The Importance of Financial Planning

Will you have enough to retire?

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It’s a worry, isn’t it. You don’t want to run out of money after you stop working, or have to live in austerity. You may have a mix of things you are relying on, a business, property, pension fund, cash savings, your home. You may also have debts, loans. So it’s complicated, and the State Pension is good, but not nearly enough, and will it stay the pace ?

Our Recommendation. You need a PLAN. We call it a Lifetime Financial Plan, because it’s a long term plan, taking everything into account. And as your circumstances change, the plan is updated so you are always on track. You can get more info about this on our website www.lifetimefinancial.ie In making the plan, we also make sure you are making the best of any opportunities, such as saving tax. The sense of relief, and peace of mind that having a plan brings, means you can confidently get on with enjoying your life.

To find out more, and take the next step to your Lifetime Financial Plan, give Aidan a call at 087 262 1006 or Mick at 085 866 9813.

The Importance of Financial Planning

Does the Market Decline Worry You?

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Howard Marks, Chairman of the US based Oaktree Capital was recently asked a question by a Bloomberg reporter – ‘does the market’s decline worry you?’ – he answered the question by writing the following in a memo to clients which we believe is a far more useful answer than the current sensational media headlines.

Does the market’s decline worry you? “The answer lies in another question: What does the market know?” Is the market smart, meaning you should take your lead from it? Or is it dumb, meaning you should ignore it? Especially during downdrafts, many investors impute intelligence to the market and look to it to tell them what’s going on and what to do about it. This is one of the biggest mistakes you can make. As Ben Graham pointed out (many years ago), the day-to-day market isn’t a fundamental analyst; it’s a barometer of investor sentiment. You just can’t take it too seriously. Market participants have limited insight into what’s really happening in terms of fundamentals, and any intelligence that could be behind their buys and sells is obscured by their emotional swings. It would be wrong to interpret the recent worldwide drop as meaning the market ‘knows’ tough times lie ahead.”

The Importance of Financial Planning

Meeting Investment Expectations

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Investors now have a much wider range of investment choice open to them than ever before, ranging from the US stock market to the value of the euro versus the Japanese yen, the price of commodities such as oil, German government bonds and a whole range of other securities. For the non-professional, attempting to devise an appropriate investment strategy with all of these options and choices available can be a daunting task.

It is widely understood that higher investment returns are accompanied by higher risks. While we might dream of making a killing on the stock markets, however, we might not want to risk our hard earned cash on high risk strategies. Fortunately there are now some quite useful and necessary tools available to assess an individual’s risk appetite to ensure they don’t find themselves outside their comfort zone.

There are three key elements that feed in to an investors profile and risk tolerance with regard to the investment strategy required.

  • Attitude to Risk
  • Requirement
  • Capacity

Attitude to Risk

This deals with the individual investors own risk attitude and/or their tolerance of risk.

“How can I emotionally handle moves in the value of my portfolio?”

Are you likely to panic, for example, if there are significant downward movements in values? On the other hand are you a bit of a gambler and feel you can take on lots of risk and volatility in order the achieve high returns? To get the balance right the attitude to risk then need to be co-related to requirement and capacity, bearing in mind that in most cases taking some level of investment risk is key to higher investment return.

Requirement

Here the need is to focus in on what is the objective of any investment. If, for example, the investor has €200,000 and wishes this to grow to €300,000 over 10 years this is probably achievable without too much risk. On the other hand if the need is to do this over 3 years then history shows us what short-term volatility can do to an investment over that period. In addition an individual’s requirement when it comes to investing a capital sum for example could be quite different to the same individual’s requirement for his pension scheme. In the first case the time horizon may be quite short while for the pension you are probably looking at a longer term.

Capacity

This is perhaps the most important consideration of the lot and deals with the individual’s ability to take the financial risk.

“If this investment lost a significant amount of its value would it make a material impact on my financial position?”

