One of the critical factors for a successful relationship between a Financial Planner and their client is a constant focus on suitability.
What might be a suitable course of action for one of our clients may be entirely inappropriate for another.
So how do we go about ensuring suitability for each of our clients in terms of the actions that we recommend they take?
We follow a rigorous process.
Unsurprisingly we need to find out a lot about you. We call this process “About You” (we even have a form with that title!).
Most importantly, we don’t just use the answers you put on that form to work out our recommendations; we talk to you as well.
We hold a discovery meeting with you and at that meeting get you to tell us your story.
How did you get to where you are today and where do you want to get to in the future?
We want to know as much about you and how you feel about all things financial as we do about how much money you have and where that money is.
Of course, what you have is important, but suitability in our world is all about finding out about your goals and objectives, what you want to achieve with the rest of your life.
A powerful tool that we use is called Financial Planning.
That’s a process that links up your needs and wants, goals and objectives with your money and your ability to have the life that you want.
One of the steps within the Financial Planning process is to try to predict how much money you will have at each important stage of your life.
We call that cash-flow forecasting.
Just like a business will look at its future expenditure and its future income, we can do the same for a person like you.
It may well be that you have already accumulated enough financial resources to live the life that you want to live, and Financial Planning can help to validate that.
Or it may be that you haven’t yet accumulated enough in which case Financial Planning can set a suitable target and show you how much you need to save or invest to hit that target.
We believe strongly that Financial Planning drives financial advice.
If you don’t need to invest more money, we will say so. If you need to change something about your existing financial arrangements, we can identify what that is and make the most appropriate recommendations.
Suitability is also a constant process.
There may be changes to your life in the future that was unknown at the time your Financial Plan was crafted.
This is why Financial Planning is a continuous process, things change, and your plan needs to adapt to those changes.
Yet at the start, we can try to map out some of the things that might happen. We call this the “what if?” scenarios.
What if I retire now? What if I want to gift some money to my children? What if I need care later on in life?
What if I downsize and move to the smaller house in the country?
These are the questions that our clients ask us.
Financial Planning is what enables us to ensure our financial advice is suitable, for you.