As the cost of living crisis continues, and political uncertainty lies ahead, now is a smart time to take stock of your finances.
It’s hard to think of a time when Britons have been more in need of high-quality, expert advice on how to manage their finances. The past year has been a perfect storm: high inflation and rising interest rates have driven a cost of living crisis, geopolitical uncertainties have amplified the ups and downs of financial markets, and the state has rarely seemed less capable of offering protection and support.
A financial adviser with whom you have a trusted relationship can be your guide through such storms. Financial planners are professionally trained to help people understand their needs and financial goals. They create bespoke plans to maximise their clients’ wealth and resilience, whatever life throws at them, and independent research underlines this point.
Studies show that people who have taken professional advice feel more comfortable about their financial situation – and that they are closer to achieving their goals. By using the services of a professional financial adviser, client research showed that 88 per cent of clients said they felt on track to achieve their goals despite the recent turmoil, and 99 per cent would recommend their adviser.
Elsewhere, a study from the International Longevity Centre found that people struggling with their finances enjoyed an average boost of 24 per cent to their pension wealth after taking advice on how to plan for retirement, with more affluent savers gaining 11 per cent. Research also revealed that people taking financial advice, earned annual returns that were around three percentage points higher than those not getting any help.
Nevertheless, misconceptions about advisers have sometimes put people off, however the image of the financial adviser as a sort of wheeler-dealer is outdated. Instead a “detailed financial plan” tailored to meet an individual’s personal circumstances and goals is what you can expect.
Questions should include “What do you want out of life? What level of wealth do you need to get it? How can stock markets help you get there? How much risk can or should you take?” A goal-based financial planner will draw all of these strands together into some clear objectives and importantly this advice is ongoing – your relationship with your financial adviser will be most productive when you meet regularly to review your situation. Inevitably we all go through changes in our lives, we expect to work and earn, then reach a stage where we don’t work any more and maybe we become a parent or a grandparent. Having the financial resilience to work through each of these periods is essential; that’s the value of good advice.
Resilience is a broad term. Financial advisers can certainly help people to save and invest for the future, but they can also help in the here and now, with advice on how to arrange finances today – where to find the best mortgage, for example, or how to manage money in the most tax-efficient manner possible.
One area often overlooked is protection. Financial services products such as life and health insurance can prove hugely valuable if a family suffers an unexpected setback. Working out which protection is needed – and how much – is a crucial task for a financial adviser. With an adviser offering support in all these areas, people will feel more confident about the future – even a times such as now when the economic landscape continues to feel challenging. Your adviser should help to look through the short-term noise and rather than being concerned about what is changing in the near future, it’s vital to have a long-term plan that maps the availability of savings and investments to an individuals needs.
That’s not to suggest that the short-term outlook should be overlooked altogether – and there are certainly challenges to keep front of mind in 2024. Not least, the UK economy remains troubled. While inflation fell in the final months of last year, at 4 per cent in December, it remains well above the Bank of England’s 2 per cent target. The consensus among economists is that the Bank should be able to begin reducing interest rates later this year, but views differ on exactly when rates will come down and by how much.
For many mortgage borrowers, a series of interest rate rises over the past two years – taking the Bank’s base rate to a 15-year high – have been painful. And for 1.6 million borrowers whose fixed-rate deals expire in 2024, costs are set to rise.
Nor are savers and investors having a good time. Returns on cash held in banks and building societies have fallen well short of inflation, and growth from assets in the stock market – which have, in the past, tended to outperform over longer periods – has also been patchy. The FTSE 100 Index of shares in the UK’s largest companies rose by just 2.4 per cent in 2023, and most stock market commentators predict only modest gains in 2024, too.
There’s also the pending general election to consider, and both the Conservatives and Labour positioning themselves accordingly. Political uncertainty feels unavoidable and there are potential swings and roundabouts with any change in government, plus the US election, scheduled for November, adds to the sense that change affecting us all is on the way.
Inevitably, different people will be impacted in different ways by these factors. Younger people, focused on getting on the housing ladder and saving for later in life, will need different help to older people, who may now be preoccupied with how to turn savings into income – and how to plan for their children and grandchildren. Women may need particular support; research suggests a significant gender gap remains in the UK, both in terms of people’s income and how much wealth they have put by for the future.
The bottom line is that now is the moment to seize the initiative. Don’t put it off: the mantra is to save and invest for the long term. Build a trusted relationship with your adviser. He or she will listen to your goals, produce a plan to help you get there, and hold regular reviews to make sure your plans remain on track even as life’s surprises hit.
How we can help
At every stage of your life, and whether you’re single or with a partner, financial planning is important because it helps you understand your current financial situation, establish future goals, and determine the best ways to achieve them. Whether this includes planning your retirement, buying your own home, managing your finances in the most tax-efficient manner possible, or considering estate planning, here at Logic Wealth Planning we can certainly help. And not only can we help you to save and invest for the future, but we can also help in the here and now, with advice on how to arrange your finances today.
To start the conversation call us now to arrange an initial no obligation meeting – tel 0808 1234 321
Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.