"Keep It Simple, Stupid!"
"HatTip" is written by Nick Lincoln, IFA
The financial planning profession can sometimes be a daunting, confusing place. Trust me on this: I'm frequently daunted and confused - and I'm supposed to know what I'm doing.
Large numbers; wacky and seemingly contradictory legislation about what you can and cannot save; endless tax consequences of doing "this" over "that" etc.
And lengthy meetings with your adviser, involving flashy presentations, graphs and economic prognostications, may initially make you feel informed. But - be honest - after a while it all washes over you. Right?
Similarly, tome-like financial planning reports may look nice in their leather wallets. But no-one is going to read them, let alone understand them.
Personal finance often seems to deliberately set itself in the face of da Vinci's maxim: let's make it as complicated as possible - that's real sophistication!
Enough already! It's time to "cut the crap", to quote The Great Bard.
“If you can’t explain it simply, you don’t understand it well enough.”
What people want (nay, ache for) in financial planning is simplicity. More than that - it's what they need.
So let's give start giving people what they need. And I think people need a financial plan that:
- fits on one side of A4;
- states the key goal to be achieved (e.g. "financial independence at age 54");
- contains no more than five or six goal-focused strategies (not tactics) - see below;
- is in plain English.
A One Page Financial Plan, as seen yesterday.
The One Page Financial Plan is:
- easily pinned on your kitchen cork board thingy (I know you have one - we all do: it's mandatory in 2018);
- always in view;
- easy to comprehend;
- actionable.
Strategy v Tactics
Strategies are broad brush means to achieve a goal, such as "invest £30,000 per annum for the next 15 years."
Tactics are specific means to implement the strategy e.g. "Invest in XYZ ISAs with ABC fund managers" could be one of many tactics to effect the above strategy.
In this analogy, tactics are the financial product recommendations that your adviser will subsequently document in a near-impenetrable advice letter, together with a small rainforest of EPDs (Essentially Pointless Documents).
Tactics should never, ever, be on a one-page financial plan! And the financial plan comes before everything else.
I've started using handwritten one page financial plans with new clients: it has been very well received. It gives you clarity and cuts through the crap. And that, in financial services at least, is simple joy - understandably!
If your financial adviser cannot give you a simple financial plan, how well does your financial adviser understand you?
{The above is not specific financial advice aligned to your unique circumstances and requirements. If you act on this article without first reading your own body weight in Key Features Documents, personal illustrations and fund fact-sheets then you may well be struck down by lightning.}
© 2018 Nick Lincoln
