| There are really only two types of services you can | | | | Planner a context within which advice can be |
| choosefrom when getting help with planning your | | | | providedbecause it highlights any areas of |
| finances,although some financial advisers do not offer | | | | vulnerability. Moreimportantly, it gives you a context |
| both. | | | | within which you canmake decisions as the effects |
| The key question you should ask yourself is which | | | | of various scenarios can bemodelled. |
| one isbest: | | | | This could be termed your own financial map for the |
| Financial Advice or Financial Planning? | | | | future. |
| Clients that get financial advice often end up | | | | On many occasions clients are better off than they |
| treatingtheir financial programme like a shopping trip. | | | | imaginedand surprised with the results, meaning they |
| They simplyprogress through life collecting policies. It | | | | can make moreaccurate financial decisions. |
| is very muchan event driven exercise. | | | | As you can probably see, financial planning is much |
| For example, you may have children so you buy | | | | moreproactive and holistic/comprehensive. The |
| some lifeassurance or see an advert and buy an | | | | problem is thatit only works properly if it is impartial. |
| investment policy etc. | | | | You need to havethe confidence that all your options |
| Because it is event driven the advice is reactive | | | | have been considered;writing a will for Inheritance |
| problemsolving, and will almost always result in a | | | | Tax planning versuspurchasing an insurance product is |
| policy beingsold to you (or doing the research | | | | a good example of this. |
| yourself and you buyingthe policy without advice). | | | | Indeed, it may be the case that you already have |
| The problem with this is that there isn?t any form | | | | enoughmoney to achieve your goals in life so the |
| ofmeasurement that takes place until it?s too late. | | | | best strategymay be to spend more. |
| You reachthe checkout, i.e. retirement, and have to | | | | Equally, if by measuring your worth against your |
| hope you haveenough in your trolley to last you for | | | | objectivesit is shown to be a very rosy picture, you |
| the rest of yourlife. | | | | could reduce therisk with your existing investments. |
| Or worse, something goes wrong on the way to the | | | | This protects you fromthe volatility present in many |
| checkout ?illness, accident etc and you have to | | | | portfolios. |
| rummage in thetrolley in the hope that you have | | | | Commission or Fees? |
| something in there todeal with the problem. | | | | If your adviser only got paid if they sold you a |
| In simple terms it is a retail service and the people | | | | policy,you may well question the impartiality. Even |
| thatprovide it get paid according to what they sell | | | | more worryingis that ongoing reviews and monitoring |
| (assumingthey are paid by commission and not by | | | | is essential to makesure your planning remains on |
| fees from you). | | | | track. |
| Having said that, a financial advice service may | | | | If your adviser only gets paid when he/she sells |
| beappropriate for your needs now before you | | | | yousomething, can you really rely on the ongoing |
| progress to amore comprehensive financial planning | | | | attention toyour planning needs? |
| service. | | | | The Financial Tips Bottom Line: |
| Financial Planning is much simpler and more effective. | | | | So to summarise, financial planning is more |
| The first step is to work out what your objectives | | | | proactive,holistic and comprehensive, and may be a |
| are,making sure you spend time to work out both | | | | more appropriateproposition for your needs than |
| your needs andyour wants. The next step is to work | | | | financial advice. Gettingimpartial advice is the key, and |
| out how far all yourexisting plans and investments will | | | | this can be achieved witha fee based financial |
| go towards achievingyour objectives. | | | | planning service. If you deal with anadviser, |
| Cashflow forecasting software is then used to build | | | | remember to ask them what financial planningservices |
| theframework of your financial plan, marrying up | | | | they offer. |
| yourobjectives with your current and future sources | | | | If they only provide a financial advice service, maybe |
| of income. | | | | it'stime to interview other advisers that DO offer the |
| Cashflow modelling is crucial as it gives your Financial | | | | type ofservice that you're looking for. |