A lot of people take a greater interest in their financial plans once they have stopped work.
It’s natural to want to do so; after all, the job used to pay the bills and now your retirement resources have taken on that role, so it seems sensible to take a greater interest.
And, of course, you have more time on your hands.
We don’t think it’s a question of the level of involvement you should have; we believe that it’s a question of which roles you should take on.
There are some areas where it makes a lot of sense for you to take a greater involvement:
-Planning withdrawals. It would help if you spent time thinking about what you are going to spend your money on and when. This is particularly critical during the early retirement phase – the “Go: Go” years, when your discretionary spending will, hopefully, be at its highest.
-You are squeezing the most out of the money you spend. Make sure that you are spending your money effectively, getting good deals on your utilities, and making your money go as far as possible.
-You are monitoring your expenditure. Keep a note of what you are spending your money on, and provide that information to your planner. This might help you to get the most of your spending too.
Conversely, there are some areas where you should try to resist the temptation to increase your involvement:
-Asset allocation. Your input is needed into the process – after all, we need to know what you want to spend your money on, and you need to tell us about your risk personality. However, it’s unlikely that you will be able to interpret your risk personality or act as a critical friend to yourself.
-Picking investments (stock selection). It’s best to let your financial planner make these choices for you. Your role is to decide whether the financial planner is right for you; are they making the best choices they can, based on your interests, rather than their own?
For some clients, involvement in the dealing process can be effective, and, sometimes, it can speed things up if the client instructs the sale and purchase of the investments.
But, if you do this as a client, you need to appreciate that there may be a lot to learn (there a lot of different share classes out there) and that it’s all too easy to make a costly mistake!
Our view is that you should kick back and enjoy your retirement – financial planning is a full-time job!