Capacity is particularly important for individuals taking on higher levels of risk obviously. Risk tolerance and appetites change over time and can actually change very quickly. It could be a significant inheritance or business success that changes circumstances for the better or when it comes to pension planning it will be necessary to calibrate risk capacity the closer the person gets to retirement. Suffice to say that there are strategies to suit each circumstance and it is vitally important you review risk tolerance regularly.

Aidan Wall has been providing impartial and unbiased investment and pension advice to clients at all stages in the their lives since 1983. If you would like to talk to Aidan about a lump sum investment or pension fund please call 046 924 0961 or email: aidan@lifetimefinancial.ie

At Lifetime Financial Planning we also conduct regular reviews of your investment / pension fund performance, which we believe are the key to ensuring your chosen fund(s) can meet your expectations.

The Importance of Financial Planning

Serious Illness Cover – Protecting Your Family Income

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How often does it happen that you bump into an old friend in the shopping centre or at a social gathering when, not long into the conversation, you learn of their suffering or that of someone close to them? Primarily your concerns are for their well being and that they make a full recovery, but what we often overlook are the associated financial costs which may impact heavily on a family or an individual. These could include loss of earnings, treatment or care and/or medical equipment which could aid recovery. What’s more, your financial situation should be the least of your worries if you were to become seriously ill.

We often overlook are the associated financial costs of a serious illness which may impact heavily on a family income, including loss of earnings, cost of treatment or care and/or medical equipment

Another consideration is that people are now living longer than ever and as a consequence the chances of being diagnosed with a serious illness are higher. Below lists out some more common serious illnesses and the average number of people affected in Ireland each year:

Cancer – 20,000 new cases each year*
Stroke – 10,000 per year**
MS – 250 new cases diagnosed each year***

One way to potentially alleviate such costs or worries would be to put a Serious Illness Cover policy in place. Serious Illness Cover, also referred to as Critical Illness Cover or Specified Illness Cover is designed to provide financial support in the event that a person suffers from / is diagnosed with an illness which is specified in the policy conditions. The plan pays a cash lump sum which can be used to offset costs during recuperation.

In recent years, Life Assurance companies have enhanced their offerings in the area of Serious Illness plans. We are now seeing the addition of illnesses to their specified lists and indeed the addition of partial payouts for more minor conditions / accidents. Although hard to think about, most plans also include some level of cover for children at no additional cost.

What is covered?

Most insurers now cover in the region of 40-50 illnesses but a key point for consideration is that the range of conditions varies between one insurance company and another. The statistics show claims to be greatest for malignant cancer, heart related diseases and stroke. On a more positive note, however, survival rates have improved significantly with advancements in science and research.

If you have ever asked yourself the question; “How financially secure would my family be if I became seriously ill?” and if the answer is “not very” then consider Serious Illness Cover.

Of course, it is extremely important to seek professional advice in this area and with that in mind please contact us to arrange a discussion.

Who should be covered?

Ideally the main breadwinner of the family should be covered, especially if that person is self employed and if an inability to earn an income would impact on their family finances.

*Source: National Cancer Registry, Ireland ** Irish Heart Foundation *** MS Ireland

If you would like to seek impartial and unbiased advice on Serious Illness Cover then please contact Aidan Wall at 046 924 0961 or email aidan@lifetimefinancial.ie

We can help you to gauge what level of cover you might need or whether you even need any cover at all. We can also research the market to find you the appropriate product in terms of price, terms and level of cover.

 

The Importance of Financial Planning

Set Your Financial Goals With a Lifetime Financial Plan

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A recently published survey revealed that a significant amount of our population is suffering from high levels of stress due to concerns about their financial well being.

Pension planning, for example, was a serious source of stress with over 51% of respondents saying they were not saving enough for their retirement. Not knowing how to plan for your financial future can lead to inaction and high levels of stress.

Identify Your Financial Goals

Despite being worried about their financial future the vast majority of people do not have a Lifetime Financial Plan to address this. In order to put together a good plan you need to ask yourself some straight questions…. 

