Financial Planning: should I engage a financial planner?

boingy

wjr4 said:

There’s no point just investing money if you have no financial plan though. 

I don't agree with that statement.
Many people don't think in terms of a financial plan. They just want to put some money away for "the future". They probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term. That's why stuff like Vanguard VLS are so popular. You don't need to know anything about it. You just stuff some money into it now and again and forget about it. Back on the late 80's, or maybe early 90's, I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

dunstonh

Many people don't think in terms of a financial plan. They just want to put some money away for "the future".

And often that means they don't use the best tax wrapper or use unsuitable assets.

they probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term.

I disagree.   Average consumers don't understand investments and don't know that the stockmarket should outperform over the long term and too many look at it short term when they do have it.

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So, one option is pretty much random selection of a couple of things which may or may not be optimal vs one that may cost more but will be optimal.  (I say may cost more as many DIY'ers end up with expensive options or poor quality options -  e..g platform own brand active funds, which are some of the best sellers on a certain large DIY platform)

At the very minimum, thought should be given to the different objectives in life and when they will occur.   Risk is diluted by time but that time may be as long as 20 years.   So, someone looking at some money needed in 8 years and the rest in 25 years, that will be split objectives and need different investments potentially.    

boingy

dunstonh said:

Many people don't think in terms of a financial plan. They just want to put some money away for "the future".

And often that means they don't use the best tax wrapper or use unsuitable assets.

they probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term.

I disagree.   Average consumers don't understand investments and don't know that the stockmarket should outperform over the long term and too many look at it short term when they do have it.

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So, one option is pretty much random selection of a couple of things which may or may not be optimal vs one that may cost more but will be optimal.  (I say may cost more as many DIY'ers end up with expensive options or poor quality options -  e..g platform own brand active funds, which are some of the best sellers on a certain large DIY platform)

At the very minimum, thought should be given to the different objectives in life and when they will occur.   Risk is diluted by time but that time may be as long as 20 years.   So, someone looking at some money needed in 8 years and the rest in 25 years, that will be split objectives and need different investments potentially.    

Spoken like an IFA. 

Albermarle

dunstonh said:

Many people don't think in terms of a financial plan. They just want to put some money away for "the future".

And often that means they don't use the best tax wrapper or use unsuitable assets.

they probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term.

I disagree.   Average consumers don't understand investments and don't know that the stockmarket should outperform over the long term and too many look at it short term when they do have it.

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So, one option is pretty much random selection of a couple of things which may or may not be optimal vs one that may cost more but will be optimal.  (I say may cost more as many DIY'ers end up with expensive options or poor quality options -  e..g platform own brand active funds, which are some of the best sellers on a certain large DIY platform)

At the very minimum, thought should be given to the different objectives in life and when they will occur.   Risk is diluted by time but that time may be as long as 20 years.   So, someone looking at some money needed in 8 years and the rest in 25 years, that will be split objectives and need different investments potentially.    

I fully understand your points, but @Boingy also has a point I think, in that many people do not really have a plan, other than some vague notion of saving for the future. I was a bit like that myself and still am in part.

Surely you must meet/have some clients who are vague on what they want to achieve, as they do not really know what they want apart from some loose notion that they should be looking after their finances better.

wjr4

boingy said:

dunstonh said:

Many people don't think in terms of a financial plan. They just want to put some money away for "the future".

And often that means they don't use the best tax wrapper or use unsuitable assets.

they probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term.

I disagree.   Average consumers don't understand investments and don't know that the stockmarket should outperform over the long term and too many look at it short term when they do have it.

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So, one option is pretty much random selection of a couple of things which may or may not be optimal vs one that may cost more but will be optimal.  (I say may cost more as many DIY'ers end up with expensive options or poor quality options -  e..g platform own brand active funds, which are some of the best sellers on a certain large DIY platform)

At the very minimum, thought should be given to the different objectives in life and when they will occur.   Risk is diluted by time but that time may be as long as 20 years.   So, someone looking at some money needed in 8 years and the rest in 25 years, that will be split objectives and need different investments potentially.    

Spoken like an IFA. 

& what’s wrong with that? You’re getting free IFA guidance on this board and you’re still complaining about us? 

wjr4

boingy said:

wjr4 said:

There’s no point just investing money if you have no financial plan though. 

I don't agree with that statement.
Many people don't think in terms of a financial plan. They just want to put some money away for "the future". They probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term. That's why stuff like Vanguard VLS are so popular. You don't need to know anything about it. You just stuff some money into it now and again and forget about it. Back on the late 80's, or maybe early 90's, I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So what about clients who are in lifestyle funds in their workplace pension who don’t understand these? What about completing expression of wish forms? What about knowing if it’s best to overpay their mortgage or invest? What’s the point of saving with no plan? 

IFAs do not do things more complicated unless it needs to be. Such a sweeping statement! Have you ever used an IFA?

wjr4

Albermarle said:

dunstonh said:

Many people don't think in terms of a financial plan. They just want to put some money away for "the future".

And often that means they don't use the best tax wrapper or use unsuitable assets.

they probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term.

I disagree.   Average consumers don't understand investments and don't know that the stockmarket should outperform over the long term and too many look at it short term when they do have it.

