A couple of times over the last few weeks I have met people on separate occasions who both asked the same question “You’re a financial adviser? So what do you do exactly?” This is, of course, an entirely reasonable question as many financial advisers – myself included – are not great at explaining to the wider world what we do for clients and perhaps more importantly, the benefits of what we do.
It got me thinking and I made a list of the stuff I can and often do for my clients, along with the benefits of doing them.
Given the purpose of writing this, I have committed to pretty much eliminating any financial jargon or terminology that my Mum wouldn’t understand. So, this, in a nutshell, is what I do….
Create a retirement plan
Put simply, I tell someone how much they ideally need to save in order to retire when they would like on an income they find acceptable. I will help people work out when they can realistically afford to retire and what the likelihood will be that they run out of money. I will also tell them what I would suggest they do to ensure they don’t run out of money.
Pay less tax
I will make sure my clients pay no more tax than they need to. I can use a whole range of pensions and investment wrappers to ensure they maximise tax reliefs, pay less tax on any investment gains and also minimise any taxes on death. I ensure they time things correctly, do not miss deadlines and also keep up to date with the various changes in legislation. If you even have a modest level of income & assets the benefits of good tax planning can be huge over the longer term.
Cheapest is not always the best. In the world of finance, this can be true however there are also many occasions where cheapest is best. Or at the very least, reducing costs where possible will most likely lead to better outcomes. Paying 1% per annum is probably, on balance, going to be better than paying 2% per annum – unless there is a very good reason. Being independent, I can usually help clients reduce the cost of saving & investing and most importantly, keep them low going forwards.
How best to invest
Pretty much everyone would agree that keeping all of your long term investments in cash is unlikely to generate much of a return. Indeed, with inflation you are often pretty much guaranteed to lose money in real terms. Likewise, investing solely in small Brazilian teak farms is probably not a very sensible idea either. Getting the balance of different types of investment is vitally important and I help clients to get this right, understand where their money is invested and ensure it is in line with their financial plan.
Less risk is almost certainly preferable to increased risk – especially when it comes to financial planning. Therefore, I ensure that clients are taking no more risk with their money than they reasonably need to. It can be a balancing act at times, but trying to reduce risk where possible just means we all tend to sleep that little bit better at night.
Protect your family
It may seem morbid and rather uninspiring to many, but ensuring you have sufficient life assurance and critical illness cover in place is actually quite a big deal. Especially if you have children or other dependents. I help clients work out what they need, source the best arrangement from the whole market place, usually in terms of cost but also factoring in other benefits too, and then get any policies applied for and put in force.
One of the best & most enjoyable things I do for clients is force them to take action or just get things done. You’ve been meaning to review your pensions for years? I’ll get that done. You have wanted to set-up an ISA but haven’t got round to it? I’ll take care of that. You want to work out the best way to help your grandchildren buy their first homes? We can plan that and implement it.
This may sound a bit contradictory after the last point, but making emotional decisions in the face of investment uncertainty can be very damaging to your wealth. I make sure my clients do not make knee jerk reactions. We make informed decisions by looking at their longer term plans. Ensuring clients tune out from all of the “noise” in the newspapers and on the TV and just stick to the plan we have created is an invaluable part of what I do.
That’s what I do. It’s not comprehensive by any means and I have already thought of a few things not on there, however I will at least be better placed to answer that question next time I am asked.