Why is a financial plan more important now than ever before

The recent and continued personal and financial toll of the Coronavirus pandemic on individuals, businesses, charities, and organisations has been immense.

Together with low to negative deposit rates, volatility in stock markets, and dare we mention Brexit, can we possibly plan for what’s next and the potential impact on our personal financial goals? Having a financial plan in place can help. Given that we are facing a new political and economic landscape in the UK and Ireland, it is more important now, than ever before.

I recently had a virtual meeting with a company director who is due to retire this year. The first iteration of her financial plan was produced for her several years ago and set out a route map for her to achieve her and her family’s financial goals. It also dealt with the “What if’s”, ensuring the family had adequate financial protection along the way. Like any journey, there were some speed bumps and adjustments needed in order to stay on course. However, having stuck with her long-term financial plan, she was able to weather the short-term market moves and achieve her retirement goal this year. This helped copper-fasten her commitment to having clear long-term financial goals and a plan to achieve them.

What is in a financial plan?

By creating a financial plan, it allows us to determine what is important to you by clearly understanding your current financial plans and goals. This allows us to develop tailored advice to help you achieve these goals, track progress, and review on an ongoing basis.
When we start this process with many of our clients, they typically summarise their personal financial planning goals under the following three areas:

Do I have enough?

Clients typically like to determine if they have enough assets and income streams in place to maintain their lifestyle, both now and in retirement. Your financial plan can address this by ensuring that your income and assets are aligned to your spending needs. Given where deposit rates and investment markets are now, how much you should keep on deposit for emergencies, and how much you should invest are essential foundations for your plan. To have the confidence that your family, and/or business would be financially secure should something happen to you or your partner unexpectedly, we will also review your life cover provisions to determine its efficiency, or if more or indeed less cover is appropriate.

What I have, I want to maintain and grow.

Essentially, this addresses the desire to steadily grow assets, which may have taken a lifetime to accumulate. Having a plan will increase the likelihood of your pension and investment assets being aligned with your tolerance for risk, which may have been tested recently. Now is a good time to look at any other pensions or investments you have that may need to be re-assessed, to ensure they align with your ultimate goals. A coordinated investment strategy within your financial plan can help with achieving better long-term outcomes.

I want to ensure I am tax-efficient.

Your financial plan will detail strategies aimed at ensuring your assets are tax efficient during your lifetime and that surplus personal or business assets can pass according to your wishes in a tax-efficient manner.

What’s next?

Although we do not know the specific details of conversations being held in government buildings, there are potentially pensions and taxation changes on the horizon. As the country attempts to recover in this new political and economic environment, your financial plan can determine if you are using the most appropriate and tax-efficient structures available to you.
By having an up-to-date financial plan in place, can we perfectly predict what will happen next? Unfortunately not. However, it will help provide you with the reassurance that although short-term impacts are unpredictable in nature, your overall financial plans and goals should remain intact. You will then be free to spend your time concentrating on what is most important to you, whether it be your business, family, or career goals, confident that you are prepared for whatever happens next.