Many people understand what a professional financial advisor does and the benefits of speaking to one. But at the same time, there are many myths and misconceptions surrounding financial planning, which often put people off getting help. We wanted to explore the most common myths we hear and debunk them one by one, so you can be confident about financial planning and the benefits it brings.
Planning or advice?
Most people seek financial advice when they are faced with a life change or life transition. Many people think that financial planning and financial advice are two ways of describing the same thing, but this is not quite right.
The key difference between a financial planner and a financial advisor is their approach. A financial planner focuses on you – your hopes, your career and lifestyle aspirations, your concerns. They look at the bigger picture and deliver a holistic strategy with a comprehensive plan for the future you want.
A financial advisor focuses solely on a single aspect – which typically will be your money and investments. Often the approach will be sales driven which can conflict with your own interests.
For example, you’ve just had a new baby and might be thinking about taking out life cover to protect your family should anything happen to you. A financial advisor will help you set up a good policy to cover the issue you’ve identified.
However, a financial planner will look at the whole picture and use their expertise to help you create a strategy to protect your family and help them to prosper in the future. This will address the obvious issue and other issues that might not have occurred to you. It’s more holistic and all about joining things up. So, this may include setting up tax-efficient trusts, will writing, planning for school fees and education costs, addressing wider protection needs for the family and taking advantage of the available tax breaks.
The benefits
Many people believe they need a financial advisor, but what many are really looking for is an experienced financial planner who has a more client centric process and helps address issues they’ve not even thought about.
A planner can give life changing guidance, a more complete service that helps you progress towards the future you want. You’ll have more confidence with a sound strategy.
Financial Planning helps clients answer:
• What is it you really want to do in the future?
• Are you going to be financially ok?
• Can you afford and achieve the future you want?
I’m capable of managing my own money
Many of us are used to looking after our finances and making decisions about money, and may not have particularly complex financial arrangements to worry about.
But do you really know everything there is to know about, for example, your tax arrangements, inheritance planning, your insurance needs, and if you’re saving enough for retirement?
After all, each one of these is a complicated area in itself, so there’s a good chance you’re missing ways to make your money work harder for you and to achieve your financial goals.
Even if you do feel confident that you’re on top of every area of your finances, it’s valuable to have a sounding board or a ‘thinking partner’. A qualified specialist casting an objective eye over your plans, and suggesting options for things that you’ve failed to consider.
Financial advice is for rich people
Many people believe only the super-wealthy need financial advice, but that’s not true. We all need to make smarter financial decisions at this uncertain time.
We all have important things to plan for, like buying a property, putting a child through university or having a good income in retirement. So getting financial advice can make a big difference regardless of your wealth. We all want to feel we are making progress for our family.
A Financial Plan gives you a framework against which you can make some smart decisions about life and your money. It allows understanding of how each decision that’s made might affect other areas of your finances. Different possibilities can be tested before any big decisions are made.
Getting financial advice is too expensive
This need not be the case and the costs depend on the complexity of the work and time involved. The fee could be a great investment for your future.
A planner acts as a guide and coach to make sure the plan stays on track for a better future. Proper financial planning can be life changing and bring huge value, both in terms of the cost, rewards and peace of mind that you can enjoy as a result.
The goal is to optimise your outcomes, provide a clear strategy for you to live the life you want for the rest of your life without the fear of ever running out of money. Changing your world and what’s possible in so many ways.
We hope we’ve managed to dispel a few mistaken beliefs around financial planning. If you have any questions about our service and how we could help you, please don’t hesitate to get in touch. Let us help you make your money change your world.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Ethical Futures llp is authorised and regulated by the Financial Conduct Authority.