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Working on your own game plan and not just the business.

Andrew Moore, Senior Financial Planner in our Plymouth Office, explains why a great game plan for your own life can make running a business much more enjoyable. This article was originally published in the Spring Edition of Devon Life Business & Professional .

Life is full of ‘projects’ to work on. We have a sense that they are worthwhile if they take us forward, give us more money, build up our assets or grow the business we work in or own. Often these activities are all-consuming and there is an element of spinning on a wheel. How often do we stop and get a sense of why we are working so hard.

As a financial planning firm we see clients in the run-up to retirement and then guide them through a fun and exciting ten to twenty years before helping them settle into a secure later life. When you have enough capital, and importantly you know you have enough capital, the years between 55 and 75 can be the best years of many people’s lives. If you have looked after yourself, you have your health, you have money, and the kids can be hidden from on some beach where mobile phone reception is poor. Smart clients also recognise that the biggest shortage they have is time. This gives an added poignancy to the pleasures and lifestyle enjoyed in these years.

In many ways a financial planner works with clients as an ‘Architect’. Clients come to us with piles of bricks and steel, in the form of pensions, savings, property and businesses and look to us to help them understand what kind of retirement can be created from them. We help them draw up the plans for the life they want. It is about them and their plan, not the money or fancy investments.

It is important to understand how much capital is enough to achieve your plans, and where there is more than enough, how much can be used in those early years for wild living without putting later security at risk. How much does that business need to be sold for? How much income is sensible to draw from that pension? How much investment risk needs to be in the pension or other investments? Can the portfolio withstand a crash without any effect on retirement plans? Without some form of plan these big decisions are taken blind.

Understanding how your cash flows throughout your life is crucial to crafting not only an exciting lifestyle in retirement but also how much lifestyle you can enjoy in the working years. Saving up all the fun for later life isn’t a great plan! Saving up all the capital for children to inherit is OK, but it is also OK to use that capital for your own pleasure. All these competing priorities can be balanced in a clear plan.

So, where can plans go wrong? Investment risk can be managed and mitigated, legislative risk can be dealt with. The big failures I see in plans revolve around fear and a lack of focus. In early retirement clients have a tendency to hunker down, and may unnecessarily waste a significant part of their active retirement. A lack of focus in the working years can lead to a lack of creativity and drive. How much easier is it to lift earnings and push business growth if you can see where it is leading?

The lives of business owners and professionals are complex and fluid. Opportunities are always there for the taking. Focussing your mind on your own game plan can often get the creative juices flowing and it is surprising how exciting business and life can be when there is more certainty about your future. Doing a jigsaw is easier when there is a picture on the lid. An experienced Financial Planner will be looking after many different clients, all at different stages of life. They can see the pieces of the jigsaw you have in front of you, and they can help you fit them together, but you need to work out what the picture looks like.

Unlike the plans for a property, your game plan will change and a regular forward-planning meeting is important. Setting aside the momentous changes that can happen in our own lives, changes in legislation can open up all sorts of opportunities and challenges. The recent pension changes have created enormous flexibility in client plans. These options won’t have existed the last time the plan was looked at.

The management of any financial plan involves tax planning, understanding pension rules, management of investment risk and the risks around drawing down on capital. Contingency planning needs to be folded in, with Wills, Powers of Attorney, and insurance sorted out. All these things are technical aspects that should be there. They are housekeeping. The success of a plan isn’t judged only on its robustness but on its ability to deliver the lifestyle that you want, now and in the future.

Of course all of this requires an open relationship with a Financial Planner that is based on trust and a sense that both parties are working on the same objectives. Proper financial planning isn’t about chasing exciting investments or tax loopholes. It is about creating an exciting life, not only for the future but also in the here and now of professional and business life.