We are one year on at WKM and I have to say I am delighted with our progress.  With the support of clients and professional relationships, we have been able to create a diverse client base which provides us with a secure line of business for the future.  I think it is important we can take pride in our achievements (business and personal) and I feel especially proud of the above.  We are now at the year six mark of our original business plan and have been able to deliver our proposition seamlessly during the various incarnations of lockdown.  Being designed with remote working in mind back in 2019, having it forced upon us was not a hinderance. 

On that note, I was delighted to accept my invitation for a vaccine recently and full praise should be given to all those who are achieving the task of UK wide vaccination from the doctors and nurses to the volunteers and dare I say politicians!

That was going to be my segway into discussing personal insurances and the need to ensure your life, employment, and even inheritance tax cover is in place and regularly reviewed, but as these have been discussed in our recent blogs and webinars, I have decided to change tack.

This month saw me re-engage in face-to-face meetings with clients and professionals.  The lift in my mood and enthusiasm has been noted by those closest to me!  The best part of my day is speaking with clients and those in our referral network.  There is the obvious challenge in those conversations of ensuring planning is the best it can be (if you know me, you know how much I love a challenge!), as well as the emotional catch-ups in discussing plans for the weekend and bemoaning the latest football results (as a Nottingham Forest fan, I feel I have a right to whinge here!)  Doing this face-to-face is more engaging and satisfying than online calls. 

This week’s highlight was being sat in a client’s garden in the chilly air with the chiminea close by burning off the loose bits of wood the client had left over from a DIY project.  Coffee, biscuits (triple chocolate cookies if my clients are reading), and sparks from the fire, set the backdrop to discussing their financial planning. 

Financial planning is such a joy to undertake but it is not easy to challenge a client on their own roadmap for retirement, especially when I mention they could increase spending.  With a couple this usually results in one’s eyes lighting up with the other beginning to scowl. And of course, I take no pleasure in this whatsoever (I do love sowing a seed of contention every now and again!)

The seriousness of this is that your financial plan should outline what you can spend in retirement from your accumulated capital and where the risk to this lies.  If the result is that you will simply not draw all your capital down to zero, this leaves space for gifts to the children / grandchildren (as one client put it, she loves the yellow discount labels at the supermarket and so the prospect of quadrupling their expenditure, will simply not happen). 

Once we know the expenditure figure, we can then have a serious discussion of investment risk.  If we do not need a high return pa for example, then we do not need to take the associated high investment risk.  So irrespective of what the risk questionnaire has said, let’s have a discussion on the return we need as part of that same portfolio construction exercise.

For the chiminea client, we are now building a legacy for the grandchildren and so the prospect of having large cash balances where the interest after tax is below inflation, does not appeal as the cash will devalue.  At the same time, as the investments will be inherited, we will have a longer time frame than the client’s own life so the adoption of a controlled element of risk with a mandate to beat inflation, sits nicely.

Out of the past twelve months, I have seen financial plans (see our webinar section for an example) empower the entire planning process to then be able to set goals of expenditure and then determine the investment risk we need to adopt to achieve them.  Without evaluating both, I would question the reliance solely on a standardised risk questionnaire and plugging money into ISAs and pensions, wishing they make you rich.  We can do so much better!

Thanks for reading.