Financial planning involves helping clients to identify and prioritise their Financial Objectives and to put strategies in place to achieve those goals.

When it comes to financial planning, clients have different financial needs and objectives at different stages of their lives. As we progress through life, our financial requirements, goals and circumstances change. Generally speaking, there are 4 Financial Life Cycle Stages. Knowing about these 4 stages in advance is conducive to successful financial planning.

Young (20’s and 30’s): Financial needs at this stage may be dominated by a need to purchase a home through a combination of savings and borrowing. Savings needs tend to be short to medium term. Surplus income tends to be low.

Middle (30’s and 40s): At this stage a client’s income may steadily increase as their career advances, etc. Family responsibilities may also increase, demanding more protection. Savings and investment needs may start to lengthen, e.g. provision for retirement may begin. Surplus income starts to rise. Significant appetite for investment risk.

Older (50’s – 60s): At this stage earned income may have peaked or begin to decline. Borrowing commitments may have been paid off, and an increasing focus is placed on retirement provision. Client may inherit funds from their parents. Surplus income is at its peak. Investment and retirement planning needs tend to dominate. Appetite for investment risk reduces significantly. Capital preservation starts to dominate. Estate and succession planning may start.

Retirement: Usually earned income ceases, substantially. Replacement pension incomes commence. There is usually a significant reduction in income. Capital accumulation has peaked and the client may need to draw on accumulated capital at regular intervals. Health may gradually deteriorate, necessitating increased medical expenditure. Estate planning will be important.

The questions you should ask during the financial planning process:

1. Have you got a financial plan in place? If so, how is it performing?
2. Are you financially prepared for unexpected events, e.g. disability, death or even job loss?
3. Have you considered the cost of your children’s education, how will you finance this?
4. When can you retire and how much money will you need to retire?
5. Will your children be liable for inheritance tax?