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Why your adviser should help you plan your life, not your money

When people pick up the phone to a financial planner, they normally have an immediate financial issue they need help with. Perhaps they are moving home, changing job, or thinking about retirement. The point is that they call because there is a money-related issue to confront.

Of course, as financial planners, that’s our bread and butter. We’re here to help people to manage their money and to deal with whatever protection, savings, retirement, tax or estate planning concern they have.

It would be easy at that point to solve the client’s problem by selling them a product or undertaking a one-off transaction. The client would be satisfied that their issue was dealt with, and we’d take our fee.

However, the role of REAL financial planning is much more than simple advice. We’re not just here to help a client get better returns on their money. We’re here to find out why they need to do that, why it’s important, what their ultimate goal is, and how it fits in with their wider life goals.

Investment management vs financial planning

There are lots of advisers and wealth managers out there whose job is to maximise the returns for investors.

However, in this day and age, anyone can create a portfolio, asset allocation or investment strategy. Technology and competition now mean most people can access investments that would have been out of their reach even a decade ago.

However, in our experience, what most people actually need is advice about how their investments fit into their overall financial plan and, more importantly, their life.

Investment management is about how money is allocated, what risk is being taken and the returns you can expect to receive.

Financial planning is about how you use your financial resources to live the life that you want. While investment performance plays a part, it’s also about life choices such as how hard you want to work, when you want to retire and what your life ambitions are.

You don’t have to be rich to lead a rich and fulfilling life – but your adviser won’t know this if they are just focused on the performance of your investments.

Here’s a comparison between investment management and financial planning.

Investment management on its own can be a very costly red herring. You could be paying annual fees and charges for an IFA, private bank or investment manager to do nothing but ‘manage your money’.

They may not be providing ongoing advice and they’re unlikely to be interested in your wider life goals and therefore what it is you are investing for.

What this has to do with a Ford Focus

In many ways, investment management is like a Porsche 911.

Now, a Porsche 911 is a great car, but the chances are it sits on your drive and you take it out for a spin on a Sunday. It’s certainly fun and gives you an adrenaline hit when you take a corner slightly too fast, but it doesn’t really serve any practical purpose as far as your life is concerned.

The Ford Focus, however, is more like financial planning. It also sits on your drive, but it is the car that helps you get through your life.

It takes the kids to school, brings the groceries home from the supermarket, and gets you to the station. It’s always there, reliable and ready to go when you need to do anything. It enables you to do all those things that you want to do in your life effectively and without fuss.

Of course, it would be great to have both cars. So, to get the most from investment management, you also need to benefit from good quality financial planning. We can’t make an investment recommendation if we don’t understand your personal circumstances, your aims and ambitions, and what your future plans are.

When we do, we can ensure that your investments are allocated correctly based on your tolerance for risk, timescales, and goals.

While an investment manager may be measured on the returns they provide for you, we’ll be measured by whether you live your life the way you want to live it.

Get in touch

If you want to find out how REAL financial planning adds serious value, and what we can do for you that an investment or wealth manager can’t, please get in touch. Email or call us on 01621 851563.

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