In general, most people find financial matters a little complicated. Many also forget to factor in the impact of certain life events that could affect their future plans. Let’s look at five common questions for financial advisers that people tend to ask, along with the importance of financial planning.
When can I afford to retire?
This is the number one question most people ask, and obviously, the answer will depend entirely on your personal and financial situation. So first, you’ll need to gain full clarity on your financial position, including pensions, savings, investments, assets, and debts. Then, you’ll need to consider what you want to do when you retire and any big life events that could impact your plans leading up to retirement age.
One way of achieving this level of insight is through a cash flow forecast. Your financial planner will help you calculate your present costs and future spending, reflecting your current lifestyle choices, goals, and aspirations. Our team will help you create a vision of what you want from life and a plan to help you achieve your aims. Financial planning is an ongoing process and a journey shaped by life’s intricacies.
What can I do to pay less tax?
You could also rephrase this question as “how can I keep more of my income?”. There are ways to reduce your tax liabilities, but this will depend on whether you own a business or are employed and your partner’s circumstances. For business owners, there might be tax benefits for switching your business structure from a sole trader to a limited company or by utilising specific allowances or reliefs.
It’s important to understand that everyone has to pay taxes. Although you may be able to find ways to reduce the amount of tax you have to pay, tax avoidance is illegal. So, talk to your financial planner about tax relief and any allowances which may apply to you. If one of you earns less than the Personal Tax threshold, for example, you might be able to use the Marriage Allowance to reduce a partner’s tax liabilities, and so on.
How can I reduce inheritance tax?
Inheritance tax (IHT) can be complicated; the total amount will depend on your estate value and marital situation. At the time of writing (September 2022), the IHT threshold is £325,000. So, if your estate is above this amount, it will be taxed at 40% unless you leave everything to a spouse, civil partner, charity, or community sports club. The threshold rises to £500,000 if your home is gifted to your children.
Estate planning reduces the amount of inheritance tax (IHT) your family will have to pay after you pass away. For example, you could leave 10% of the net value of your estate to a charity (reducing the IHT to 36%) or use Trusts, certain types of Business Relief, or gift money. Your financial planner will review your estate and advise on suitable ways, along with writing a Will, so the right people inherit your estate.
How do you choose a financial adviser?
The Financial Conduct Authority has a list of registered financial professionals called the Financial Services Register. Always check this to ensure you are talking to a reputable adviser or planner. Explore the financial planning tools, products, and processes they offer to see if they are the right fit for your needs. Never feel pushed into making a decision or an aggressive scheme by an adviser unless you are happy.
You may find a more holistic approach to organising your money and planning for your future is more suitable. Financial planning looks at your lifestyle, aims, and aspirations to determine a set of realistic possibilities based on real calculations. It also considers big life events, market volatility, and political and economic uncertainties. This gives you complete control over the choices you make and the actions you take.
What are the consequences of not getting financial advice?
If you have a mix of old pensions, various savings, and investments, you could miss out on opportunities to make your money more tax efficient. If you lack a diverse investment strategy, you may not be reaping a good return on your portfolio. If you haven’t considered your lifestyle and future goals, then your money might not match your aspirations. If a big life event occurs, you may not be prepared.
Financial planners are fully trained and qualified to ask key questions to help you make big decisions about your money and your life. Not only will they help you protect and make the most of what you have earned, but they will also ensure your family benefits from your estate too. A financial plan is a blueprint for living your life securely.
Our financial planning team will provide clarity and tax-efficient solutions to help you make the most of your hard-earned money. We tailor Our fixed fees to your individual situation. In addition, we will discuss where you are now and where you would like to be in the future.
Would you like a financial planning review? Then, get in touch to speak to our financial planners.