Why you should think about Financial Planning and not Financial Products.

I recently had a meeting with a new prospective client.  They had recently received some money from the sale of a property and wanted to know where to invest the funds.  We discussed their financial affairs, income and expenditure, assets and liabilities, attitude to risk, and hopes, aspirations and dreams and left to give some thought about the best way forward for them.

They were keen to discuss the opportunity to invest, and in particular invest to produce income (as they had a relatively low disposable monthly income).  However after reviewing their circumstances in detail, one thing became abundantly clear.  The clients in question had a number of credit cards and loans where the interest paid on them were relatively high.  Paying off this debt would provide them with more net disposable income, ensured that they wouldn't be incurring the high levels of interest they were paying and put them in a healthier financial situation than investing the money they had.

Whilst there are potential downsides with taking this approach, and we discussed all our recommendations with our clients in detail to ensure that they are comfortable with the recommended approach (together with ensuring that they understood the importance of reviewing their financial affairs regularly), on this occasion paying off these liabilities made sense.  The best advice for this particular client didn't involve putting in place a "financial product".

There is a common misconception about what we do as financial planners is sell financial products.  For our business, this isn't the case.  What we actually do is provide a professional financial planning service which may involve a financial product....but often may not.  The focus for us is always on what's right for our clients in relation to their needs...if this doesn't involve a financial product, that's fine.....if it does, that's fine too.

So, next time you look at planning for your financial future, ensure that you ask enough questions so that you understand that the professional you choose to work with is focussed on your needs, and takes into account all potential options, not just the ones which involve a recommendation of a financial product.