It is vastly misunderstood what an Independent Financial Adviser does. People are always surprised when I say the vast majority of my job is being a financial therapist to people. Helping people understand why they have made those money decisions in the past and how that might impact their future.
It seems we could be on the cusp of a lot of change with the budget coming up and it reminded me of the last time the financial landscape changed significantly, that was 2015. In 2015 the ability for someone to fully withdraw a pension was born and the media said that people would withdraw pensions and buy Lambo’s. Did this happen…..no.
I feel that one of the main reasons why this did not happen before what that transaction would be saying is that I value a Lambo over my lifestyle in later life. I value a Lambo over holidays and time with the family. In reality very few people valued a piece of metal over these things.
We can learn a lot from this day to day with our money and the decisions we make. If you are someone that buys a coffee every morning you are making a similar choice with your money, I value coffee over having that money for other purposes. There is nothing wrong with this decision, as you might value the ritual that gets you set up for your day to make you more productive, which in turn increases your overall wealth. This is great, but understanding these habits and what is driving them is where a financial adviser can help.
Too many advisers just say don’t buy the coffee and save into a pension, but that is not what good planning looks like. Good planning looks at what drives those decisions and the outcomes from those decisions to make a plan that works for you to achieve the goals you want to achieve. When looking at these it also important to understand influence. For example, look at what comparisons are being drawn. The best example is coffee based again if you look at an at home coffee machine like Nespresso your comparison is automatically to Starbucks and the thought is that the machine and the pods are cheaper than a Starbucks everyday. But that machine coffee is still more expensive than instant coffee at home. So, what is the right comparison to is it to the coffee machine or instant coffee. And the answer is not simple, it depends on what you are trying to achieve and why. If you are just trying to achieve a saving on Starbucks but still want good coffee then the comparison to the machine is best, if you are trying to save maximum money to achieve something else, as you value that something else more greatly then the instant coffee is the right comparison.
I wanted to go through this so that we could all think more deeply about why we make the decisions that we do and the impact of those decisions. I think it is important that everyone sits and thinks about goals and aspirations and look at order of priority to help to achieve better outcomes.
We will help you do this with your money and life goals. We will help you unpick these when it comes to retirement, goals for giving children money or whatever it may be.
If you think that you would benefit from reviewing your financial goals, please contact Daniel Prosser on 01329 282882 or via our Facebook or Contact Us pages.
Please note: The content of this blog is for your general information purposes only and does not constitute as investment or retirement advice.