23 February 2017

What is proper financial planning, and why appoint a financial planner?

The first and, to our minds, key point is that financial planning does not start with investments and products, or even with finances generally, but with who you are, what concerns you have, and what you want life to look like in the future. We often say that you are our client, not your money!

One of the professional organisations, the Chartered Institute for Securities & Investment (CISI), defines financial planning as:

“an ongoing process to help you make sensible decisions about money that can help you achieve your goals in life; it’s not just about buying products like a pension or an ISA.

…it might involve putting appropriate Wills in place to protect your family, thinking about how your family will manage without your income should you fall ill or die prematurely, spending money differently, but it involves thinking about all of these things together, i.e. your ‘plan’.”

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What you want your life to look like will be different for everyone, and might include funding university costs for children, funding deposits for the children’s first properties, retirement (one of the most common goals that clients tend to focus on) and, perhaps at a later stage, passing wealth to the next generations. Whatever you are aiming for, it is crucial to articulate this and to do so in some detail. A good financial planner will be able to help with this, as most individuals have not thought through in detail what they want from life.

Once the goal is clear, a ‘price tag’ can be put on it. The CISI talks about bringing things together in a plan, and to get to this a financial planner would normally ‘crunch the numbers’. Essentially, once we understand where you are, and what you are aiming to achieve, we look at the financial side to see what needs to be done to get you to where you want to be. Most planners will do this by using modelling software to show you how your finances look or might look over your lifetime. The modelling can then help you answer questions such as:

  • Am I on target to achieve my goals? For example, can I afford to retire at age 55?
  • How much should I be saving to achieve my goals?
  • What investments are best suited to provide the income I need throughout my lifetime?
  • What investment risk do I ‘need’ to take?

Ultimately, financial planning may lead to the recommendation of an investment product, but the investment product is just a tool to help you achieve your objectives, and the selection of a product, where relevant, is a long way down the process.

The second point from the CISI definition is that financial planning covers a wide number of areas, and many of these areas will require advice from other professionals, such as lawyers or tax advisers. Financial planners are focused on you achieving your objectives, so, where you don’t already have suitable advisers in place, they can recommend hand-picked specialists to make sure that your broader issues are dealt with.

Some questions, however, are not so easily answered. Looking thirty years into the future can be a daunting exercise. The key is to accept that we are working with a lot of moving parts. You have to play with the parts that move and create ‘what if’ scenarios. These scenarios then help you to see what your finances will look like five, ten, or twenty years into the future, and help you know how to react when things change or don’t go to plan.

So, the key is to create a sound financial plan and this can be done in six steps:

  1. Establish your goals in life – short, medium and long-term.
  2. Work out what assets and liabilities you have – write them down.
  3. Evaluate your current financial position – how close are you to achieving your goals?
  4. Develop your plan – create a ‘route map’ for achieving your different goals.
  5. Implement your plan – make the changes and make it happen.
  6. Monitor and review your plan at least yearly and make adjustments when needed.

Ultimately, the aim of having a financial plan is to take away financial worries and enable you to concentrate on living your life as fully as possible.

Please get in touch if you would like to hear more about how we have helped our clients to live their dreams. We would be happy to share some client stories with you to show the value of proper financial planning.

This blog post was written by Richard Wadsworth and Stephen Rowntree, financial planners at Carbon. You can view Stephen’s and Richard’s profile by clicking on their names or contact them via email on or

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