I met with a prospective client on Friday afternoon, an individual who is “top of his game” as far as his profession is concerned even though he describes himself as a technology addict always wanting to acquire the next new piece of technology kit.
I actually met with him some years ago when the multiple pension plans that he had acquired during his working life were beginning to become rather unmanageable.
Not only was he inundated with multiple and differently constructed pension statements at different times of the year but there was little if any cohesive investment of his pension funds taking place.
He didn’t take us up on our services at that time but did follow some guidance of a friend and consolidated all of his pension plans into a well know online SIPP provider.
But he came to see us again because he needed help to get the investment of his funds on track.
Empowering people to invest through online platforms is an excellent and growing approach for the UK consumer.
But it doesn’t mean that everyone is either comfortable doing it themselves or will have the time or inclination to acquire suitable investment knowledge to manage their pension funds.
I explained to him that we took a six step approach to managing money:
1 – Setting objectives linked to your Financial Planning goals (when do you want to retire, how much retirement income will you need?)
2 – Understanding your attitude towards investment risk reward and volatility (over exposure to shares/equities is quite common)
3 – Agreeing on an asset allocation strategy which will form your base point for investing (I asked if there was mix of cash, fixed interest, commercial property and shares in his pension portfolio)
4 – Making tactical decisions to reflect current economic and market outlook. (Our portfolios contain less in Gilts for example than they did a number of years ago)
5 – Selecting suitable funds to populate the agreed asset mix (and this was a real challenge for him because of information overload – just exactly who could he trust?)
6 – Following a pre-agreed review strategy which includes rebalancing asset allocation (thus trying to control against excessive introduced risk and also not being afraid to get rid of the under performing funds)
So even people who are perfectly able to execute the implementation of their financial products online, and very many are, may decided that they need advice to go with it.
Photo credit: Flickr/Wonderlane
