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The financial plan
In this section we have provided some examples of what you can expect in your Personal Financial Plan, however, please bear in mind that your plan will be personalised to you and therefore some of the examples may not be applicable to you.
Click on the images below to see a sample document relating to each of the planning stages.
Current Situation
To get from A to B we first need to know what A looks like. As part of this process we will write off to your existing investment, pension and insurance providers to get up-to-date information on your current financial products. You can provide us with details if you like but authorising us to obtain this information should save you some time. We will also ask you to supply us with information on other aspects of your assets and liabilities such as bank accounts and mortgages.
As part of your Personal Financial Plan, we summarise our understanding of your assets, liabilities, income and expenditure. This allows you to compare progress from year to year and helps us to make sure that nothing has been missed out when preparing your Personal Financial Plan.
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Steady State Cashflow Projections
The "Steady State" cashflow analysis graphs try to demonstrate the direction that your finances might be expected to take These graphs are based on a number of assumptions that we agree with you and can amend "on screen" to demonstrate the effect of changes. Typical changes might be to model the effect of early retirement or to show you what difference there could be to your long-term financial position if you aimed for higher (or lower) investment returns.
There are three likely trends. The first is that your assets will grow indefinitely. What this might highlight is that you may be able to retire earlier than anticipated, you may be able to increase your expenditure and “enjoy life” more or you might be able to reduce the risk you are taking with your investments because you don’t need to aim for such high returns. It could also mean that you start making gifts to the next generation as part of an estate planning strategy.
A second scenario is that you will run out of money based on the various assumptions. As a result of this analysis you may need to reduce expenditure, make your investments more tax-efficient or increase investment risk. A final scenario is that your asset base grows until you retire. Your pension income doesn’t match your expenditure requirements and your asset base is gradually depleted. An ideal scenario is to run out of money on the day you die!
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Opportunities
In the opportunities section, we look at optimisation strategies such as making the most out of pension savings, consistently using ISA allowances, aiming to use Capital Gains Tax allowances and holding investments tax-efficiently between spouses. We then demonstrate the effect that this could have on your finances by comparing the results with the Steady State situation.
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IHT Planning
Where relevant for clients, we will estimate their current Inheritance Tax liability and recommend way that this could be mitigated. Some IHT solutions are "overnight" solutions such as setting up whole of life assurance to cover the liability, whereas other solutions involve making gifts over a period of time. The cashflow analysis system can help show the effect that each solution would have on your estate's IHT position.
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Action Plan
The second part of our Personal Financial Plan is a Personal Financial Action Plan. An example section of this can be found by clicking the image. In the Action Plan we explore your goals and objectives and then provide advice and commentary on just about every aspect of your finances that we are qualified to advise on. A typical Action Plan will cover Investments, Pensions, Insurance, Liabilities Management, Tax Planning, Estate Planning and will also comment on recent legislative changes that we feel are relevant to you.
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