Friday, 10th July 2020

This Month's Magazine
The Art of Successful Financial Planning

The Art of Successful Financial Planning

When it comes to financial planning for the longer term, thatÂ’s when things become more difficult. Investment options, tax reduction and investor protection are some of the important factors to be considered.

Most people have a reasonable idea about how their day to day finances work but when it comes to planning for the longer term, that’s when things become more difficult. Remember; financial planning is not an exact science and “off the peg solutions” can be dangerous.

The starting point is to understand what it is you are trying to achieve. At this point, a professional financial planner can help to prompt the types of questions you should consider.

You should assess what you have at your disposal and take into account known future changes – commencement of pension benefits perhaps, a future inheritance, repayment of a mortgage or other loan.

The next step is where an experienced financial planner can be invaluable in helping to identify what he or she will call your “risk tolerance” or “attitude to investment risk”. This really is vitally important; otherwise, you may find yourself worrying every day about your investments. If this happens, you are undoubtedly invested in the wrong place. Now your financial adviser can recommend a solution which should be as simple as possible and easy to understand. Different types of investment can increase tax efficiency, sometimes reducing tax or perhaps
just deferring it. In either case, this can improve income levels or capital growth.


Other factors include the range of investment options and whether passive investments are suitable or perhaps active management is more appropriate. The overall levels of security and investor protection should also be considered and the resulting recommendations may involve the use of a single investment vehicle or combine a number to fulfil the overall plan.

Always make sure that the recommendations are being explained fully in writing and where any reference is made to performance, ensure that this is supported with evidence from an independent source.

So now you have made your decisions, your financial adviser should complete all of the paperwork with you and arrange for the investments to proceed. If you donÂ’t understand something, be sure to ask for an explanation. You may well have cancellation rights and it is as well to understand what these are at outset and should you change your mind, to know whether you may incur any cost as a result of cancelling.
So is that it? No, not quite. Your circumstances may alter and depending on the investments you have made, they will need to be reviewed on a regular basis.

What you should now be able to enjoy is peace of mind, with confidence in the advice given and that it will be kept under review. You should also have easy access to information about your investments and know that your adviser is there to help at any time.

Next month will look in more detail at passive and active investments and will include some useful doÂ’s and donÂ’ts.

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