We have long been advocates and promoters of the benefits of REAL financial planning.
A different approach to Financial Planning
However, describing what that process involves and how it differs from simple transactional financial advice (How much do I pay into my pension?) and pure investment advice (Am I a medium risk or higher risk investor?) has proved a real challenge.
Award winning journalist, Robin Powell, The Evidence Based Investor, has written a series of articles which are some of the best descriptions and explanations we’ve read.
Robin argues “Having a financial plan is imperative not because our lives are ordered, structured and predictable, but because they are NOT”. Its also vital to ensure that your own plan is constantly revisited, tested and discussed to ensure you remain on track.
We often use the analogy of financial planning with flying i.e. constant course corrections take place when flying and so they should with your own planning. Robin uses another analogy between financial planning and seeking someone to service your car “A financial planner is not simply trying to fix your car, but is looking to ensure you and your family reach your desired destinations safely and reliably while enjoying the journey along the way”
It would be easy to focus on the planning, technical and investment aspects of planning, but arguably one of the greatest benefits of working with an empathetic planner might be the management of the inevitable emotional peaks and troughs. “Having a planner to hold your hand, talk you off the ledge or bring you down from your high horse, helps you to focus on the things you can control. It keeps your emotions away from the investment process”.
Robin also explodes one of the biggest myths in the Financial Advice profession “A financial plan should not just be an investment plan either. Of course, that is part of the design, but only a small one. The investment portfolio is really just the means to the end, which is living the life you want to live and giving you the flexibility you need.
A roadmap is not an effective metaphor. That implies there is only one route to where you want to go. An effective financial plan recognises that life is about trade-offs. It presents you with alternative routes, each with their own advantages and disadvantages. You decide ultimately”.
More from Robin Powell
You can access each of Robin’s brilliant articles below and if this triggers a question about your own plans, please do contact us.