Good financial planning is about doing the small things consistently over time, a private wealth adviser has outlined while touting the benefits of good financial advice.
In conversation with nestegg, Stanford Brown’s Kirsten Lynn has shared the most common mistake she sees people make when it comes to their money – making short-term ad hoc decisions about their finances without having articulated the overall goals and strategy.
This would not necessarily be an issue, except for the fact that one of her most commonly received questions from clients is, “Am I on track? Will I have enough?”
This is when it’s important to go back to your objectives, she considered.
This requires reflection of “both what they want to achieve for themselves and what they want to leave as a legacy for children or other family members.”
One of the under-appreciated benefits of working with a financial adviser, according to Ms Lynn, is “working together to understand and articulate their objectives”.
With that in mind, Ms Lynn said her response to her clients would be to discuss how much the individual or couple wants to keep spending and how this will impact on capital.
This is where financial projections can come in handy. “I often use simple financial projections to show the impact of different spending levels to illustrate the trade-offs,” she flagged.
But while capital can be a big issue, “financial advice is not always just about achieving the optimal financial outcome when there are people involved”.
She recommends seeking out a professional “who will work with you to understand what you are looking to achieve, explain the trade-offs and assist you to make an informed decision”.
“The family dynamics and non-financial objectives matter,” the wealth adviser added.
“Another benefit that people may not realise is the peace of mind of having a trusted adviser who understands and coordinates your financial world and can assist you and your loved ones if anything happens to you,” she continued.
This is especially important in the area of intergenerational wealth transfer, where Ms Lyn said “it’s common to find someone has significant wealth and complex structures but has not updated their will or considered how control of that wealth will be transitioned to the next generation”.
“There is an important role for financial advisers, accountants and estate planners to work together in this area,” she said.
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Article reproduced from Nest Egg by Grace Ormsby