Planning beyond the numbers

For current clients and partners of Brunel, you’re likely to already be well aware that financial planning is not all about the numbers. For anyone new to ourselves and financial planning, however, it’s always worthwhile to revisit just what we do and how it differs from merely being ‘money organisation’.

Financial planning is designed to go ‘beyond the numbers’ to discover what it really is that you want the numbers (and, of course, money) to do for you. The important thing for us (and you) is to know where you want your money to take you.

Here’s a practical example. A ‘normal’ piece of financial advice between an adviser and a client might start with the client saying that they want their investments to perform better. There would be some reorganisation – the client may accept that they now have investments that are exposed to a little more risk, but have a chance of generating better returns. The client would go away, essentially happy.

Financial planning though, going beyond the numbers, stops in this situation and asks you what you want to do with your better returns. Of course, we would all like more money, but why specifically now? Do you need the money for something specific? Is that something specific going to be worth the greater exposure to risk that the advice above would entail?

It’s a specific scenario but let’s say you want to ensure you can fund your child’s first year school fees. They’re coming up in a couple of years and you need to know the money is there. The above financial advice might achieve this. But then again, it might not. The above advice ignores the important part of the equation: providing your child with the education you wish them to have. This important part, on its own, is completely separate to money. Money merely enables it to happen.

‘More money’ also does not guarantee the money would be available in the above scenario because ‘better returns’ is not a sound financial planning strategy (or investment strategy, for that matter).

Maybe we can start to put some of your spare income into a Stocks and Shares ISA, rather than leaving it for ‘day to day expenses’. Properly invested and managed, this can grow over a relatively short time to the point that your funds are needed. Being an ISA, your funds are available immediately when you need them. And we don’t need to impact the rest of your financial plan by exposing your investments to greater risk, or taking money out of what should be your funds for your aims in retirement.

Of course, this is a very singular example and maybe altering your investments and exposure to risk would have been the best course after all! But this decision would have been taken to get you to where you want to be, rather than with merely ‘numbers’ in mind!

Next time you think about your plans, your money – or talk to a client about the same – it’s worth thinking about where you really want to be and what your plans are. What do you want to do, beyond mere numbers?