Ten life moments when DIY financial management is not enough

User Written by Adon Beddoes on December 07, 2018.

Ten life moments when DIY financial management is not enough

It’s not uncommon for people to think that a financial adviser is not for them. Often this is because they think they don’t earn enough (wrong!), or that financial advisers are for billionaires rather than your average Joe (wrong again!). Sometimes it is because they think they can do it themselves.

I am firmly of the opinion that every adult could benefit from professional financial advice but if you’re not convinced by that, there are certainly some very key life moments when expert guidance is essential. I’d say a financial adviser is an absolute must in the following situations:

1. When you start working

While you might feel that your monthly starting salary doesn’t warrant an adviser spending time on your finances this is, in fact, a great time to seek professional advice. Few of us start our careers earning six figure sums but however much or little you earn, you should get into the habit of saving for retirement. An adviser can help you work out how much you can afford to save and where to put it so that it is working as hard as possible to fund the lifestyle you’ll want when you are no longer earning. That time might feel like it is light years away but it will sneak up on you quicker than you think. Hopefully you will start to soar in your career and this will be the start of a long and fruitful relationship with your adviser. I certainly enjoy accompanying my clients as they progress through life and finding personalised solutions as their financial planning requirements evolve.

2. When you get married

This is often the next big step on life’s journey and a decision which will necessitate some financial planning changes. Engaged couples and newly weds need to be open with each other and work out a strategy for how their joint finances will work. It’s often useful to have a third party involved in this to bring an objective point of view.

3. When you start a family

This is a really key life moment which demands some major financial adjustments. A spouse might be able to look after themselves financially but a baby definitely can’t, so wealth protection becomes indispensable. Review life insurance requirements and health cover as a priority but also consider taking out income protection and critical illness cover. A will becomes absolutely essential too, including the nomination of guardians for your newborn. It may be relevant to look at trusts and other asset protection tools to mitigate IHT and this is definitely not something to DIY. And yes, now really is the time to start putting aside savings for your child’s education, if you haven’t already done so.

4. When you get divorced

Let’s hope your fairy tale doesn’t end in divorce - but if it does, a financial adviser will be absolutely essential in acting as an unbiased third party and helping to minimise your financial losses. They can also ensure that you take care of all the necessary admin with regard to estate planning, beneficiaries on life insurance policies and so on as well as adapting your financial plan to your new circumstances.

5. When your spouse passes away

It’s not nice to think about, but it does happen - and with it comes a whole host of complex financial challenges at a time when grief may make it difficult to concentrate on practical matters. Some people have never had to manage household finances beyond day to day spending until a spouse dies and can feel very ill at ease with unfamiliar financial matters such as life insurance death benefits and the management of financial assets including shares, bonds and property. Having a trustworthy and professional financial adviser who can help in the decision-making process takes away a huge amount of stress and ensures that costly mistakes are not made.

6. When you receive a substantial cash sum

Whether it comes from a bonus, a big salary increase or an inheritance, a cash windfall is a golden opportunity to invest towards a more secure financial future. Sure, you’ll want to celebrate with a blow out but be careful not to squander all your newfound wealth or to make rash decisions which you will come to regret. Take financial advice over how best to invest the lion’s share of your money to build your wealth.

7. When your parents become your responsibility

If you are in your forties or fifties you may well be a member of the so-called ‘sandwich generation’ bearing the burdens and responsibilities of caring for your children, often struggling to achieve financial independence, and your aging parents at the same time. It’s tough and can stretch finances in many different directions. A financial planner can help you to prioritise as well as plan for potential future expenditure such as residential care for a parent.

8. When you are thinking of retiring

And I don’t mean the week you are stopping work for good. As I said above, forward planning throughout your working life with the help of a financial adviser is by far the best way to approach retirement planning but if you have not used a professional before, you will certainly need to when retirement is imminent. And I mean at least three to five years before you retire. It is essential to take stock of your situation well in advance by calculating the total savings you have and comparing that to estimated retirement expenditure to see if any gaps need filling. An adviser can also analyse how to get the best out of your retirement pot including whether or not it is in your best interests to purchase an annuity.

9. When passing on your wealth

Gifting large sums is not always as simple as it should be. You must ensure that you understand the impact that giving away your assets could have on your future finances as well as any tax implications. A financial adviser can flag up things you may not have thought of and suggest tax-efficient ways of gifting.

10. When your assets total quarter of a million

For those who are lucky enough to accumulate significant assets a DIY approach becomes untenable. When your wealth gets as high as, say, a quarter of a million why wouldn’t you put your money management in the hands of a professional who is better qualified than you to ensure that your wealth continues to build and is adequately protected?

To sum up, just because you can do something, doesn’t mean that you should. Although we all have a certain amount of experience of saving and budgeting, managing your money in a savvy way is not as easy as many people imagine. For the majority, a financial adviser can add value in a whole host of ways to ensure that you are making the most out of your hard-earned cash.

If you are in any of the above situations and don’t have a financial adviser, or if you are looking for some general guidance with regard to retirement, investing and estate planning please feel free to get in touch with me at abeddoes@infinitysolutions.com for a free, no-obligation chat.

Adon Beddoes

Adon Beddoes

Posted on December 07, 2018 in Financial Planning.