Benefits Of Financial Planning

We recently commissioned a report into the benefits of financial planning for peoples’ lives and their relationship with money. As a firm who are passionate about financial planning but wanted to truly understand and quantify the actual benefits of a financial plan in the real world. We see the benefits every day with our clients, so we commissioned this report to better illustrate the benefits, using real evidence and research. The research that we refer to in our Impact Report shows that people benefit from getting financial advice by accumulating nearly three times the savings and investments than those who don’t, are more than twice as likely to have a pension, are more financially protected and feel more confident about their financial future. For more tips and advice on the benefits of financial planning and what to be aware of read our Investwise Financial Planning Impact Report.

“Ultimately, the decisions we take in personal finance – planning for retirement, taking out insurance policies or choosing to invest in funds – can be among the most important in our lives. We need to be sure the advice we get works in our best interest.”

For anyone considering seeking financial advice we suggest the following tips:

Benefits of having a plan:

1. Plan first, invest later: Never make an important financial decision without first
   having set some objectives, within a clearly laid out financial plan. This will ensure
   that your financial arrangements are appropriate and compatible with your life goals.
2. Pick an advisor who is interested in your goals, lifestyle and financial plan.Avoid advisors who immediately ask about how much you are investing, or quickly introduce products. A good advisor will get to know you first and establish your needs before carrying out independent research.
3. Watch out for tax treatment: Most insurance companies and exchange traded fundare taxed under Exit Tax Rules. This might be fine, but if you have tax credits available, or previous capital losses, a Capital Gains Tax Structure might be much
   more appropriate. This type of structure is not available through insurance companies. A good financial plan will take tax into consideration and recommend investments to are appropriate and efficient. For older clients, Capital Gains Tax
   Investments can also be more appropriate from an estate planning perspective.
4. Understand costs: A significant benefit of using a financial planner is the long term cost saving. Ask your advisor how much the advice will cost, how it is calculated and what the TOTAL costs are. These will include the following: Advisor Fees: Is the advisor adding an annual fee, and if so, how much is that in Euro terms? This is usually quoted in percentages Allocation Charge: Any potential deduction from your monthly investment or lump sum Investment Management Fee: What are the total annual costs, including all hidden costs that are often not disclosed? This is called the Total Expense Ratio (TER)
5. Risk Level: Is the investment appropriate to your needs and requirements? Some advisors will just ask the client to complete a risk questionnaire, and then match the investment exactly to the result. Good advice, and good investment management requires a much more detailed analysis than this.
6. Access: Do you need access to the funds? If so, ask if there are early encashment penalties in the first 5 or 6 years. Almost all investment accounts can be set up with no encashment penalties or lock-in periods at all. Early Encashment Penalties are often a sign that commission is being paid by the provider to the advisor. This is recovered by the product provider through higher annual charges. It is a lie that there is no additional cost to the client. The product providers do not absorb this cost, as I have heard being said to clients.