When I reach the office on a Monday morning, it’s impossible for me to predict the kinds of situations I’ll encounter that week. Each client is different with their own unique family tapestry, goals for the future and financial means, and this is what makes it so fulfilling. 

My role is to gain a holistic overview of an individual’s or family’s wealth, calling on relationship managers and taxation, succession and investment specialists when required. Even though number crunching is central to my role, understanding the client’s goals, needs and wishes lies at the heart of effective financial planning. 

Top three do’s

Understand the workings of a financial plan
Firstly, a financial plan is an overview of your current financial situation that takes into account all types of assets. Secondly, it acts as a roadmap that lays out some of the milestones that could affect your life in the short, medium and long term. It can simulate the financial effects of your choices, be it early retirement, pension withdrawal, marriage, selling a business or having another child. It also typically contains suggestions for improvement and optimisation. Lastly, it serves as a good basis for you to understand your risk ability when it comes to investing.

Define clear goals
Clients often start the planning process by asking me how other people go about setting goals or dealing with life events such as retirement or financing their children’s education. While this might be helpful, you’ll need to forge your own way by contemplating your family’s wishes and ambitions within specific time frames. Without clear goals, you’ll struggle to define a meaningful long-term financial strategy, and your overall wealth and circumstances could suffer as a consequence.

Be realistic
While many clients actually possess more wealth than they realise, it’s not uncommon for people to underestimate the means required to maintain their current lifestyle long into the future. They’re often shocked by how much they spend and wish they’d started the exercise earlier. In cases where income increases, people tend to spend more instead of save more, which can be risky if left unchecked. Lastly, there are also those who believe they need to maintain the bulk of their wealth well into their retirement to feel financially secure, even though they know they can’t take it with them! Although this is a very human and understandable way of thinking, it’s important to be realistic about how much wealth is needed to allow you to live a comfortable life.

Top three don’ts

Don’t delay
If you put financial planning on the long finger, you could miss out on important deadlines or opportunities, for example optimising pension withdrawals from a tax perspective. The sooner you start to set goals and put a plan in place, the sooner you’ll have peace of mind. Remember that a financial plan is a solid basis for planning your estate, be it passing on property or setting up wealth structures for those you love. If you have family members scattered across the globe, timely planning is even more crucial as wealth planning involves multiple jurisdictions, each with its own legal, taxation and succession laws.

Don’t forget to review
Financial planning isn’t a one-time exercise. If only it were that simple! It’s an on-going process that needs to be adapted in sync with any changes to your circumstances or indeed the legal framework or economic circumstances in your country. As you progress through life, you might acquire new assets and by doing so, might run the risk of exposure in one or more asset classes. It can be hard to see the need for portfolio diversification without the full overview of your wealth.

Don’t leave your partner out of the loop
It goes without saying that each family has its own way of managing its finances. That said, when it comes to financial planning, it’s generally best to communicate openly, honestly and regularly so that everyone is on the same page and feels secure about the future. This is particularly important when couples are not married or in a legally-recognised partnership. Make sure you understand marriage and family law in your country of residence and what it might mean in the case of incapacitation or death.

Laying out your life with clear goals in a financial plan can be a daunting task for many people, but with a plan in place a future free from financial burden is one step closer.

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