4 May 2023

The hidden value of financial planning

When you first engage with a financial planner, you are unlikely to ask them to stand in the way of ‘THE BIG MISTAKE’, but this is a valuable benefit of using a great financial planner.

Initially, you might come to us with a specific question:

  • How much do I need?
  • When can I retire?
  • Can you sort out my pensions?
  • How well has my investment performed?

As you progress through the advice process, your planner is likely to open the conversation out to gain a deeper understanding of what is important to you, what makes you happy and what drives you. This helps to give context to your original question. By understanding you on a much deeper level, a more personal solution can be offered for you and your loved ones.

Should you elect to engage in an ongoing advice service, expect a good planner to review your situation in relation to tax and legislative changes, whilst making use of your allowances and reviewing your investments. You should be able to contact your planner at any time throughout the year to answer any questions that you have. Although not an exhaustive list, I’d say that this is the minimum you should expect from your planner.

At Carbon, our planners have an additional focus on coaching which starts with the deeper understanding we gain from our clients during the initial stage of the process. One example of the ongoing coaching we provide is positioning ourselves between our clients and ‘THE BIG MISTAKE’. This means that we work with our clients to ensure they don’t make any decisions that could derail their financial plan.

This could include:

  • Managing expectations during periods of positive and negative investment returns: Focus on the average return over a longer period rather than high return over a shorter period. An average return of 5% over 20 years will likely include years where annual returns are +20% and -15%.
  • Holding your hand during market crises: Providing the evidence of how markets have reacted in previous crises, and that holding your nerve has always been the answer. By staying invested during a downturn, you will benefit fully from the recovery. If you try to time the market by selling during a downturn and reinvesting when the recovery happens, you will miss some of the best days of the market, a mistake that we have written about in a previous blog:
  • Help you spend more if we can evidence that you will have excess capital at the end of the plan: We encourage our clients to spend their money on the things that make them happy, holding them accountable to this. What is money, if not a means to happiness and enjoyment?
  • Help you pass money to the next generation and support causes that are important to you: This may be encouraging you to gift during your lifetime or by ensuring that pensions and investments are structured to enable efficient gifting when you die. Providing education and coaching to the next generation to help them understand the value of money is another important aspect.
  • Work with you to plug a shortfall in your plan: This might be helping you understand your options such as downsizing your home, reducing expenditure, getting a better investment return, or working for longer.
  • Spend time developing a sustainable retirement income strategy: This is often a big moment, moving from earning money to spending it. Ensuring a robust plan is in place provides the reassurance that you will never run out of money .
  • Regularly stress-testing your financial plan: This provides peace of mind that your plan is robust and resilient, even in the worst-case scenarios. This should give you confidence that external influences are unlikely to derail your plan.

A good financial planner will be content providing advice and guidance on the things above the surface, but a GREAT financial planner will dive much deeper, working with you to make sure you don’t make that BIG MISTAKE that could derail your plan. This leaves you to focus on your happiness and enjoying a meaningful and fulfilling life.

If you would like to learn more about how Carbon can help you, please get in touch.

The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.

This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action.

Tax and Estate Planning Services are not regulated by the Financial Conduct Authority.

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