Planning with the experts to meet life goals; As Financial Planning Week draws to a close, Tyneside financial adviser Graeme Urwin highlights his work with Durham dentist Martin Burgess to show the importance of financial planning.
The results they aim for is for you to be truly in control of your finances and therefore your future.
Who are the IFP? The Institute of Financial Planning (IFP) is a not-for-profit professional body established in 1986 to focus entirely on the practice of financial planning. IFP works closely with its 2,000 members to help people l across the UK to realise the importance of financial planning to their lives. See information at http://www.financialplanningweek.
org.uk/ Graeme Urwin, a financial planner and wealth manager at Newcastle-based financial adviser Rutherford Wilkinson, and a member of the IFP, describes here how he has helped Durham dentist Martin Burgess with his finances using the principals of the IFP.
The situation When I met Martin in 2007, he had been dealing with various commission- based salespeople and advisers for many years. As a result he had gathered and been sold many policies, investments and pensions.
Martin was dissatisfied with his previous adviser and did not feel in control or feel as well organised as he would wish.
Martin's main priority was the security of his family, and ensuring he had enough for enjoying life now and in his retirement years to come.
The problems Martin Burgess wanted to know: Do I have enough protection for my family or too much? Do I have enough investments and pensions or too much? Am I taking the right amount of risk with my investments? How can I maximise tax efficiency? When will I be able to clear my mortgage? What are these NHS pension benefits, and how do they affect me? How exactly will all these assets help me when I decide to retire? Will I run out of money before I die? Fair enough questions I think, and I reassured him that these were not uncommon after advising dentists for 23 years!
We also discussed why I am fee-based, rather than relying on commissions. The simple answer was that I do a totally different job to the salespeople he had met. For example, if you don't need any more policies and investments, how are you going to pay me? It became clear that no one had asked Martin what his values were in life and what goals he wanted to achieve in the next 10-20 years. After all, is there anything more important than that? Actions taken One of the most crucial things we ask new clients to take on board is that we need to look at everything as a whole. You cannot spend the same pound twice, and actions in one area invariably affect decisions in another. We gathered all the information we required from Martin, including assets, expenditure and his and his wife Jennifer's goals in life, and by when.
So now, effectively, the client is saying to us: we have told you what we want and by when, and you now know what we have. So are we going to run out of money before we die? This is where the all-important issue of measurement comes in. Only a small percentage of advisers utilise what is known as a cash flow forecast to give the big picture. In his job as a senior dentist, Martin diagnoses before he prescribes, and we are no different.
This sophisticated software helps me help the client by giving the big picture, so that I can then look at all the little pictures in context. It also means I can build in the NHS pension scheme and state pension benefits as well as all Martin's personal assets and requirements. It became clear that Martin was over-insured in many areas, as we now took into account NHS pension benefits. Also, he did not need to add to his pensions, as he had enough for retirement.
This meant that significant savings could be made by cancelling policies he did not need, and stopping personal pension investments.
We also arranged an offset flexible mortgage to replace the old one, and the savings made on the cancelled policies were switched to debt repayment.
It also became evident that Martin was taking more risk on his investments than he needed to, but was unaware of this. In fact there was no investment philosophy at all, so we created a proper risk assessed portfolio, replacing the collection of disparate plans he had..
Martin paid an agreed fee for all the work undertaken.
The results I asked Martin what benefits he got out of dealing with me, and they were: A written financial strategy explaining the overall picture as well as what to do and why Becoming organised, including sorting out wills and lasting powers of attorney Put his mind at rest that his family were protected Identified when his financial independence day was for retiring Reduced risk on investments and gained a risk assessed portfolio for all seasons Stop waste by stopping policies and investments he did not need, and put this to good use reducing debt and spending more Found someone not only independent but impartial, who he can trust to look after his affairs both now and in the future.
The peace of mind that Martin and Jennifer have gained knowing that they can achieve their goals in life is all-important to them. They also want ongoing advice in a long-term relationship and know that their situation will be reviewed each year with someone they trust.
So it's about service not selling, and as I work for the client and only the client, we simply agree a fee for me to deliver this service. This allows people like Martin and Jennifer to simply get on with enjoying life, knowing they are going to be properly looked after.
Summary It is this type of financial planning service that the IFP is promoting this week.
If you have an existing adviser, or are looking for one you can trust, be very clear about what type of person you want to deal with.
If you want this type of service, find a fee-based planner who works for you, and you will be assured that they will do a holistic planning job to optimise your financial affairs to help you achieve your all-important goals in life.
Start by asking if they are a member of the IFP. I wish you well.
FEE-BASED Graeme Urwin. FUTURE Financial plans should involve making sure you can afford to put your children through university.
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|Publication:||The Journal (Newcastle, England)|
|Date:||Sep 12, 2009|
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