BY ADRIAN WHITE
BEFORE digging into financial planning and its benefits, you should know the answer to this question: What is financial planning?
The prospect of making a financial plan can often seem daunting and complicated, the reality however should be very different to this. A financial plan should be kept as simple as possible, and to answer my earlier question, I believe that financial planning is the process of setting financial goals for you and your family, and creating a plan to help you achieve them.
Your hopes, dreams and ambitions will be at the heart of a real financial plan, and that financial plan will incorporate everything that money touches in your life to give you the best opportunity of making those hopes, dreams, and ambitions a reality.
Working with a financial planner
Financial planning is of massive benefit to so many people with the need for advice growing all the time. To get started with financial planning you should sit down and reflect on who you are, who you want to become and the life you want to live, with a plan then being crafted around this.
Once you know what you would like to work towards it is time to gather all your financial information and to meet with a financial planner.
The financial planner will analyse all the information you provide and will work with you to create the plan to get you where you want to be. The financial planner will have a lot of questions for you, but I would also encourage you to ask questions of your financial planner to make sure that you are happy to work together.
How will we work together?
This is the most important question as it lays down the terms of engagement. The two main points to establish here are: how much time your planner needs from you, and how much time you need from your planner. You will gain an understanding of who you will hear from in the team and how you will hear from them, be it in person, over the phone or online. An ongoing relationship is essential as a financial plan is a living document that changes with you as your life changes.
Have you experience working with people like me?
You don’t want to be in outlier in your planner’s practice, you will get better and more complete advice if your planner and their organisation regularly works with people just like you to develop their expertise.
What is your fee structure?
A financial planner should clearly outline all fees, charges and commissions that are charged or received in the provision of financial planning services, and how these are paid.
A proper financial plan should always have a fee attached, and that fee should be pre-agreed with your Planner. Professional advice is only worth something if you are paying for it.
What is your investment philosophy?
The importance of this question can be twofold, many people are very interested in financial markets, and where specifically their money will be invested. This will allow them to judge if their beliefs are aligned with those of their planner.
Many others may have little interest in, or experience with investing money themselves. But asking this question will allow them to see if their planner can keep the investment decision jargon free and uncomplicated, while clearly supporting the recommendation to fit your goals.
Financial planning is not about finding the next big investment opportunity, or star investment manager.
It is about doing the boring stuff well and focusing on what has always worked to achieve the outcomes you are looking for.
The Financial Planning Standards Board has conducted global research which shows that people who work with a certified financial planner are being 63% more likely to feel very knowledgeable and confident about financial matters.
Working with a good financial planner can bring great clarity to your personal finances, but if you don’t know where to turn, asking friends or family if they have worked with a Financial Planner that they would recommend is often the best place to start.
• Adrian White is a Financial Planner with FDC Financial Services within the West Cork Region. FDC Financial
Services Ltd is regulated by the Central Bank of Ireland.
