Investment management and financial planning need to be studiously aligned to make the absolute most of your wealth, but all too often people can neglect the tax, structuring, retirement and inheritance sides of things.
We often hear from firms on their investment support and on the rationale of a wealth plan, but few detail how the advice from across the spectrum of wealth management services helps ensure your plan withstands the shocks of today’s world. Simon Prescott, Head of Wealth Planning at Nedbank Private Wealth sets out one considered approach.
For me, 2022 is likely to end up being a year of two halves. The first half felt like a time when people were catching up on life post the pandemic, finally being able to celebrate the major life events that had been postponed and being reunited with overseas family and friends on holiday. Every sentence seemed to start along the lines of: “I am really glad to be seeing you again after so long”.
But it is only now that life seems to have returned to “normal”. Yes, there is a necessary focus on the increasing cost of living and the changing impact the war in Ukraine is having on the world, but it is only in China that Covid-19 headlines continue to dominate.
Some aspects of work, however, span both these periods and often date back to a time during the pandemic – one of these is the enthusiastic adoption of the wealth planning-led approach we take with clients
Meanwhile, there is a lot that is part of an inherently familiar cycle. There is the stream of images on my social media feeds of kids in uniforms that are too big for them, standing before a front door, about to head off for a new school year. And I am juggling an autumn schedule that includes half term, Halloween and Bonfire Night in between business trips to see colleagues in our offices in the Isle of Man and Jersey.
Some aspects of work, however, span both these periods and often date back to a time during the pandemic – one of these is the enthusiastic adoption of the wealth planning-led approach we take with clients.
First flagged in 2020 through an article encouraging people not to ‘just’ plan to invest, but to invest to a plan, our rationale for an integrated approach resonated. By highlighting that investment goals could be more tangible than the future performance of a few stock exchanges, clients began to re-evaluate their priorities in life and appreciate that achieving those goals required more than an appropriate level of diversified investments.
Clients started to realise the advantage of dealing with a private bank because of the opportunity to access currency management in portfolios, the benefits of which became clearer as sterling (and the euro) hit (and remained at) record exchange lows against the US dollar. In addition, some also appreciate the chance to borrow against their investment portfolios to help meet short-term financial needs, while remaining invested and giving portfolios the time in the market they need to climb in value.
Instead of conversations only starting five to ten years before retirement, more people are strategically planning ahead for life as a retiree and how they can prepare for an undetermined timeline with a finite sum of money while maintaining their current standard of living
More fundamental, however, was the change in tone of the conversations we were having, and that we continue to enjoy – and I use that verb deliberately.
Yes, many high net worth individuals are still waking up to the need to have a solid financial plan in place, with structuring and bespoke legal and tax advice sought from a third-party adviser, to make the absolute most of their money. But we are finding it is now a lower number that need to start the thought process than pre-Covid-19. Meanwhile, many more are seeing the value of putting a date in the diary for their annual review.
Instead of conversations only starting five to ten years before retirement, more people are strategically planning ahead for life as a retiree and how they can prepare for an undetermined timeline with a finite sum of money while maintaining their current standard of living.
And while the practical changes with regard to wills and lasting powers of attorney have encouraged more to draw up and file these documents, the interest in the new information has also prompted those who have completely baulked at thinking about these to start a discussion with their family. As a result, people are also taking a harder look at existing paperwork and re-evaluating past decisions to ensure these support better inheritance and succession planning.
While we are far removed from Victorian times – where death was so prevalent it supported huge industries from black edged stationary to plaiting hair for keepsakes – conversations are much more open and pragmatic and include realistic timeframes for wealth planning
Last but not least, an aspect of the pandemic that still pervades – at least for the foreseeable future – is the increased acceptance of death. While health care and technology innovations have increased longevity – with rumours of lifespans of 150+ years now circulating – there is an appreciation of our own mortality and its consequences for our family. While we are far removed from Victorian times – where death was so prevalent it supported huge industries from black edged stationary to plaiting hair for keepsakes – conversations are much more open and pragmatic and include realistic timeframes for wealth planning.
In my previous article, I talked about three factors stopping action. These were procrastination, not knowing where to start and parsimony. With procrastination addressed, there are still many who don’t know where to start or are fearful of the costs involved. This is not only because of the fees per se, but also the impact these will have on the amount of money you can invest to your plan – after all fees compound too over time and negatively impact your wealth levels.
Both these factors can be overcome through a conversation with the team at findaWEALTHMANAGER.com or, if that feels too much, subscribe to the newsletters from my firm and others.
Investing in financial advice and knowledge will help you understand the benefits of a holistic approach to financial planning as it relates to you and your family
Investing in financial advice and knowledge will help you understand the benefits of a holistic approach to financial planning as it relates to you and your family. You will be able to weigh up the value wealth planning should generate against a personal list of fees and charges set out in black and white. And you can start to ensure that the values you hold can be reflected in your financial plans.
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