As the lyric goes I’ve been laid up from work my rent is due, my kids all need bran new shoes, money’s too tight to mention… Mick Hucknall soared up the charts in the 80’s with this song, and looking back, society has little changed some 20 years later. In reality, many of us are quite familiar with this …
Financial planning is a phrase that is slowly and surely beginning to permeate society at every level; TV, newspaper, radio, and even bus shelters. Financial planning can be defined as A coordinated process for identifying, planning for, and meeting goals related to financial needs for individuals, families, and small businesses.
As it applies to Joe Soap, it basically means that both he/she and their family are protected in uncertain times. How does one do this? Who should they turn to?
Can we really plan for the worst? Planning for eventualities is a part of life, and whether we like or not, sooner or later they happen. All a person can really do is make provision for these events as best they can, and get on with their life.
So what events am I talking about? I am referring to events that affect your life that can largely out of your control. These mainly affect your life, health, and the money in your pocket. This is why there is a need for qualified experienced financial advisers that can help and guide you.
The role of a financial advisor is to impart their experience & knowledge on solutions to your unique situation, which provide insurance or protection to a consumer in the event of sickness, long term illness, retirement, invalidity, and death.
The process of financial planning involves a qualified and experienced broker carrying out a “fact find”, that means the gathering of personal information (from the clients) that enables a financial advisor to identify the concerns of an individual in the event of any of the above happening and how they might best prepare for these. A good qualified financial advisor after a thorough consultation shall then recommend certain solutions suitable to their clients current and future needs.
When? And how should this be done. In theory the best way in which to do this is through an annual review. An annual review should really be just that; a standing appointment to review ones financial needs, life goals and aspirations to ensure these goals are being achieved on an annual basis.
An annual review is a complete misnomer unless it is done every year.
There are urban myths that financial advisers base advice on bigger premiums. This can be true of many services, not financial services alone, and mis-selling was a problem in the past. However, the average 21st century person is more savvy and more aware of what’s out there, so rogue sales people are easily spotted and quickly weeded out.
The regulatory framework (at least for brokers) in Ireland is so tight and the entry standards so high that only the most qualified are able to practice. Our company view is that every person offering advice in Irish Mortgage Brokers must pass the acid test of state regulation and thus every adviser is individually regulated. From a business perspective as it applies to a financial advisor, most clients are sourced from recommendation and referral so an inept advisor will have no clients, and subsequently will be shoved out of the industry.
Aside from all of this, the financial regulator is an active watchdog making sure that high and accurate standards of advice are dispensed in the appropriate manner. This is done through education, and continued professional development.
Historically in more frugal times, Irish people tend to be more insular and protect what they already have as opposed to trying to build an empire. The desire to buy property has been temporarily set aside in favour of ensuring that current living standards are maintained plus “the home” protected. How often have you heard “at least we have our health.” The biggest asset a person can have is their health which basically means they can work, earn a living and build a home for them and their kin, we accept that ‘health is wealth’ yet in many cases we don’t make adequate insurance provisions for our main wealth (our health) and we have fully comprehensive insurance on cars but not on ourselves….
As John Lennon once said ‘Life happens’ make sure you are devising some plans. Poetic yet true.
*Today’s post was brought to you by Keith Sheeran, Keith is a mortgage adviser and financial planner with over a decade of experience in the industry. You can email him at keith dot sheeran at mortgagebrokers dot ie or call him on 01 673 0418