Lifestyle financial planning is designed to help you answer some of the bigger questions in life. So if you find that you’re asking yourself some or all of the following questions, then you’re probably in need of some financial advice:
- When can I work because I want to, rather than because I have to?
- What do I have to do to ensure I never run out of money?
- How much do I need to earn, save or sell my business for to give me what I want out of life?
- Exactly what level of investment return do I need to achieve my objectives?
- What can I realistically hope to achieve with what’s available to me?
In order to provide accurate and tailored advice, we need to understand what a client wants out of life, and ultimately what their end goals and aspirations are. Once we know this, we can create a financial plan to help them achieve these. By having a better understanding of our client’s aims, we can then calculate what it’s going to cost them from a savings point of view, and also identify any shortfalls in their planning to ensure they meet these goals, which is how we derive their ‘number’.
Many of our clients come to us looking for financial independence, in particular after they’ve been racking their brains with the above questions with little success of finding the answers. However, financial independence is not always the aim for some of our clients. Some focus their financial aspirations around an activity or a series of activities that they want to tick off their bucket list, such as climbing Everest, water rafting in the French Alps or dining in all the Michelin star restaurants in the UK (did you know there are over 150?!).
We work with our clients to reach their financial goals by using lifetime cash flow modelling to help them understand the reality of money, as well as what their ultimate ‘number’ is. Initially, the process of understanding the number our clients are aiming for is very much based on a questioning process, so we can get under the skin of what they’re looking to accomplish. Understanding the figure our client is working towards is the holy grail of financial planning.
Depending on what a client wants to achieve, there may be one single goal, or a number of goals that need to be accomplished in order to reach their ultimate financial objective. Creating a timeline is key at this stage as it allows us to include the client’s current assets, pensions and property details to ensure that every outcome is accounted for during the planning phase. For example, a timeline will help determine how much passive income a client needs from all their assets so they never run out of money, which is where we use the clash flow model to derive our client’s specific ‘number’.
The timeline also allows us to plot out various events and scenarios so the client has a clear view about anything that may impact them achieving their financial goal or goals; it also helps us understand what actions need to be taken. One of the biggest fears we see from clients that want to become financially independent, is running out of money, but having a timeline puts what is achievable into perspective. By using this system it also means we can convert the final ‘number’ into an annual income, which gives clients an understanding of cash flow planning and how much money they need to be putting aside year-on-year. This step-by-step guide helps us manage expectations by giving our clients a realistic outlook on their financial goals. That way expenditure can be altered if needed in order for the goal to be met.
It’s key to note that a lot of clients aren’t always working to achieve materialistic goals or seeking to purchase their next property – a lot of it is experiential, which links back to our bucket list reference earlier. By working closely with our clients in this way, we’re able to offer specific advice that is completely catered to each client’s financial goals (whether linked to personal or business finance).