I have attempted to say farewell to as many clients personally as possible, but for those I haven’t managed to reach.
I want to express my deepest gratitude to our lovely clients, the Thornton team and, of course, the wonderful Isle of Man community. Your trust and support have been invaluable.
My family and I are off to Toronto, Canada, to be closer to our Canadian family.
Being part of our clients’ lives and the Thornton team has been a privilege. Over the last 2.5 years, I have learned so much by observing experienced financial planners in client meetings and crafting financial plans for clients.
Financial planners work with many numbers to help clients optimise their finances. Clients turn to us for help with their pension, investment, and protection needs. We are well-versed in the technical world.
However, the real value lies in deeper client conversations that blend the science and the art of money.
Financial planning is forward-looking, and with the power of software, we can project clients’ lives and show the financial impact of different life choices.
The art of financial planning is understanding what is important to each person, what the money is for, and how much is enough; knowing the deeper ‘Why’ behind the most important goals can help clients align the goals with our actions.
It is far easier to stick to the plan and the investment strategy during the inevitable negative news cycles when you have planned prudently and have a financial planner (thinking partner) on your side.
Here’s a thought and an insight I want to leave you with as I depart: Remember, the journey to financial independence is just as important as reaching the destination.
I have full confidence in your ability to balance enjoying the present while planning for the future.
How Planning Sets the Stage for Investment Success
Having a clear financial plan comes before investing. It lays a strong foundation for your investment and can help answer many financial questions, some of which may have kept you up at night.
An investment is just one element of your financial plan.
The financial plan is like a roadmap, which identifies different routes to reach your desired destination, such as when you can retire, and identifies potential obstacles.
It starts with capturing your hopes, dreams, and fears and putting a plan in place to address them. Then, you can see if you are on track to achieve the goals you have set.
If you don’t like what you see, the financial plan can show you how to improve your position.
Imagine you’re planning the trip of a lifetime—a journey around the world with the money you have. You don’t know how long it will take to complete the trip or how much it will cost.
The key question is: do you have enough money to complete the journey?
The answer will depend on the expected cost of your trip. Do you wish to travel in luxury, go backpacking, or something in between? Do you expect to earn some extra cash while travelling?
What if things don’t go as planned (e.g. your vehicle breaks down or you fall ill)? If you plan to travel in business class, will you have to switch to economy class?
Now substitute “trip around the world” with “personal life journey”. We have one life.
We can correct our course, but we can’t do it all over again. We can react as things happen, but we are much better off being proactive in the long run.
Preparing is often better (and cheaper) than repairing. US President Eisenhower once said, “Plans are worthless, but planning is everything”. Your plan will change as your life changes.
Your financial plan can also help answer many investment-related questions:
-How much do you need to save and invest for your short, medium and long-term goals?
-Can you retire now given the level of your accumulated wealth and sources of income? If not, when can you retire?
-What level of returns would your investment need to earn for your plan to be achievable? Is it realistic?
-How much risk do you need to take? How much risk can you emotionally tolerate?
-Can you afford to invest? Have you built your portfolio of investments on strong foundations? Do you have a sufficient cash buffer? Have you insured the risks in case you were to die or not be able to work?
-Can you afford not to invest, considering inflation and increasing life expectancies?
-How much income can you safely draw from your investments so that your money lasts as long as you last?
-Will you need to reduce your spending and draw less income from your investment portfolio during market downturns and economic slowdowns?
-Can you afford to spend more perhaps and live life to the full? Will you remain financially secure if you pay for your children’s (or grandchildren’s) university fees, or help your children with a house deposit?
The list could go on. Without understanding your life goals and personal financial position, it is very difficult, if not impossible, to answer many investment-related questions.
Should you invest? Should you focus instead on repaying your debts? How much should you invest? How much risk should you take?
We also don’t know what we don’t know.
Using a Chartered Financial Planner can help you identify your unknown unknowns – we all have them! Planning can also help minimise future regrets.
We cannot fully control or predict the returns our investment portfolios will earn, and we cannot predict with certainty what life will throw at us.
However, knowing that we can control many aspects of our financial plans is empowering.
Our job as financial planners is to help you focus on what you can control, assist you in clarifying your goals, and give you more confidence about your future.
