Supposedly, only 4% of the adult population undertake any sort of comprehensive planning for their finances.
I find that staggering, but whatever the exact figure, there is a huge majority who don’t engage in their future financial well-being in any meaningful way for a variety of reasons.
Before I divulge the five most common reasons, let’s be clear what I mean by financial planning. In essence it means taking control and not leaving anything to chance. For more information on what financial planning really means please refer to my last blog.
So what are the five most common reasons for not having a comprehensive financial plan?
Reason #1: Fear
There is no doubt that there is a huge amount of fear around trusting someone with your money. Advisers and planners should never underestimate this.
Trusted recommendations have a huge part to play here. A potential client came to see me the other day as they had inherited a significant lump sum. They were referred to Blue Sky by one of my longstanding clients (circa 20 years). I explained how we worked and the options the potential client would have if we were to work together. I also explained the need to plan and create an emotional connection between money and what the inheritance would mean to the way they could live their life, as opposed to just investing and obtaining an income.
The potential client agreed to embrace comprehensive planning after they admitted they had never had a plan and the throw away comment that touched me; “this would be very scary if I didn’t know that Jill had done this and worked with you for such a long time”.
Reason #2: Apathy
“It’ll be alright in the end”
“It’ll all come out in the wash”
“Our situation is simple and straightforward”
Just some of the comments that I hear from time to time.
Much of the apathy is related to fear and some can be traced back to my next point, a lack of understanding. We only know what we know, after all. A friend of mine when working out whether he should embark upon comprehensive planning said to me “if it’s so good, why doesn’t anyone else I know do this”?
The million pound question! But lack of planning is surely not the benchmark? He pressed ahead when I suggested that he shouldn’t run his life based on the lowest common denominator!
Reason #3: Lack of Understanding
Where can we learn about financial planning and all aspects of managing money? Certainly not in schools…well, not up until recently anyway.
Much advice is ‘potted advice’ and is given by well-meaning family and friends. The internet, whilst helping in some areas, has proved to be a hindrance in other ways. Much the same as with the medical profession; self-diagnosis can be dangerous! Until you can assess the whole situation, how can you ever really know the right answer?
Reason #4: Costs
Financial advice is free, right? Of course not. It never has been as hefty commissions were often payable to advisers. Now though, it’s much more transparent and gradually, people are beginning to realise the value in paying for expert advice.
I often find that people are looking for a quick fix or an answer to a specific need or problem when they first make an enquiry to Blue Sky. The solution is more often than not a comprehensive plan that incorporates all aspects of their finances.
A high rate tax payer I was speaking to recently said he’d never paid for advice. He received lots of benefits from his company at no perceived cost to him. His tax bill for the month was more than the cost of our planning service which would impact the rest of his life! But its all about value; received and real!
Reason #5: Comfort Blanket
“We’re doing alright. Everything is fine”.
Well it may be now but what if the situation changes? Rules and guidance are changing all the time. Circumstances change in the blink of an eye. Can you be sure that emotional decisions won’t override sensible decisions if a crisis occurs?
Should the worst happen, would the surviving partner have sufficient money? What would happen to the pensions? Could they stay in the same property?
This is all so common, but surely we should be on the front foot ensuring that we are protecting our loved ones and making the most of life’s opportunities?
Nobody on their death-bed ever said they were glad they had put things off. If it’s time to make a sound comprehensive financial plan to give you and your loved ones peace of mind, contact me today.
To book an appointment to discuss your Comprehensive Financial Plan with Gary Neild call 01202 756560.
