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What does a Financial Planner Do? Part 2

In this third installment of ‘What does a Financial Planner Do” I will be exploring how a financial planner ensures a client’s financial plan remains fit for purpose and keeps clients on track.

Once a financial plan is developed it is important that it is reviewed regularly. It is typical for clients to work with a planner on an annual basis to look at how the long term cash flow forecast is comparing to current spending and that other assumptions on investment performance, inflation and salary growth are matching reality. There may also be other changes to financial products required such as ensuring tax-free ISA limits have been fully utilised or annual capital gains thresholds have not been breached. A financial plan and the goals associated with it is never left to chance – a client’s goals are too important for that.

A financial planner may only see a client annually or bi-annually, but that does not mean the planner only looks at the client’s plan once a year. Depending on investment strategy, changes to investments may need to be made to ensure the risk-profile remains in line with agreed thresholds. For many, the stock market and the undulating valuations that come with investing can be an emotional rollercoaster. Up one day, down the next. For some clients who are relying on investment growth to fuel their dreams, it can seem like the stock market’s ever fluctuating valuations are toying with them, which can be difficult to bear. Having a professional financial planner watch over the investments can help take the emotion out of the investing journey. Financial planners cannot guarantee strong investment returns every year, but they can ensure clients are not taking any more risk than they need to. They are focused on the results over the long term and they build in tolerance to their financial plans by using conservative estimates. If a planner sees the performance consistently under-performing they can look at comparable funds with similar risk profiles to understand if the under-performance is market-wide or if the investment needs to be changed.

If the investment performance is universal based on the amount of acceptable risk, a financial planner will make recommendations to either increase the contribution or adjust the goal in some way. Encouragingly, it can only take a tiny tweak to a financial plan in the short term to address any long-term deviation.

Financial planning becomes especially valuable in volatile and under-performing financial markets because a planner can make clients aware of necessary ‘course corrections’. In the same way that an aircraft makes tiny ‘course corrections’ to stay on target when blown of course, it can sometimes take only the smallest of adjustments to get back on track. Would you be inspired to make a small change now for a better tomorrow? By highlighting potential issues in plenty of time planners can minimising the short term impact whilst ensuring the long term goals are met.

A financial planner can show you how today’s choices can impact the future and help you make more informed decisions about your finances. Planners are always looking into the future to ensure client goals are met, and the more time you have, the more impactful the recommendations can be. Is it time you developed a financial plan?

If you are interested in working with a “financial planner” I would encourage you to seek out an adviser who has the Certified Financial Planner qualification (CFP) which is an international accreditation. You can find a CFP qualified adviser using the following link.

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