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28th April, 2021
Planning what we want for our lives and how best to achieve it can be daunting without the right tools at our disposal. Following our recent webinar, 'Financial planning: helping you along your journey', we've outlined some key considerations to bear in mind, in addition to a link to the recording.
Goals are important to us all, and will vary from person to person and across different stages of life. The financial plan will assess your specific situation, translate your concerns into tangible goals and build a roadmap to give you the best chance of meeting them. While ensuring financial comfort in retirement for you and your family will become increasingly important as we progress through our careers; protection, legacy planning and managing spending will be prominent as we enjoy retirement.
Plans are designed to evolve and capture your changing circumstances as they arise. A good plan will instigate and drive all the right decisions with respect to the structures and investment portfolio to put in place to suit your unique needs in a timely manner. Importantly, the plan will provide a platform for all the heavy lifting to occur on your behalf so you can focus your time on the items that really matter to you.
The institutional world and the individual investing world have many parallels. For example, pension funds went through a significant evolution on the back of the global financial crisis and individuals can certainly learn from this. The evolution resulted in much a better alignment between portfolios and the specific benefit promises of each fund ("called asset liability investing"). The same principles underline what financial plans aim to do, aligning your wealth (your 'assets') with what you want to achieve in your life (your 'liabilities'). Luckily, a lot of the same sophistication used by institutions today are also now available to individuals and used throughout the planning process.
While there are not many office water cooler conversations these days, there are a number of trends across our client base. For business owners, Covid has been front and centre of people's minds and in particular has provided a reminder of the importance of the right family governance structures and business succession planning. Negative interest rates have also come at an inopportune time for businesses, so investment of corporate cash is also a growing trend. For individuals, the world is getting very small! With the mobility of the workforce, returning expats or people looking to move abroad is something we’re seeing more frequently (or at least it will be when we can fly again). More and more clients are also receiving share options which has led to detailed tax and investment conversations. For retirees, it may sound morbid but the first port of call remains getting your will and Enduring Power of Attorney (EPA) in place. Advance succession planning and leveraging the right structures to meet your needs is also key to passing on assets in a manner you want, protecting your dependents by doing so, and not leaving them a large tax bill in the process. Incorporating the relevant issues in your life within a financial plan will ensure decisions can be taken in the context of your overall goals and individual circumstances in a timely manner.
How we work with you starts with a quick personal conversation so that we can understand your circumstances and objectives. We will take it from there using our ‘wealth allocation framework’ to translate our conversation into tangible objectives, prioritising between short-term needs and longer-term core and aspirational goals. Our team of planners and specialists will help to make sure we don't leave any stone unturned in the final action plan we recommend to help you achieve these goals. Once we agree actions with you, it should be the start and not the end of the process. By keeping the plan under review, you can track progress over time, adapt the plan as your circumstances change and ultimately ensure you remain in control.
Benefits of a financial plan can vary from person to person; whether it’s peace of mind from having everything in one place and an action plan for your financial future in motion, or tangible euros saved from having the right structures and investment solutions to give you the best chance of meeting your specific goals. The key is to plan early to give you the most time to utilise the efficient structures at your disposal. Pensions, for example, remain the key tool to save for retirement. There is a triple set of tax savings in this area: pre-tax contributions, tax-free investment growth and tax-free lump sum remain relevant for us all. However, thinking about what structure is right for you and what pension pot to aim for is most effective when done so long before retirement.
By leaning on our team of specialists, we'll make sure we identify the right levers to pull early in the process and work collaboratively with your legal and tax teams to make sure we arrive at the best solution for you.
The global financial crisis (GFC) resulted in a lot of investor panic and ultimately capital was lost in many cases. This resulted in the desire to have a much more solid platform to understand what the right investment portfolio is for each individual. The financial plan aims to provide this clear bridge between a client's goal and the portfolios that clients hold. While we are still not fully out of the 'Covid woods', plans helped avoid similar knee jerk reactions in the March 2020 sell off and clients were instead able to partake in the subsequent recovery. Simply, financial planning, investments, it's all part of the same conversation. Using your plan as the basis for the investment conversations will provide clarity around what investment approach is right for you. The wealth allocation framework can help breakdown your portfolio between liquidity, core and satellite investments to align your capital with your overall objectives. The planning framework is a key starting point. Risk tolerance, investor preference and your investor profile are all key inputs into the discussions we will guide you through to arrive at your final portfolio(s).
Why not request a call today to find out how we can help you plan your future.
Warning: The information in this article does not purport to be financial advice and it does not take into account the investment objectives, knowledge and experience or financial situation of any particular person. You should seek advice in the context of your own personal circumstances prior to making any financial or investment decision from your own adviser. There are risks associated with putting any financial or investment plan in place. There is no guarantee that the plan will meet its objectives. The tax information contained in this article is based on Davy’s current understanding of the tax legislation in Ireland and the Revenue interpretation thereof. It is provided by way of general guidance only and is neither exhaustive nor definitive and is subject to change without notice. It is not a substitute for professional advice. You should consult your tax adviser about the rules that apply in your individual circumstances.