Author:
Damien Rylett
Chartered Financial Planner
Reviewed by: Megan Jenkins, Chartered Financial Planner
Have you ever jumped in your car, started the engine, and driven aimlessly without a destination in mind? Chances are, you haven’t. Yet, surprisingly, many people take this approach when it comes to their investment portfolios. These portfolios often involve substantial sums of money that have been diligently accumulated through years of hard work and disciplined saving. Without a clear objective or understanding of what you are trying to achieve, it becomes challenging to find meaning in your money. When asking “What are you trying to achieve?”, common answers from clients include “growth”, “income”, or even “outperformance”. As financial planners, it is our responsibility to reframe the question and shift the focus towards aspirations, goals, dreams, beliefs, and visions.
Traditionally, financial planners have prioritised money over their clients’ genuine fears and pressing questions. We believe it is crucial to address concerns like “How can I ensure I never run out of money?”, “How much do I need to earn or save to be able to achieve my life goals?”, “When can I afford to free myself from burdensome obligations and start doing things I really enjoy?”, “How can I secure my family’s financial security in any circumstance?”, and, perhaps the most significant question of all, “How much is enough?”.
How much do you need to retire and more…
How much income do you need to be comfortable, how much do you need invested and how to pay less tax...
Our role as financial planners is to assist clients in attaining and maintaining the life they want. We aim to inspire them to pursue their passions and enjoy the things they want to do while they still have the time to do so. People don’t really want financial products or investments—they seek peace of mind, security, and a clear financial direction to be able to secure their desired lifestyle.
Lifestyle looks different for everyone, whether it is large scale or entails a more modest approach. Some have a lifestyle that includes gifting to charitable causes or leaving behind a legacy after they die. Ultimately, it all comes down to lifestyle. A big lifestyle requires a big number, while a smaller lifestyle requires a smaller one. Therefore, our job is to help clients understand their “number” – the amount needed to sustain their desired lifestyle. With proper financial planning, we can guide them in accumulating, managing, protecting, and, most importantly, enjoying their wealth.
One effective method for determining an individual’s financial requirements is the use of cash flow modelling. By projecting an individual’s assets, income, and expenditures into the future, we can paint a picture of their financial journey. From a financial planning perspective, cash flow modelling presents an individual’s present financial situation in a graphical form and illustrates how it may unfold in the years to come. Find out more about cash flow planning in this article [1].
Once we establish the current financial situation, we can compare it against the stated goals and objectives. Generally, people fall into three categories: the “Haven’t got enough,” the “Got too much,” and the “Got just the right amount – but I don’t know it.” Attempting to provide financial planning advice without cash flow modelling is akin to guesswork. Only after undergoing comprehensive financial planning and cash flow modelling can we delve into the topic of investments.
An investment portfolio serves as a tool or medium through which individuals endeavour to achieve their financial planning and lifestyle objectives. The “Not enough” group will either need to invest more or take more risk, the “Too much” may be able to reduce risk on their portfolio and spend more or give assets away to avoid inheritance tax. The “Just right” need to become aware of their situation to be able to enjoy some peace of mind.
Our clients may wish to consider combining the expertise of a financial planner with that of an investment manager. When these skills are mixed together, the results can be both powerful and life changing.
On your journey towards financial security and fulfilment, it is essential to avoid aimlessly driving without a destination in mind. Instead, adopt a purpose-driven approach to your investment portfolio. By defining your aspirations, goals, and dreams, you can find meaning and direction in your financial decisions. Here at Saltus, clients have access to both highly qualified financial planners and an award winning investment management team, ensuring that we can carefully map out the journey and help you to arrive at your destination safely and on time.
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Article sources
Editorial policy
All authors have considerable industry expertise and specific knowledge on any given topic. All pieces are reviewed by an additional qualified financial specialist to ensure objectivity and accuracy to the best of our ability. All reviewer’s qualifications are from leading industry bodies. Where possible we use primary sources to support our work. These can include white papers, government sources and data, original reports and interviews or articles from other industry experts. We also reference research from other reputable financial planning and investment management firms where appropriate.
Saltus Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. Information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested. Tax rules may change and the value of tax reliefs depends on your individual circumstances.
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