By ROBIN POWELL
There is often a vast gulf between what people think financial advice is all about and what it actually is. The popular view that advice is solely focused on picking good investments is akin to the view of a GP as someone whose role is purely to prescribe pills.
So TEBI has decided to run a new series on the many and often surprising reasons you might seek the counsel of a professional planner. So we’ve come up with a list of ten, and although it certainly isn’t exhaustive, it’s a helpful starting point. Here, then, is the first reason.
Reason #1: Your life is undergoing a fundamental change
If you’ve lived long enough, you will have learnt that life is not a straight road. We start off on one path and then something happens. It might be a seemingly incremental occurrence – we meet someone, we stumble on an idea, we lose someone or something. But things change.
Initially, we think we can absorb that change with little adjustment. But sooner or later we realise this is going to take a complete alteration in our course. Suddenly, we find our priorities are reordering themselves and what we used to value little or not at all is now our number one concern. Something has fundamentally altered.
Now, the nature of fundamental change is that it rarely impinges on just one area. A change of career might mean having to take a cut in pay. A second marriage might require a larger home to accommodate all the children. An illness might force an extended sabbatical from paid work. A decision to quit a dead-end job might necessitate a return to tertiary education. And, of course, retirement can be the biggest transition of them all.
Sometimes, even a transition that appears to be an unequivocal step up, like a move to a higher paying job, can go awry because we discover belatedly that we have struck the wrong balance between financial and other considerations.
The point is that the material considerations of our lives are inevitably bound up with the emotional, the physical, the intellectual and the spiritual. Even a philosophical realignment could lead us to reassess our assets and liabilities. Everything is bound together and it is hard to manage change successfully without a holistic approach that provides structure.
This shouldn’t really be surprising, given the connectedness of everything, but it is astounding how many people think they can ring-fence one corner of their lives from a fundamental change elsewhere and think everything can go on as normal.
The virtue of structure
Providing that structure amid all the random connections and collateral impact of change is what financial planners do. Few of us can live inside the turmoil of life’s turning points, all the while successfully managing short-term change and keeping focused on long-term goals.
We need someone to help us clarify where we are, how we got here, where we want to go and how we are going to get there. We can’t fall back on old ways of thinking, because we’re finding ourselves in a completely new landscape. Put another way, we’re in the middle of a complex gear change and we need someone to look at what might be coming over the hill.
Anyone who has been through a fundamental life change knows there are a LOT of moving parts. There are existing obligations and other people to consider. But there are also new commitments and goals that can clash with those established ones.
Yes, the financial challenges are really just one of the most visible manifestations of that turmoil. But, oddly, people often find by acquiring a clear grasp of the material issues involved with change and an understanding of their options, the emotional side gets easier to deal with.
A divorce, for instance, is always wrenching, particularly when there are children involved. And if there is a new relationship, with another set of children, the considerations multiply. An overwhelming emotional crisis coincides with a financial one.
Providing headspace
While a financial planner is not a psychological counsellor, they can help clear some headspace for you to deal with the mental transition by making the physical and financial transition easier and by providing the plan and structure for you to achieve it.
Changing careers is not as stressful as a divorce, but nevertheless can be hugely challenging. Old cosy certainties give way to questions about where you fit and what your value is. You may love the change, but it might come at the cost of a significant downward shift in compensation.
Again, the emotional is tied up with the financial. But it’s only by getting those underlying material structures adjusted, that you can find the space for the non-material side of change.
Change is one of the few certainties in life. None of us can avoid it. But we can make these transition points easier with the help of someone who is not on the rollercoaster with us, and who can see what’s awaiting after the ride, to help us through it.
ROBIN POWELL is the founding editor of The Evidence-Based Investor. He works as a journalist and consultant specialising in finance and investing, and as a campaigner for a fairer, more transparent asset management industry. He is the founder of Ember Television and Regis Media, and is Head of Client Education for RockWealth and Evidence-Based Advisers.
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