Typically, in the western world, when people get paid more they spend more. They buy a bigger house, they buy a bigger car, they take more frequent and more costly holidays. The maintenance goes up, their expenses are higher and they feel no better off. And there’s little left over for topping up the retirement pot.
What’s the role of the adviser in this?
In the age of consumer duty, it is easy to think it is all about ‘outcomes’, achieving the highest return at the lowest cost. But is it? Aren’t advisers more about helping the client work out what they need and want to make them happy and building a plan to get there?
And part of that is having a conversation about what enough looks like, which is complicated.
Agreeing a vision of the future – how long the client will want to work for, what their retirement will look like, what they want to leave for their children – often requires some discussion or even debate.
Financial planners are now having this conversation in an environment in which worries about the present are frequently overshadowing hopes for the future, so this is a critical component of value-add.
For the adviser, it is about helping your clients to think about what is enough for them, what they need to feel secure and contented, and then helping them to achieve that at a level of risk they are comfortable with, so they do not take on more risk than they need to.
It is about making sure they use the tax benefits that are available to them, that they have got the insurance they need, that they have sorted out their pension, that they have the pieces of the puzzle in place that will deliver them to where they want to be.
And it is about making use of technology to help them understand whether they are on track towards that future or think about what they might need to do differently.
‘Enough’ is a state of mind, and financial planning grounded in strong client relationships and effective use of technology can help more people to get there.
Ben Goss is chief executive of Dynamic Planner
