To help you make sensible decisions about the future, we’ve broken down the financial planning process into five stages. They are:
- Establishing your goals
- Gathering data
- Evaluating your current position
- Developing and implementing a plan
- Monitoring and reviewing that plan regularly
This article looks closely at step two – accurate factfinding, which forms the foundations of any sound financial plan.
In order to construct a robust and meaningful financial plan, it is essential to have all the building blocks in place.
The problems with discussing data
You’ve probably heard the phrase ‘rubbish in, rubbish out,’ or a variation of it and it is absolutely true in the context of financial planning. Any plan would be meaningless if it were based on information that was factually inaccurate or if details were missing entirely.
This data gathering part of the process is known as factfinding. In years gone by, it would involve going through a very lengthy set of questions with your adviser to build up a profile of your current situation. This was fraught with problems – it was longwinded, uncomfortable, as the information was rarely to hand and where details were provided, they would often be estimates from memory, rather than facts.
At Belmayne, we prefer to spend time with clients discussing your needs and objectives. We focus on how we might meet them, rather than simply noting down facts on a piece of A4. Afterall, the value of advice is in helping you achieve your goals, not creating notes of existing circumstances, no matter how detailed.
Information sharing
In recent years, technology has begun to offer solutions to many of the problems in data gathering. For example, the creation of secure, online client portals has given us a way to interact with you before we meet, to ensure all the essential information is to hand. This means we can spend our time together reflecting on this data and begin to formulate a plan.
Often the most challenging part of the factfinding process, even allowing for shared web areas, is creating an accurate income and expenditure profile. It is extremely difficult to account for every pound in your pocket and details are often overlooked, such as prescription costs, pet insurance, opticians’ fees, etc. The odd coffee or lunchtime sandwich is rarely considered, although it can add up to a significant amount over the course of a year.
Again, technology is coming to the rescue. Open banking means it is possible for you to share transaction data with us from your bill paying accounts, providing the most accurate information, upon which we can base a solid financial plan. Engagement with such software has been low to this point, given obvious concerns about security and frequent banking fraud horror stories. However, I’m hopeful that as online security improves through two-factor authentication and fingerprint recognition, more clients will feel they can have a deeper relationship with their adviser by utilising this functionality.
In the next article in this series, we will explain how the information we gather helps us evaluate your position. If you would like to learn more about the factfinding process, don’t hesitate to contact us on (01246) 298181 or email: enquiries@belmayne-ifa.com