  • When do you want to retire?

  • If I die or suffer serious ill-health how is my family fixed?

  • When do you want your mortgage paid off?

  • Have I made a will?

  • Should I review my savings and investments?

  • Can I save money on the cost of some utilities and services – Energy, Car or Home Insurance, Health Insurance etc.?

Let’s have a brief look at some key areas:

Take Control of your Pension

Starting a Pension Plan or increasing your contributions to an existing one is a very good move to make at the start of 2016.

  • The younger you start your plan the better as your pension pot will then be bigger.

  • If you have a workplace pension scheme you should join it as your employer is likely to be making a contribution for you.

  • Those approaching retirement should make sure they are not taking too much investment risk.

  • Identify your retirement goals and the cost of getting there.

  • Put in place a plan to review your Lifetime Pension Plan at least once a year.

Protect your Family

Death is a taboo subject to most and yet having plans in place to deal with the financial impact of unexpected death is vital for anybody with dependent relatives. Equally you need to consider you and your families circumstances if you suffer a serious illness to the point where it has the effect of eliminating your income. 

  • Do you have Family Protection/Life Insurance cover?

  • If so will it be enough to maintain your family’s standard of living?

  • Should you have Serious Illness or Income Protection cover or both?

Estate Planning

Estate planning is a vital component of any robust financial plan. While, for example, the recent budget increased the tax free threshold for inheritances passing between parent and child to €280,000, with increasing house values etc., it doesn’t take a lot before there are very heavy tax exposures. Only a third of Irish people have made a will which is crazy if you want to dictate and sensibly arrange how your affairs are going to be managed when you die. You certainly don’t want to leave yourself dependent on the laws of intestacy which may not distribute your assets as you would like.

  • Have you made a will?

  • Does it need to be reviewed?

  • Are there any financial or tax planning matters that need consideration?

The Need for Regular Reviews

You should review your financial plan with your Broker on an annual basis. Numerous studies have shown that those who conduct regular reviews having higher savings and pension values than those who do not. 

  • A good plan will help eliminate the stress of not knowing where you are going.

  • Your circumstances do change regularly, for example, additions to the family.

  • Other situations change – tax laws, interest rates, economic climate etc, and your Financial Broker will be able to keep you up-to-date with these changes.

     

 

If you would like to take control of your finances in 2016 and get your Lifetime Financial Plan in place then please contact Aidan Wall, QFA, at 046 924 0961 or email aidan@lifetimefinancial.ie

 

The Importance of Financial Planning

How to Invest a Lump Sum

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HOW TO INVEST A LUMP SUM

As someone who has advised clients on their investment options for over 30 years, people often contact me seeking impartial and unbiased advice on how to invest a lump sum. Whether you have recently received an inheritance, successfully completed the sale of an asset or even won the lottery jackpot the advice I provide is pretty much the same in every case. Here are some simple steps to help demystify the whole process:

 

1: Decide on your investment goals

Some important questions to ask yourself at the early stages of investing include:

  • How long do I want to invest for, is it short or long term?
  • What level of return do I expect to receive?
  • Do I want a guaranteed level of return?
  • Will I need access to my fund if my personal circumstances change?
  • Do I want to receive a regular income from my investment?
  • How much risk should I take?

 

2: Seek Impartial Advice

Often people assume that they save money on fees or commission by arranging their investment directly through a product provider, bank or other financial institution when in fact the opposite is often the case.

The Competition Authority recently noted that Life and Pensions companies tend to provide better product design, more flexible terms and more competitive quotes when engaging with an Impartial Financial Broker.

An Impartial Financial Broker is a highly qualified professional who is required by law to work in your best interest, not in the interest of investment companies.

Their impartiality enables them to research the market thoroughly for the most suitable investment opportunity and to provide a range of choices to suit your needs. This is known as “fair analysis” of the market as it gives you a much better picture of the range of investment choices available.

