What is the value of financial planning?

By FMB on 

Posted in: 

Can you actually put a price on it?

When FMB was founded in 1987, the “financial advice” industry was new. The focus was on selling products and what products could give the best returns. For many consumers this is still their reason for seeking financial advice and how they are inclined to judge its results.

However, *research has shown that there are five areas where financial planning can affect financial outcomes.

• Asset allocation (making sure all your eggs are not in one basket)
• Withdrawal strategy (when you take income and where from)
• Guaranteed income products (such as insurance products and annuities)
• Tax efficiency (making sure tax allowances are used and money is withdrawn most tax efficiently)
• Portfolio optimisation

A combination of good decisions in these 5 areas can generate *29% more income on average for a retiree and good decisions around these areas are more likely to occur with the support of a financial planner. The strength of a good financial planner is supporting your decision making not stock picking.

It’s not surprising we are struggling to educate consumers on the negative impact of iemotional investor behaviour when the financial services profession has spent the last 30 years talking about investment returns and "beating the market". It is going to take some time to change attitudes.

The research reflects our belief that a  personalised financial plan with a goals based investment strategy is far more valuable in the long term and our role is to ensure you stick to it.

This article is a summary of a paper by Morningstar from 2018 which we are happy to send out for you if you would like to read it. Just drop Ruth an e-mail at ruth.power@finman.co.uk or telephone the office on 01539 725855

*Blanchett, David and Kaplan, Paul “Alpha, Beta and Now…Gamma” The journal of Retirement (October 2013)

© FMB 2017 - 2019. All rights reserved.
Financial Management Bureau Limited is authorised and regulated by the Financial Conduct Authority.
Financial Management Bureau Limited is a limited company registered in England and Wales. Registered office: Shenstone House, Helsington, Kendal, Cumbria LA8 8AA. Registered number: 02089786
The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk

Top