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 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

Understanding Investment Risk

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During the last few years of the 2000’s we all saw the effect that stock market falls had on pension funds, investments and share prices. We all saw how the values of pensions and investments fell. If you were one of these people that has been affected by the stock market falls, it’s understandable that you might still think twice about investing in shares (non cash funds). However, we all know that leaving your money in cash for a long time may not necessarilty generate the best returns.

As 2015 has begun with historically low interest rates, many people are now seeking alternatives to deposit accounts. However the levels of risk associated with alternative investment options and also the investors attitude and capability of taking on risk must be carefully assessed in considering suitable choices.

It All Begins With A Plan……

Before you begin to choose a suitable investment you will want to consider what are your investment objectives. Setting these objectives correctly based on your current situation and knowing your investment profile will form the basis for choosing the correct options.

Rating Funds

It is important to note that most managers of Investment and Pension Funds are now broadly in line with guidelines received by the European Securities and Markets Authority (ESMA) in the context of Risk Rating their Funds. The ratings are based on a scale of 1 to 7 meaning that you can now readily identify the level of “risk” pertaining with 1 being at the very lowest level and 7 the highest.

Investor Attitude to Risk

A very important piece of work that should be done as part of the decision making process is to take full account of an investors attitude to risk. There are many “Risk Attitude Questionnaires” that help to determine this and help to match the investors requirements with the huge range of investment fund options available in the market. Apart from recording the investors view it also takes account of really relevant matters such as:

  • What is my knowledge of investments?
  • When will I need access to my capital?
  • Do I need to draw an income?

Capacity to Bear Risk

This is another very important factor to take into account when constructing your portfolio. It is one matter to say you can accept risk in order to achieve high returns but another key factor must be to match your profile with your capabilities.The real message in all of this is that while there is a myriad of options and choice it is vitally important to seek and have independent advice available to you. If you need any further information on this please don’t hesitate to contact us.

Call Aidan Wall at: 046 924 0961 or email: aidan@lifetimefinancial.ie