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Point of View

Drawing a financial roadmap

Planning the route to your financial future doesn’t have to be difficult, say wealth planners Max Jones and Carl Drummond

One of our clients has retired early to travel the world giving lectures about cigars. Another plans to indulge his love of sports cars by buying several iconic Caterham vehicles and renting them to the public at racetracks. Both have reached important lifestyle goals through careful financial planning.
Everyone’s goals are different and vary from the exotic to the more practical considerations of mortgages, school fees and retirement. The one thing they all have in common is the need for a well-thought-out financial plan that combines opportunities for growth with protection against market forces and life events that can blow them off course. This is the roadmap that can get you from where you are now to where you want to be in the future.
But getting a financial plan right is about more than simply crunching numbers, says wealth planner Max Jones, whose clients range from those in their mid-30s with a lifetime to plan, to those nearing 80 who need a secure income in retirement. It begins with a period of reflection as you really get to grips with what’s important to you, what you want to achieve and the timeframe. 

Developing a strategy

Once he understands these personal targets and motivations, Jones works with his clients to develop a strategy that will achieve their aspirations. To do this he needs a clear understanding of their whole situation, including any assets and debts. Some may need to cut their spending while developing an investment strategy that takes account of their individual attitudes to risk.
Investors also need to decide whether they want an advisory portfolio, which means they will be involved in any investment decisions, or the discretionary version, through which a professional manager handles everything. Whatever the approach, Jones says: “The overall aim is to limit nasty surprises and deliver reliable and consistent returns that meet the objectives of the financial plan.”
“If the plan is aiming to achieve a particular lifestyle in later life, I look at the most tax-efficient way to build up a pot of money that will provide someone with the desired income at retirement,” he explains. “So, I’ll consider different pensions, ISAs and other alternative investments.”
Financial planning is so specific to the individual, covering everything from a child’s future to inheritance tax planning, so Jones needs to really get to know the person, not just their finances. “We want to get on with our clients on a personal level and make sure that we build long-term relationships with them and their families,” he explains.
This is because plans have to change with circumstances. Whether changes are good or bad, they could make previous financial planning redundant.
“Following the establishment of the financial plan and advice to support it, I like to review the client’s situation every six to 12 months,” says Jones. “It should be an evolving plan, so I’ll give guidance that will be appropriate to changing life needs and expectations.”

When the worst happens

He adds: “As part of the planning process, we must ensure that the client has a basic level of protection against whatever life throws at them so the plan will not be affected too much. When it comes to critical illness or even death, there are ways to ensure financial protection and we will look at how much cover our clients need to give their families financial security.”
Wealth planner Carl Drummond adds: “Of course, it’s very individual depending on the client and whether it’s an instance of a death or diagnosis of critical illness or disease. On the death of a family’s main financial provider, they can receive a family income benefit, which is paid to cover their essential expenses and outgoings.
“But in some ways, critical illness coverage is more pressing because one in three people will be diagnosed with a critical illness before they reach the age of 65.”
In addition to the personal tragedy, this can have a huge financial impact, both through loss of earnings but also because they may have to cover some medical costs. The top three conditions claimed against are cancer, heart attack and stroke – each of which can mean someone is forced to stop working.
Critical illness and income protection plans can be used in conjunction with one another – the critical illness policy pays out a lump sum upon diagnosis, while the income protection scheme provides a monthly income. “The way to think about it is, ‘How can my family be provided for in a case such as this?’” Drummond says.
The world can seem an ever more expensive place and careful financial planning is more important than ever if you want to cover future costs, enjoy the lifestyle you want and protect yourself from unexpected events.

Find out more

For more information about how to develop a financial roadmap to suit your needs, speak to your wealth planner or get in touch.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.