 

3: Ensure your Advisor conducts a “Factfind”

Before imparting any advice on how to invest a lump sum your advisor should conduct a “Factfind”, which is essentially an in-depth analysis of your current financial circumstances and includes your income and expenses, your family situation (number and ages of dependants etc) and your existing assets and liabilities. This helps both advisor and client to build up a picture of where you currently stand financially.

 

4: Ensure a Risk Assessment is carried out

All investment funds are rated from 1 to 7 in terms of the level of risk involved, with low rated funds offering lower returns and less chance of volatility, and higher rated funds offering the potential for greater returns, but also greater volatility.

By conducting a Risk Assessment an advisor can ensure that you fully understand the different levels of volatility risk involved. In recommending a particular investment for you, the advisor will also take into account what they believe to be your threshold for withstanding any potential losses that could occur. This helps you to gauge your own attitude to risk when deciding what type of fund you may want to invest your money in.

At Lifetime Financial Planning, conducting a Factfind and Risk Assessment is an integral part of our advice process.


5: Review your Investment Options

At this point your advisor will research the market thoroughly for a range of options to suit your needs, providing you with a choice of suitable investments based on your requirements, your financial situation and your attitude to risk.

A good impartial advisor will also take a number of other factors into account, such as the financial strength of the product provider, the past performance of similar investments, and the cost of fund management fees.

 

6: Conduct Regular Reviews

When you have made your investment decision we strongly advise conducting regular reviews with your advisor in order to stay up to date on the performance of your chosen fund. Conducting reviews also enables your advisor to stay updated with regard to your personal financial circumstances and recommend any changes needed to ensure you stay on track to meet your goals.

 

About Lifetime Financial Planning

At Lifetime Financial Planning we have been providing impartial investment advice to clients at all stages in their lives since 1983. If you are seeking impartial advice on how to invest a lump sum or you wish to conduct a review of an existing investment then please don’t hesitate to contact us.

We can help you to diversify your investment, devise a phased strategy and/or switch or redirect an existing investment if you so choose.

Call Aidan Wall, Lifetime Financial Planning, at 046 924 0961 or email: aidan@lifetimefinancial.ie

Website: www.lifetimefinancial.ie

Investments can fall as well as rise. Past performance is not a reliable guide to future performance.

Aidan Wall Financial Services Ltd T/A Lifetime Financial Planning is regulated by the Central Bank of Ireland.

The Importance of Financial Planning

Financial Broker Vs Bank Advisor Part 3: Competitive vs Monopolistic

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In Part 1 of this series of articles I explained that an advisor at your bank is often tied to a limited number of financial product providers, greatly restricting the amount of choice it can provide to you the customer. Impartial Financial Brokers are not tied in the same way, and are therefore free to research the market for a more competitive alternative which is often better suited to your specific requirements.

The Competition Authority in Ireland has noted that this ability to act in the best interest of our clients results in Life and Pensions companies providing more competitive quotes, more flexible terms and better product design when engaging with an Impartial Financial Broker.

This leads to the ultimate question, why would you want to pay for what is often an ill-fitting off-the-shelf product from your bank when you can arrange a better suited product that often costs less through your Impartial Financial Broker?

If you have already availed of a free financial planning service or purchased a financial product which you wish to review, I would be happy to do it for you. Call me at 046 924 0961 or email: aidan@lifetimefinancial.ie Website: www.lifetimefinancial.ie

Aidan Wall Financial Services Ltd T/A Lifetime Financial Planning is regulated by the Central Bank of Ireland.

The Importance of Financial Planning

Financial Broker Vs Bank Advisor Part 2: Long Vs Short Term

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It can be difficult to cultivate any kind of meaningful relationship with a Financial Advisor at your bank, as they can often be more focused on hitting their quarterly sales targets than in your long term financial well-being. If you are deemed worthy enough to be called in for an annual review you might also find that the Advisor you previously met has been transferred to another branch in a reshuffle.

