Wealth Management

The hardest and easiest question a financial planner is asked

Jonathan Scholes
19 January 2023
4 min read

20 January 2023

Whenever I tell someone I’m a financial planner, one the of the first questions I get asked is “what can you do for me that I can’t do for myself?”. While I could launch into a list of credentials or share anecdotes that highlight my financial planning experience, I have found over the years that this information does not resonate well, especially when causally speaking with friends over a beer around the barbecue.

What I have come to realise is that the question they really want to ask is, “will I be ok?”. This lends itself to one of the first questions I always like to ask, "can you tell me what ok looks like?”. While this is very much a loaded question, since most people don't have a great idea of what their future looks like, what it does is get people thinking about their priorities, whether it’s when they want to retire or the type of lifestyle they want to pursue.

So, what does ok look like?

Findex’s recent Managing Wealth report on how Australians across generations are spending and investing asked survey participants how much money they will need in retirement to fund their living needs.

While the results were somewhat different depending upon the age of the respondent, in most cases between 15% and 20% of respondents indicated they would need a balance of $1 million. This magic million-dollar number is often banded around as being a goal and I think it is a fantastic goal to have. However, whether it's enough to retire on is completely dependent upon your total financial situation, and even more so on what kind of lifestyle you have had during your working life, and indeed what kind of lifestyle you want to have in the retirement stage of your life.

What I can do for you that you can’t do for yourself

So, back to the original question, “what can I do for you that you can't do for yourself?”. As part of the financial planning process, we spend a significant portion of our time together, both initially and on an ongoing basis working through what we internally call cash flow modelling. Essentially, this is your financial life on a page.

Once we have an idea of your current position, your financial goals, and your appetite for risk, we can build this model that will show you how you are tracking, where your shortfalls are and help you understand what you need to do to achieve your goals.

Generally, we end up with a one-page output which many clients hold onto for quite some time, in some cases, many years. It took me much longer than I care to admit to realise why this one pager matters to clients so much. Years of experience has taught me that it is about how it makes them feel.

While we hope that our clients always feel happy and in control, for many it can be an awakening to the fact that things need to change - be it your goals, your living needs or perhaps how hard and how long you're going to work for.

The purpose of this cash flow modelling is not to scare you. The purpose is to provide you with clarity into your financial position on a level of detail that can't be achieved using an online tool, or a notepad and a pencil.

Yes, in many cases the value of this is intangible, however when 50% of all our survey respondents say that wanting peace of mind, and consulting someone with greater knowledge is most important to them, the intangible very quickly becomes the greatest value that a financial planner can give to their clients.

If you’re curious about what your financial future looks like and are interested in speaking with a financial planner from our Wealth Management team, get in touch with us today.

For more insights on how Australians across generations are spending and investing, read Findex’s Managing Wealth report.

Author: Jonathan Scholes | Head of Client - Wealth