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The value of a second opinion for a financial plan

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By David Andrew Wealth Planning

I spent time on the phone this week speaking to one of our clients whose mother-in-law is very unhappy with her adviser and her financial plan. While this is scenario may potentially be good news for us, it is a real shame for his mother-in-law.

A good financial plan is all about collaboration and confidence. When the collaboration is right, the plan is sound. When the plan is sound and the investment strategy is appropriate, the results are good. When the results are good, people are happy. When people are happy, they feel confident and in control. When people feel confident and in control they live better lives.

Living a better life can be the outcome of a really good financial plan, and finding the right adviser to deliver that possibility can be like finding a needle in a haystack.

So what can we do to feel confident, and in control of our financial futures?

  1. Be clear on your most important life goals, discuss them with the people who matter in your life and reach consensus around your priorities.
  2. Then set your financial parameters:
    • How much do I need?
    • When do I need it?
    • How much can I save?
    • What return do I need?
  1. Organise all of your financial information so that you can identify exactly what your gaps and risks are. If your financial affairs are not in order, it’s hard to be in control and confident.
  2. Build a plan that creates a clear link between your financial resources and your goals. Are they achievable? Are any trade-offs required? What is the probability that you will achieve your goals and what are the risks you face along the way?
  3. Build a portfolio that is evidence based. Don’t rely on speculation and opinion, but on the real evidence of what works in financial markets. Academic research provides some valuable insight in this regard. Your portfolio should be diversified across asset classes, provide built-in safety buffers against market volatility and take a long term structured approach. A diversified approach means that when one part of the portfolio is not working so well you can reasonably assume that another asset class will be performing better.
  4. Review, Review, Review. A financial plan and portfolio management is like a good marriage, the real work begins after the wedding ceremony. Similarly a successful financial plan needs to be worked on; priorities need to be reviewed, the portfolio needs to be rebalanced, opportunities need to be reassessed and so on.

Done well, planning should be a very rewarding exercise as the feeling of control and confidence increases, you should worry less and have more time to spend on the things that will give you more pleasure.

If you know someone who could benefit from a second opinion on their plan and their investment portfolio we are always happy to assist.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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