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So, one option is pretty much random selection of a couple of things which may or may not be optimal vs one that may cost more but will be optimal.  (I say may cost more as many DIY'ers end up with expensive options or poor quality options -  e..g platform own brand active funds, which are some of the best sellers on a certain large DIY platform)

At the very minimum, thought should be given to the different objectives in life and when they will occur.   Risk is diluted by time but that time may be as long as 20 years.   So, someone looking at some money needed in 8 years and the rest in 25 years, that will be split objectives and need different investments potentially.    

I fully understand your points, but @Boingy also has a point I think, in that many people do not really have a plan, other than some vague notion of saving for the future. I was a bit like that myself and still am in part.

Surely you must meet/have some clients who are vague on what they want to achieve, as they do not really know what they want apart from some loose notion that they should be looking after their finances better.

There are clients like that but the whole point of seeing a financial planner is that they help with plans. Most old financial advisers put your money in something with no plan for the future & hope for the best, which you can do yourself. We’re in 2024 now and things are starting to change for the better, with advisers being more proactive. 

boingy

wjr4 said:

boingy said:

dunstonh said:

Many people don't think in terms of a financial plan. They just want to put some money away for "the future".

And often that means they don't use the best tax wrapper or use unsuitable assets.

they probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term.

I disagree.   Average consumers don't understand investments and don't know that the stockmarket should outperform over the long term and too many look at it short term when they do have it.

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So, one option is pretty much random selection of a couple of things which may or may not be optimal vs one that may cost more but will be optimal.  (I say may cost more as many DIY'ers end up with expensive options or poor quality options -  e..g platform own brand active funds, which are some of the best sellers on a certain large DIY platform)

At the very minimum, thought should be given to the different objectives in life and when they will occur.   Risk is diluted by time but that time may be as long as 20 years.   So, someone looking at some money needed in 8 years and the rest in 25 years, that will be split objectives and need different investments potentially.    

Spoken like an IFA. 

& what’s wrong with that? You’re getting free IFA guidance on this board and you’re still complaining about us? 

Haha!  Don't be so defensive. If you bother to read my words you'll see that I pointed out that using an IFA is a valid strategy, and that not using one is also a valid strategy. "Both approaches work".

As for "free IFA guidance on this board" I do see some of that but I also see IFAs being quick to dismiss anything "non-IFA", including some of the most popular funds and some of the most popular DIY strategies. Everyone has a bias, even IFAs. ;p

dunstonh

I fully understand your points, but @Boingy also has a point I think, in that many people do not really have a plan, other than some vague notion of saving for the future. I was a bit like that myself and still am in part.

Exactly. Many people do not really have a plan, which is why advisers encourage them to have one.  It doesn't have to be micromanaged but it should be a rough idea at the very least.  Some people have very easy scenarios. Some do not.

As for "free IFA guidance on this board" I do see some of that but I also see IFAs being quick to dismiss anything "non-IFA", including some of the most popular funds and some of the most popular DIY strategies. Everyone has a bias, even IFAs. ;p

I have been here a long time and have not seen an IFA dismiss DIY as a method or some of the "popular" funds mentioned.    There has certainly been discussion on the variations in styles of funds. home bias vs no home bias but that isn't dismissing them.     There have also been some really bad quality posts from clueless DIYers.   The minute you try and point out their flaws, an accusation of bias gets thrown in the ring.

wjr4

boingy said:

wjr4 said:

boingy said:

dunstonh said:

Many people don't think in terms of a financial plan. They just want to put some money away for "the future".

And often that means they don't use the best tax wrapper or use unsuitable assets.

they probably already have a works pension and some cash savings and they know that the stock market should outperform the cash over the long term.

I disagree.   Average consumers don't understand investments and don't know that the stockmarket should outperform over the long term and too many look at it short term when they do have it.

I started putting my works bonuses into a Virgin PEP (the forerunner of ISAs). I knew nothing about PEPs or investments beyond what I had read in the financial column of newspapers. No plan, just a wish to put some money away.

And that was a poor quality investment product offering a poor investment option.

So it's great if you have a plan or specific objectives but it's by no means essential, especially with the sort of information and advice now available online. The OP could split that money between a passive tracker fund and some savings accounts and it will do mighty fine. Or they could use an IFA who will almost certainly do something more complicated and charge them a chunk of money for doing so. Both approaches work.

So, one option is pretty much random selection of a couple of things which may or may not be optimal vs one that may cost more but will be optimal.  (I say may cost more as many DIY'ers end up with expensive options or poor quality options -  e..g platform own brand active funds, which are some of the best sellers on a certain large DIY platform)

At the very minimum, thought should be given to the different objectives in life and when they will occur.   Risk is diluted by time but that time may be as long as 20 years.   So, someone looking at some money needed in 8 years and the rest in 25 years, that will be split objectives and need different investments potentially.    

Spoken like an IFA. 

& what’s wrong with that? You’re getting free IFA guidance on this board and you’re still complaining about us? 

Haha!  Don't be so defensive. If you bother to read my words you'll see that I pointed out that using an IFA is a valid strategy, and that not using one is also a valid strategy. "Both approaches work".

As for "free IFA guidance on this board" I do see some of that but I also see IFAs being quick to dismiss anything "non-IFA", including some of the most popular funds and some of the most popular DIY strategies. Everyone has a bias, even IFAs. ;p

Absolutely no bias, if you’ve got the knowledge then go for it, but not everyone does or have the time to learn. I often turn clients away if they don’t need help, but with some guidance first.