I think financial planning could and should be uncomplicated. It should be about discovering some honest truths, your honest truths to be exact.
To me it is a process of subtraction or simplification, not addition and complication.
How simple can we make it for you to see what your future holds? What simple changes can we make to improve that look? Or is it good enough already? What simple things can be done to plug any gaps? And how easily understood is the resulting plan?
We understand and accept the inherent simplicity of a car – it has wheels that turn, an engine to make those wheels turn, brakes to stop the wheels turning and a wheel to point the other wheels in the right direction. Simple.
Most of us do not need to know or understand any more than that.
Financial planning should be equally simple. So why is it dressed up to look complex? Could it be the belief that something complex justifies fees?
“You can’t do this, so you should pay us to.”
Not a very engaging way to engage, is it?
Under the bonnet, financial planning can look complicated. There are many moving parts, a lot going on, a lot of connections, you unplug one thing and it affects something else.
But why, if you work with an adviser you truly trust, would you need to look under the bonnet?
We do not do that in the car showroom, do we? We know we like the look of the car; we like the price and we trust the brand. We do not ask them to prove the power or acceleration or emissions, do we? We just ask them to tweak it a bit to meet our own needs, stick a key in it and motor off. And each year we bring it back and ask them to check it over.
If you feel the need to know and understand all the ins and outs of your financial plan that should be a warning to you. Something is amiss – perhaps you do not really trust your planner.
Our simple approach boils down to two graphs.
This one shows us when (if ever) you will run out of money to spend:
No red is a good sign.
And this one shows how much money there should be available (not including property) year by year:
This plan needs work – there is way too much money left over later in life; opportunities have been missed.
If, or when, both of those graphs look and feel good to you, what else do you need to know? And why?
The servicing aspect of the plan is just as simple. What has changed? What should be done about it? Are there any errors being made?
What is true of financial planning, is true of life: Simplicity is almost certainly the answer. Very infrequently is it put forward as the solution.
future proofing your finances
advice@townclosefp.co.uk
Town Close are expert financial planners. Our goal is the same as yours – to help you do the things that are important to you in the time you have remaining.