Case Study Five - Impartial Financial Planning

Situation

David, a General Medical Practitioner, approached us for our opinion on his existing financial planning.

Now 60, the children had flown the nest (thankfully!), and he and his wife Marion wanted to have lots of holidays and have a good time while they were still in good health.

David had used various financial advisers in the past, but never seemed to get a straight answer to the one big question he and Marion needed answering:
 
“I want to part retire now and have a great time travelling, but will we run out of money before we die?”

Instead, David always felt he was just being sold new products and investments.

David informed us that he had an NHS Pension, a personal pension, no mortgage, various savings and their respective State Pensions.

His main goals were:

• Retire from the NHS and take his pension. Then return to work part time until age 65 when he will retire completely.

• Have their wealth pass on to their children, not Gordon Brown.

What We Did

As Holistic Financial Planners we specialise in creating financial strategies for individuals and their families, rather than simply selling policies.  It’s all about ascertaining where a client is in relation to where they want to be, and creating a financial strategy to get them there.

The first thing we did was to ensure we really understood David and Marion’s current situation.

We then asked David and Marion to complete a detailed expenditure template. This meant we could start to use an accurate measurement of what they would actually need in retirement to achieve their goals in life.

The next step was to work out how far all David and Marion’s existing plans and investments would go towards achieving their objectives. Cashflow forecasting software was then used to build the framework of their financial plan, marrying up their objectives with current and future sources of income.

This could be seen as their own ‘financial map’ for the future, which was absolutely crucial for David to get the result he wanted.

The results of the forecasting exercise was that cashflow would remain positive throughout the rest of their lives.

What this meant was that they could achieve all their objectives with the minimum risk. Indeed, they could even spend more money if they wanted.

With a context now to work with, we then put together an action plan for Inheritance Tax mitigation by implementing new wills, as well as taking out Enduring Powers of Attorney for each other. This is an arrangement to look after their affairs if they became incapable of doing so during their lifetimes.

Finally, their collection of investments and policies were transformed into a risk assessed investment portfolio, designed to keep risk to a minimum and maximise tax efficiency.

What it Meant for David and Marion

• Complete peace of mind for their retirement years, knowing they can achieve all their goals, and even spend more than they thought.

• Correct wills that reduced their children’s potential Inheritance Tax bill by £114,000.

Summary

As David and Marion found, by having a fully researched financial plan created for them, they were able to see projections of how their future financial lives would look, enabling them to plan ahead with confidence.

Action Point

If your adviser only got paid if they sold you a policy, you may well question the impartiality. Even more worrying is that ongoing reviews and monitoring are essential to make sure your planning remains on track. If your adviser only gets paid when he/she sells you something, can you really rely on the ongoing attention to your planning needs?

Getting impartial advice is the key, and this can be achieved with a comprehensive fee based financial planning service. Ask your adviser if they offer this. If not, it may be time to review your options.