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I had an enlightening conversation with a new client last night.
1. He told me how much he expected to make – in percentage terms.
2. How long he wanted to invest – before retirement.
3. How much he wanted to live on in retirement – in exact figures.
He wasn’t an adviser.
He wasn’t a professional investor.
He just wasn’t British!
Does discussing money make you uncomfortable?
Generally, we Brits talk about money euphemistically – in fact, we talk around money…
Most find it hard to be specific and talk openly about numbers and tangible goals.
Here are the most common things my British clients say they want: -
Peace of mind knowing I have sufficient funds.
To secure my family’s future.
But what does any of that actually mean?
Goal setting: the very first step in your financial plan
Unless you have clear, achievable targets, it’s virtually impossible to make a beneficial financial plan.
And without a financial plan, your finances will be far less effective overall…
– meaning they may underperform, cost too much, be tax inefficient –
Or all three.
So, if you’re like many of my clients and you want to know how to secure your family’s financial future…
…what does that actually mean to you?
List the goals that will mean your family’s future is secure, according to your personal definition of that objective.
If it helps, classify your goals as either requirements or necessities.
From there it’s possible to work out if your goals are realistic, achievable and affordable.
Step two: where have you got to so far?
Because we Brits are uncomfortable talking money, step two is also a sticking point occasionally.
However, it’s critical to know where you’re at – financially speaking.
So you can break down the actions you need to take to achieve the goals you just defined (see step one!).
Gather statements together and do your sums, or request a X-Ray Review™ - it’s a diagnostic overview of your entire financial position.
Then, armed with your goals and full financial facts, it’s time for…
Step three: the plan!
With clear goals, and having quantified your current position, you can formulate an appropriate plan to get you where you want to be.
It may be something as simple as ensuring you invest on payday every month without fail, and remain invested no matter what markets or politics are doing.
It may mean you need to change the way you’re already invested, so you’re paying less in costs, taking less risk – and ultimately getting the best returns possible.
Your plan may need refining as the years go by, as your goals perhaps change, you achieve them, or you approach retirement and want to take less risk for example.
“It takes half your life before you discover life is a do-it-yourself project” Napoleon Hill
Not everyone needs a financial adviser, because a financial adviser won’t always add enough value to a portfolio to justify their fees.
As a rule of thumb, the more money you have, the more value a fee-based adviser can add.
Therefore, it is entirely possible you can secure your family’s future if you follow the above steps.
However, if you want to use a financial adviser to help you manage your wealth, make sure you choose the right adviser.
Here’s a checklist to help you do that.