Financial Advisers – The Common Misconceptions

To be honest, I’ve discussed this topic before in my Financial Advisers and Financial Planners – What’s the Difference piece (you can access here) but it never ceases to amaze me how people just assume they really know all about what I do.  Most of them (the vast majority) get it so wrong and while I shouldn’t let it annoy me, it irritates the hell out of me!  

I’ll give you an example of what I’m talking about.  Firstly, the good thing about being in a semi-lockdown is that I can finally get out and about and meet different people.  I love meeting new people, getting to know what makes them tick and swapping opinions/anecdotes.  Last Friday night, after my Morris Dancing session, I went off to the pub and got chatting to someone who came out with the rather impertinent line “Oh my God! You’re a financial sales’ person – please don’t flog me a pension!” Needless to say, I wasn’t impressed, I thought we’d left that assumption behind 25 years ago but the fact is, along with this guy, so many people still see what I do as that, flogging pensions and investments to make money.  Not true – and my clients will verify that for me!

It’s About Planning for the Present and the Future

Financial Planning is NOT about flogging pensions and investments, it’s about looking after people’s money and advising them as best as possible as to how they can live as they want to with money in their pocket.  It’s about making the best of other people’s money so they don’t have to worry, and they can enjoy their lives with the money to do so.  

Those Who Have Too Much, Just the Right Amount and Too Little

There are three types of people in my book when it comes to finance. Those who don’t have enough money, those who have enough and those who have too much, (not many people are the second kind!). My son Tom reminded me of the three types of people when I had a drink with him yesterday (his wife is about to present us with another grandchild– exciting times…but I digress!). We chatted about everything, from the Euros to business and lots of other bits and pieces too.  Tom chatted to me about our clients and asked me if I realised how much money some of our clients have?   We have clients in their 80s without children and with huge sums of money that they’ll never spend – yet there are other clients in debt (and we are working hard to get them out of it).  Our clients are always from one end of the scale to another.

Financial Buckets

With that in mind, we talked about Financial Buckets (I’ve written a piece on that here).  It’s all about how much money is coming into your bucket and how much is flowing out.  If your bucket is at a healthy balance, then you’re going to be ok but if it runs out and you can see that there won’t be enough to last you when you stop working, then you’re in trouble.  A Financial Planner will navigate that financial bucket for you.  That’s what I do (and so does my son Tom).

Lifestyle also plays a part of it.  As a planner, I always query how much does a client need to maintain their desired lifestyle?  It amazes me that some people manage perfectly well on just £10k to £15k a year whereas others need at least £50k just to break even!  Whatever my clients’ lifestyle, I need to make it happen for them, without them worrying about their finances.  I always ask about lifestyle, what they want after they stop working and I look at the financial implications so that together, we achieve their wishes!  Recently, I had two new clients and we’ve gone through all of the above – but we haven’t yet even discussed pensions (contrary to what some people might think – it’s just not what I do immediately, it comes later) and that’s because to me, it isn’t important to them yet, I need to deal with their current life stage and work out how much money they need to live on comfortably, the pension comes next!

So, it’s annoying when people think what I do is just flog a pension – and I wish I could dispel the myth surrounding Financial Advisers. Yes, when I started as a Financial Adviser back in 1990, it was about selling pensions and investments and my senior at the time used to tell me off because I didn’t sell enough or make enough commission.  I hated selling financial products and I was no good at it.  So, I quit, set up on my own in 1992 as a Financial Planner (nearly went bust initially) – what I did for people soon gained traction and I got recommended by all my clients and here we are today. That brings me back to my response to the man who assumed I was a financial salesman, I said now’s not the time to discuss that, just let it go! And with that, I carried on sipping my pint.