What Does a Financial Planner Actually Do? And Do I Need One?

When people hear the words financial planner, they may picture someone talking about pensions and investments, but financial planning is about much more than that.

At its simplest, financial planning is about understanding where you are today, where you want to be in the future and whether your finances are on track to help you get there.

For some people, that might mean working out whether they can afford to retire. For others, it could mean deciding what to do with an inheritance, helping their children financially, making the most of their investments or planning how to pass wealth on to the next generation.

The common thread is that financial planning is about the bigger picture rather than looking at individual financial decisions in isolation.

 

Financial planning starts with you

A good financial plan should begin with understanding your circumstances and, perhaps more importantly, what you want your money to achieve.

That means looking beyond the value of your pension or investment portfolio and considering your income, expenditure, assets, liabilities and future plans.

You may want to retire early, travel more, help your children onto the property ladder or simply have the confidence that you will never run out of money.

These objectives are all very different, which is why there is no one-size-fits-all financial plan.

Two people with exactly the same amount of money could have completely different financial plans because they have different lifestyles, priorities and ambitions.

 

It is about looking ahead

One of the most useful aspects of financial planning is being able to look beyond where you are today.

Cashflow planning can help show how your financial position could develop over the years ahead by bringing together your expected income, expenditure, pensions, investments and other assets.

This can be particularly valuable when making significant decisions.

For example, you might be considering whether you can afford to retire earlier than planned, increase your income, make a large purchase or provide financial help to your children or grandchildren.

Rather than making these decisions based on a pension balance or a bank statement today, a financial plan allows you to consider the longer-term implications.

Of course, no plan can predict exactly what will happen. Investment returns will vary, tax rules can change and your personal circumstances may be very different in ten or twenty years’ time. The value of financial planning is therefore not in predicting the future perfectly, but in helping you understand the choices available to you.

 

Financial planning is not just about investments

Investments are an important part of financial planning for many people, but they are only one part of the picture.

Depending on your circumstances, financial planning could involve retirement and pension planning, tax planning, estate planning, investment management and protection, as well as helping you make major financial decisions.

These areas can also be closely connected.

For example, deciding how much income to take from a pension could affect your tax position, the amount of investment risk you need to take and the value of the assets you eventually leave to your family.

This is why we believe financial decisions are best considered as part of an overall plan rather than in isolation.

 

What about investment risk?

Investment risk is another area where financial planning can provide valuable context.

It is understandable that people approaching retirement may become more cautious about investing. However, retirement can last for several decades, so completely avoiding investment risk may create its own problems, particularly when inflation is taken into account.

The appropriate level of risk will depend on your circumstances, including your attitude to investment risk and your capacity for loss.

Someone with substantial assets and relatively modest spending requirements may be able to tolerate a fall in investment values more easily than someone who relies heavily on their investments to provide their essential income.

At Wise Investment, we manage our clients’ investments ourselves rather than separating investment management from the financial planning process. This means our financial planners and investment team can work closely together and consider how a client’s investment strategy fits with their wider financial plan, income requirements and long-term objectives.

 

Do I need a financial planner?

Not everyone needs a financial planner.

If your finances are straightforward and you are comfortable managing your own pensions, investments and financial affairs, you may be perfectly happy making your own decisions.

However, there are certain times in life when professional financial planning can become particularly valuable.

This might be when you are approaching retirement and want to know whether you have enough money, when you receive a significant inheritance, when your financial circumstances become more complicated or when you simply want greater confidence that you are making the right decisions.

It can also be valuable for people who have accumulated significant wealth but do not necessarily have the time, expertise or inclination to manage everything themselves.

 

The value is in having a plan

The value of financial planning is not necessarily about achieving the highest possible investment return.

For many clients, it is about having confidence that they can afford the lifestyle they want without compromising their longer-term financial security.

A financial plan might show that you can afford to retire earlier than you expected. It might demonstrate that you can spend more than you thought, or that you can help your family while still maintaining your own financial security.

Equally, it might highlight that some changes are needed, such as saving more, working for longer or adjusting future spending.

Knowing where you stand can be valuable either way.

 

How Wise Investment can help

At Wise Investment, we believe good financial planning starts with understanding what is important to you.

As an independent, employee-owned financial planning firm, we take the time to understand our clients’ circumstances, objectives and plans for the future before making recommendations.

We then bring together the different areas of your financial life, including pensions, investments, tax planning and estate planning, to create a plan tailored to your circumstances.

Our financial planners work alongside our investment team, who manage our clients’ investments directly. This allows us to consider the financial plan and investment strategy together, rather than treating them as separate services.

Whether you are approaching retirement, considering a major financial decision, managing a significant amount of wealth or simply want greater clarity about your financial future, professional financial planning can help you understand where you stand and what your money could realistically allow you to do.

If you have never had a financial plan, or it has been some time since you last reviewed yours, it could be worth taking a fresh look at your financial position and your plans for the future.

If you would like to understand how financial planning could help you make the most of your money and give you greater confidence about the future, please get in touch with Wise Investment to arrange a conversation with one of our financial planners.