Crystal Clear Vision, not Crystal Balls!

Piggy Bank Home Finances Intelligence Savings Education Investment Professor


In my last blog I told you about not having crystal balls – much to the apparent amusement of some readers!

The point I was making was that Financial Advisors don’t have crystal balls. They don’t sit around predicting what the markets and property prices will do in response to global events. So what do they do? someone quipped to me. Well, here’s a quick overview, in case you were wondering too…

Everything is based around helping clients, so as you might expect, I spend much of my days and some of my evenings with clients. Many clients are business owners, so I usually go to their place of work. Those that aren’t will see me at home and few come to our offices in the countryside near Creigiau.

Only a small minority of my work is one-off assignments, the vast majority are individuals, couples and families who I typically see twice a year. When we first met they will have been asked about what they wanted to achieve in the future. Their answers will have depended on their age, but as I tend to specialise in helping people in their 40s and 50s, replies will usually be focussed on retirement, perhaps with an element of protection of assets within the family.

Financial Clarity

So, we make a plan. It’s not some vague notion, pipe dream or fantasy. It’s a financial model of the future based on reasonable expectations of how money will grow, given a healthy spread across various investments and asset types.

Some people find it odd that we talk about things like hobbies. I often ask what a client did on the weekend. If they say that they have played golf, eaten out, planned a holiday or gone shopping – I’ll ask if they aspire to do that when they retire. They quickly get the point: You have to get a mental image of the sort of lifestyle you want to live so that you can cost it out and work towards it.

With existing investments and day to day expenditure analysed, we plot some scenarios and recommend possible courses of action to achieve the goals that have been set. We have developed the Financial Clarity System that helps this process.

Age is a major factor in choosing a course of action, as it will affect how much time there is to address any gaps. Tolerance to risk is another important consideration and again can be very age-dependent. As a generalisation, younger people may take the view that as retirement is such a long way off they can be bolder in their investments, whereas a couple who are about to retirement will be focussed on “de-risking” everything. But there are many exceptions to this, too. It is my job to help, support and advise.


Why Regular Meetings?

The yearly or bi-annual meetings are all about making sure that plan is still relevant. Legislation changes – could we use that to our advantage or does it represent a problem that needs to be addressed? Family circumstances change too and those have to be factored in.  Making changes to the plan along the way gives clients peace of mind that they are still on course to achieve their goals or alerts them to actions that need to be taken.

Most of my clients know my view about the crystal ball syndrome, but I still get emails and calls every time a world event triggers market falls or jitters. What will happen next? people ask. And then I remind them about not having crystal balls. The truth is that what is important is not to be trying to predict the markets by playing the long game and having the confidence to understand that over time things usually balance out. Knee jerk reactions to short term events, on the other hand, can really leave you worrying about whether you did the right thing.

Stick with a good evenly balanced, bespoke financial plan plus a sprinkling of confidence and you’ll save yourself sleepless nights and dreams about giant crystal balls making off with pension pot, house and car in the middle of the night! Until next time – best wishes,