At Nicholls Stevens we try to help clients think about their money in a different way.
If a client makes statements or asks questions such as “What rate of return can you get for me?” or “I need an adviser who can get me 14% every year”, I realise that I will need to introduce him or her to a new way of thinking or Nicholls Stevens may not be their appropriate planner.
What do we do differently? When planning for a client we start at the other end, which in my opinion is the right place to start, we ask a simple question “What do you want to do with your life over the next n number of years?” – the number of years obviously varies with the age of the client. Many of our clients are seeking retirement advice, so the question relates to how you are planning to spend your retirement.
When we know what you want to do, we can put together a plan to achieve your aims. We prepare a simple spread sheet to show the likelihood of the plan succeeding. The plan includes certain assumptions, which are always conservative. However, the plan is not infallible, inflation, interest rates and investment returns will change on a regular basis, so the plan will need to be kept up to date on an annual basis
One of the most important outcomes of putting together such a plan is that it increases the client’s sense of security. The plan may in fact prove that you do not need to take too much risk in order to achieve the required outcomes. The result is that you do not have to chase the investment which promises 14% pa but may not deliver, you can invest your capital in lower risk investments.
The alternate situation is that the spreadsheet shows that the goals cannot financially be achieved. This may be disappointing but there may be other lifestyle choices which can be made to improve the situation. We may be able to help you increase income by suggesting letting out a room in your house taking some part time work or re-arranging your investments in a more tax efficient fashion. On the expenditure side improved budgeting can often save the day!
Many clients are concerned about giving away capital to their children or to charity during their lifetime because they fear that they will not be able to fund the cost of long term care. We have found over the years that if we can demonstrate to the client that the capital will not run out this produces increased freedom within the financial plan; capital can be given away with confidence and you are here to enjoy your children, grand-children or a chosen charity putting your money to good use.
Considering money this way around makes taking financial advice much more fun and fulfilling. Many people find the whole experience of discussing money boring but most people enjoy knowing that they have sufficient funds to enable them to enjoy travel, hobbies or visiting the grand-children on a regular basis