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

Exploring Your Investment Options

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Keeping your money on deposit can be a good means of achieving short term objectives and access to instant cash but for longer term financial goals, however, you may want to consider other options. A good place to start in this is by taking these 5 steps:

Step 1

What do you want to do with your investment – what are your goals?

Step 2

What is your investment horizon – how long do you wish to invest your money for?

Step 3

How much investment risk are you prepared to take or is appropriate for your financial profile?

Step 4

How much ready access to your money do you need? In general you can assume that the longer your money is invested the better the return tends to be.

Step 5

Consider your long term goals and don’t simply focus on the short term.

By taking on board the message from these 5 steps you can discover the type of investor you are and find an investment that best balances all of the criteria. These can generally be found in a combination of the following options:

  • Cash – money placed on deposit
  • Bonds – government and corporate bonds or government and corporate loans
  • Property – usually commercial property but can include residential
  • Equities – company shares traded on stock markets
  • Commodities – tracking the performance of the likes of oil, copper, gold and more
  • Alternatives – this refers to investing in non-traditional assets or strategies
  • Funds – these are collective instruments that invest in combinations of each of these and will often be referred to as Mixed/Managed Funds or Multi-Asset Funds

Help Is At Hand

At first glance the investment world can appear confusing and an uncomfortable place, complicated by charts, tables and strange language. While ultimately the decision about where and how to invest your money is yours, professional advice is particularly important when exploring the type of investor you are – ranging from conservative right through to Adventurous and a range of options in between. This advice will then follow on to helping you choose the right portfolio of investments to match your profile. It is also important that the person giving you advice is properly authorised and qualified who can guide you along your investment journey and offer one to one advice along the way.

If you would like to explore your investment options please call Aidan Wall at 046 924 0961 or email: aidan@lifetimefinancial.ie

The Importance of Financial Planning

Protecting Your Family Business Interests

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As a business owner you protect your property, your vehicles and equipment. And so you should because if your business suffers a catastrophic event involving these, the very financial viability of your business may be in jeopardy. But have you considered what would happen to your business if you died prematurely or if you were so incapacitated, through illness or injury, that you could not run your business anymore. Equally, if you have fellow shareholders or partners or you have a key member of your business team, who are vital to the viability of the business, think about the consequences if the same happened to one of them.

Key Issues:

You may need to consider the impact on your business and/or your family should any of the circumstances mentioned above unfortunately come to pass.

  • Would your family stay in the business or would they be required to sell the business?
  • Would the remaining shareholders/partners, such as Canada online casino Maple Leaf, in the business have the funds needed to buy your share from your family?
  • Would you have the funds available to buy your co-owner’s share of the business from their family?
  • What would be the impact on your business in the event of the death/impairment of a key employee or business partner?
  • What about the tax implications?

It won’t happen to my/our business

Many business owners believe that it simply won’t happen to them. The chances of one partner / director, in a two or three man business dying or becoming seriously ill before retirement, are probably a lot higher than you might think and it does happen. Quite often what is left is a very serious financial problem mainly through the lack of readily available capital to deal with the consequences.

There is a Solution

Business protection can assist in ensuring the continued survival of a business and provide for a deceased business owner’s family in the event of premature death or serious illness and incapacity.

Shareholder/Partnership Insurance (Business Owner’s Insurance)

This provides funds, through the proceeds of an Insurance Policy, to the surviving business owners to purchase the share of a deceased’s shareholding from their personal representatives. Depending on the structure of the business the cover can be set up on a personal or corporate basis. This cover ensures the deceased’s legal representatives / next of kin are provided for and the surviving business owners retain control of the business. The cover in question should be carefully co-related to a properly structured shareholders agreement that addresses the wishes of shareholders/co-owners in the event of such an occurrence.

Keyperson Insurance

This type of cover is designed to protect the human assets of the business in the same way as fire insurance protects a company’s physical assets. Protection, again through an appropriate Insurance Policy, is taken out by a Company on the life of a key employee to protect the Company as a result of the death or serious illness of the key employee.

Gift or Inheritance Tax Planning

As a business owner, it is important also to take a close look at the implications of Capital Acquisitions Tax if you are planning to pass on your business to your family when you die. Inheritance tax can become a real burden where financial resources are tied up in a business. If you do not plan ahead, your family could be faced with a difficult decision between having to sell the business or having to borrow the money to pay the tax liability. There are a number of solutions to this and Gift or Inheritance tax planning allows you to plan for the tax liabilities which could arise, thus ensuring that the business won’t have to be sold off to pay the tax bill.

The Next Step

Each of the situations outlined in this article requires very careful consideration and planning. The very first action should be to seek good and expert advice. Why not give us a call and together we can set the proper planning in train.

Call Aidan Wall today at 046 924 0961 or email: aidan@lifetimefinancial.ie for expert impartial advice on Business Protection.

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

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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The Importance of Financial Planning

Everyone Needs a Financial Plan

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How often have we heard the expression “I would not have achieved my goal without having a carefully thought out plan and sticking to it”. We hear it from high achieving people in the world of sport and business alike.

You will hear it from top class golfers like Rory McIlroy who will set his objectives, arrange his playing, coaching and work schedule for the year ahead and then go and execute that Plan. If he starts his year with no plan then he would say the focus simply isn’t there to be successful. This same principle is equally important in all other situations – the football/hurling team coach, the business manager or home-maker all need a plan. Doesn’t it make eminent sense, therefore, to seek assistance in achieving the objectives of your financial plan through each stage you face in your life?

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The Importance of Financial Planning

Pensions – No longer a luxury but an absolute necessity

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The recent budget announced that the Pensions levy is being substantially reduced and indeed will be abolished completely by the end of 2015. What was seen as a major obstacle to the encouragement to save through a Pension Plan for your retirement has now effectively been removed. Here therefore are some key considerations for you to bear in mind.

1. Start as soon as you can

  • Make no mistake, the starting point is the most important point when it comes to pensions.
  • Of course it is hard for someone in their 20s to think about saving for their retirement – let’s face it they are immortal and will never get old! – and it is made even harder in a fraught economic climate.
  • But the sooner a pension is started, the less a person will have to save. Someone who is 25 and takes out a pension is saving themselves a world of financial pain in the years ahead. If they wait until they are 40 they will need to put aside over 4 times to get themselves the same return.

2. Never panic though

  • More than 50 per cent of the population does not have a private pension.
  • While it is better to start a pension early, that doesn’t mean it is ever too late to start, it simply means that the later the start the more you may need to put in.
  • Counterbalancing the late start is probably a greater degree of affordability as you get older.

3. Managing risk

  • When you are younger you can afford to take a degree of investment risk that can include investment in high risk stocks.
  • As you get older the fewer risks you should take.
  • A gradual de-risking should be a feature of your strategy with each passing decade.
  • Good advice will help steer you through the process and to identify suitable opportunities without putting all your eggs in one basket.

4. Mix things up

  • Don’t just decide on a sum you’re comfortable putting into it and leave it at that. Change the payment amount as your life circumstances change.
  • If you get a pay rise you can increase it, if you have children you can reduce it (but only slightly). If you are due a bonus you can put in a once off lump sum.

5. A necessity, not a luxury

  • Putting pension money aside for your future retirement should be considered an unavoidable outgoing and not a luxury.
  • It is right up there with a mortgage, food, clothes and electricity as one of the things people need to realise that they cannot do without.

6. Keep tabs and get good advice

  • You should check your pension plan regularly.
  • Having access to a good financial planning adviser who will steer you through the process and carry out regular reviews with you is vitally important.

Source: Lifetime Financial Planning 2014