What will your retirement look like?
What will you do?
How will you continue to provide meaning to your life’s purpose?
And what for you will be the physical, intellectual, and spiritual goals that those who continue to thrive as they age challenge themselves with?
Money is the engine that drives many of our ambitions. But this isn’t a money discussion. It’s what we can do with our money that is valuable. Our conversations should be about purpose.
And if I had to define for me what a financial planner can do then that would be it. To help with the decision of why you want the money in the first place. And in defining a future life to determine how big or small your retirement fund needs to be. And when. Which seems much more efficient than an “any road will do” approach.
What if the future life you defined meant that you could, and were excited to, retire early? Or allowed you to make a deliberate choice to work longer. Or perhaps a blended approach – working, but with extended experiences and breaks. Life is choice. But hopefully informed choice.
The outcome of the financial planning process is a plan. It has specific goals and objectives and articulates the steps to get from here to there. But the value is wider than that.
Firstly, it brings order and organisation to your financial life. Be it investments, insurance, estate planning, taxes or how best to use your household cash flow, or even how to improve it – the process of planning is a valuable one.
But a plan on its own has little value. So, the second benefit is accountability. Financial planning supports you in following through on your financial agreements, works with you to prioritise your goals, shows you the steps you need to take, and regularly reviews your progress.
Achieving goals, particularly in the investment area, requires objectivity. Why? Because humans are very often driven by emotion which is not a useful attribute to being a successful investor. Financial planning brings insight to help you avoid emotionally driven decisions, is available to assist you at key moments of decision-making, and provides the research necessary to ensure you have all the information.
It is also about thinking ahead to anticipate your life transitions, being financially prepared for them and creating the action plan necessary to address and manage them ahead of time.
And education. Financial planning explores what knowledge will be needed for you to succeed; by first thoroughly understanding your situation, then providing the necessary resources to assist your decisions, and explaining the options and risks associated with each choice.
Lastly, it is a partnership. One with the goal of achieving the best life possible. Investment success is ultimately about return. Financial planning success has a wider mandate – a life well lived.
Stephen McFarlane is a financial adviser with NZ Funds Private Wealth in Timaru. The opinions expressed in this column are his own. A copy of Stephen’s disclosure statements are available on request, free of ch