02/07/18How financial planning can help you sleep at night

How financial planning can help you sleep at night

It’s sometimes difficult to describe my role as a financial planner and the various hats I wear when working with clients.

There’s clearly the financial stuff.

As a Chartered Financial Planner, I take the technical aspects of my job very seriously and make sure I’m always up to speed on the latest developments as they relate to financial products, taxation and relevant legislation.

But there’s another, equally important aspect to my work.

I was recently introduced by a local solicitor in Leicester to a couple in need of some financial advice.

Their motivation for seeking advice was to create a plan for retirement, to make sure they could afford to retire at the desired time and have the confidence they would not run out of money.

This couple had an existing financial adviser, but he wasn’t quite right for them.

Despite delivering a decent investment return (arguably the investment markets did this, rather than the adviser!), the clients had a niggling doubt in their mind; where they too ‘low ticket’ for their financial adviser?

It was a reasonable doubt to have. Their adviser, who was very product oriented and a ‘restricted adviser’ only able to choose from a limited range of product option, had a minimum client size of half a million pounds.

In fact, this minimum asset level had even influenced his prior advice not to transfer a pension, because it still wouldn’t meet the adviser’s minimum level.

Leaving this interesting approach aside, their existing financial adviser also tended to focus on products, failing to answer what to this couple were incredibly important questions. They wanted to know what capital and income their pensions could provide in the future, and what this meant for their retirement plans.

On arrival, I explained that I can’t control the investment markets. No adviser is able to do this. What I can do is help build a robust financial plan, allowing you to live and enjoy your life.

Part of the financial planning process I work through with my clients is to ask what keeps them awake at night. Asking this question on this particular occasion resulted in an interesting response.

The wife hesitated and turned to her husband. She slowly and cautiously articulated her answer; she told us both that the thought of having to continue with her stressful job until the mortgage was repaid was giving her sleepless nights.

This answer was a revelation for her husband as she had never voiced this concern before. He was, it’s fair to say, gobsmacked at her response.

An important part of what I do is to ask questions, and then ask an extra layer of questions, to get to what really matters.

This isn’t ever done in a way that makes clients feel like they are in some form of interrogation. As well as knowing which questions to ask, I’ve become pretty good at knowing when to stop with a certain line of questioning!

But on this occasion, asking the right questions had resulted in uncovering the most important issue at stake. It meant that the financial planning process could help resolve these sleepless nights.

We constructed a lifetime cash flow forecast for the couple, considering a range of different scenarios. This demonstrated that the wife could retire in four years’ time, well ahead of her original goal to retire by age 60.

I also demonstrated using the cash flow forecast that they could repay their mortgage in full by the end of the summer; no more sleepless nights!

As the clients stood up to leave, she explained how she felt so much better having spoken to me, sharing her biggest concern and getting this resolved. As a result, both were more confident about their plans for retirement and enjoying the next stage of their life together.

What keeps you awake at night and how could financial planning resolve this worry? I would love to hear from you.

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