Can a Financial Plan change your life?

5th May 2016

One subject has been dominating enquiries recently, both from existing clients and potential clients, and that is pensions.  New pension rules were announced in April 2015; some of the rules came into force immediately and others took effect from 6th April 2016.

These new rules have massive implications for both personal pension plans and final salary pension plans and the issues are both complex and complicated.

Typically our clients are hard-working people, who have enjoyed successful careers.  They have behaved responsibly and “done the right thing”, paying their taxes and saving regularly, which has allowed them to create a degree of financial security for their family.  While they do not consider themselves to be “rich”, it is fair to say that they have built up above average pensions – either in the form of personal pension funds or in entitlement to a final salary pension.

One such client was quite upset when he came to us, because he thought that he would be hit hard by the reduction in the Lifetime Allowance.  He felt betrayed by what he perceived to be a decision by the government to apply a retrospective tax to his long-term savings and wanted to understand whether there was any action that could be taken to mitigate the impact of the changes.

When faced with a situation like this it is important to be aware that there are likely to be a number of options available.  In order to identify the most appropriate course of action you have to consider the bigger picture because any financial decision should be taken in the context of your wider goals and objectives.   Therefore rather than just focussing on the pension issue we took our client and his wife through our comprehensive Financial Planning process, which included creating their own Lifetime Cashflow Model, in order to explore how close they were to achieving financial independence.

As a result we were able to demonstrate to our clients they could stop work right away, even though they were still 5 years short of their normal retirement date, if they wanted to do so.  As you might imagine this news, while very welcome, was a bit of a bombshell to them both and has taken a little while to sink in.

While we cannot promise that everybody that we work with will be able to stop work straight away, we do know that we have helped many of our clients to move from a place of anxiety, frustration and uncertainty to one where they feel in control of their destiny and have the knowledge and confidence that they can do the things that they want to do without having to worry about running out of money.