Impartial Financial Brokers, on the other hand, are singularly focused on building long term relationships with our clients as we know it takes time, expert planning and regular reviews to truly achieve your financial goals and aspirations. That’s why we’ve called ourselves Lifetime Financial Planning to better reflect our ethos of long term focus on your financial wellbeing.

We want you to succeed in your long term financial goals as your success means our client is happy, and happy clients return to us for more business. We certainly wouldn’t have lasted over 30 years in this business if we were solely interested in short term relationships and quarterly sales targets. So the question is, what kind of relationship would you prefer with your Financial Advisor?

If you have already availed of a free financial planning service or purchased a financial product which you wish to review, I would be happy to do it for you. Call me at 046 924 0961 or email: aidan@lifetimefinancial.ie Website: www.lifetimefinancial.ie
Aidan Wall Financial Services Ltd T/A Lifetime Financial Planning is regulated by the Central Bank of Ireland.

The Importance of Financial Planning

Financial Broker Vs Bank Advisor Part 1: Tailoring vs Forcefitting

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If you have been offered a financial planning service or “wealth check-up” by your bank, you may be unaware that banks tend to ally themselves with a single provider or a very limited number of financial product providers, greatly restricting their ability to provide you with more choice.

This often results in your requirements being force fitted into an off-the-shelf financial product which is unsuitable to your needs, uncompetitive in terms of pricing and unrepresentative of the actual range of choices available to you. A service which initially appears to be “free” could therefore end up costing you more in the long run.

Impartial Financial Brokers, on the other hand, are not restricted to a limited number of product providers, and are therefore free to research a much larger number of providers to find the most appropriate solution for you with regard to price, suitability and terms.

This is known as a “fair analysis” of the market, as it gives you a much broader picture of the range of choices available to you, and when it comes to your personal finances it’s always better to have more choices.

If you have already availed of a free financial planning service or purchased a financial product which you wish to review, I would be happy to do it for you. Call me at 046 924 0961 or email: aidan@lifetimefinancial.ie

Website: www.lifetimefinancial.ie

Aidan Wall Financial Services Ltd T/A Lifetime Financial Planning is regulated by the Central Bank of Ireland.

The Importance of Financial Planning

Life Assurance – Looking After Your Loved Ones

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Statistics show that people are more likely to insure their cars and homes than themselves. They don’t seem to baulk at all about insuring their borrowings such as the mortgage on their home, however, insuring themselves has been shown to be much more price sensitive. Perhaps it is the mandatory nature of car, home and mortgage protection cover that makes it so much more acceptable. In reality, however, your life is your most important asset – especially if you have dependants.If you have people dependant on your income generating ability such as a spouse and children you really ought to be taking measures to ensure that their financial wellbeing is secured in the event of your untimely death.

Stop, Think and Ask Yourself…

  • Do I have dependants who rely on me and my income and who would be at a major financial disadvantage if the worst were to happen to me?
    • If the answer is yes and there is none or not enough Life Assurance cover in place then you should consider doing something about it.
  • Questions that need to be asked and advice that needs to be sought around this are: –
    • How much cover should I have?
    • Apart from providing for my dependants future financial wellbeing, do I have liabilities that need to be covered?
    • What type of cover do I need and for what period of time?
    • What is the cost and how do I go about getting best value?
    • Do I need to cover my spouse’s life also?

So…what are the next steps?

There are many reasons why people are slow and reluctant to put in place appropriate and sufficient Life Assurance cover.

  • It’s discretionary and therefore not prioritised – it should be though
  • There is a fear that it is hugely expensive – in general this is not the case
  • Maybe you feel that having Mortgage Protection to pay off your mortgage is enough – it’s not
  • How do I start?? – it’s easy, seek good advice

The role of a good advisor in all of this is to help you through the process of:

  • Identifying what type of cover you need
  • How much cover you need and the cost
  • Helping you choose the most appropriate policy for your needs
  • Assisting you through the process of putting the policy in force
  • Carrying out regular reviews to take account of your changing circumstances

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