and price. And, then, when to sell them.
With this in mind, it’s extremely important to understand how your financial planner will invest your life savings.
Keeping the costs of your invested wealth to a minimum makes sense. While no one can control performance, we can all control the costs we pay and overpaying for your investments will significantly reduce the wealth that you and your family can enjoy.
4. The fees you pay align with your requirements, rather than the amount you invest
A good financial planner will make their fees simple and transparent. They will tell you what they charge and clearly explain how you can pay. Knowing in advance exactly how much you’ll pay and what for, gives you clarity and peace of mind.
Most financial planners will offer an initial meeting for free. This will give you time to get to know how they work and whether you would feel comfortable working with them.
Once your planner understands more about your circumstances and needs, they’ll be able to tell you how much the service you require will cost. It’s vital to understand what this amounts to in pounds if it is quoted as a percentage, and the impact this will have on your wealth over the long term.
Paying a fee that’s a percentage of your wealth means the fee you pay increases proportionately as your wealth grows. This subtle but significant increase to the fees you pay effectively erodes your wealth. A fee that is tailored to your requirements and circumstances is designed to reflect the service you receive rather than the level of wealth you invest.
“Life Matters don’t charge upfront fees. Our mission is to be fair and transparent. Because our value lies in our service, instead of calculating our ongoing charge as a percentage amount to you, we charge a simple subscription fee tailored to your requirements.”
5. A good relationship with a financial planner can span decades, so you’ll want to enjoy working with them
You should look for a financial planner you can see yourself having a lasting relationship with, so it’s important to get along well with them.
When you first meet, take time to understand the values and ethos of the firm. Make sure you get a good feeling about what they stand for. Ask yourself the following questions:
- Does their outlook on life align with your views?
- Is the planner passionate about achieving the best outcomes for you?
- Have they listened and understood what you’re looking to achieve?
- Do they understand and care about what matters to you and why?
“At your first meeting with Life Matters, we make sure there’s plenty of time for you to ask questions and get to know us better. Given the long-term nature of our relationship, it’s vital you feel we’re the right fit.”
Choosing a financial planner is an important decision. You’ll be entrusting them with your financial wellbeing and will need to be comfortable discussing personal matters with them. With the right planner you’ll gain both financial and lifestyle benefits, as they’ll help you understand what’s possible with the wealth you have.
At Life Matters, we care enormously about the relationship we have with our clients and helping them achieve what’s truly important to them. If you would like to arrange a chat to find out more, email your@lifemattersfp.flywheelstaging.com or call 01202 025481.
1 Source: David Blake, Tristan Caulfield, Christos Ioannidis and Ian Tonks (2015) ‘New Evidence on Mutual Fund Performance: A Comparison of Alternative Bootstrap Methods’.