Adviser fact-finding: No-one expects the Spanish Inquisition!
Financial planning is a professional advice service which helps you organise your financial affairs so
that you can achieve your personal and financial objectives, many of which revolve around ensuring
a happy and prosperous retirement.
Planning for retirement has always been complex, but the
pension reforms introduced in April 2015 brought even
more choice to pension savers, and thus introduced even
more complexity to decision-making at retirement. Instead
of being a single event, your retirement is now much more
likely to be a series of episodes, with different income and
investment strategies for each phase of this new stage of
your life.
Complexity can be a bad thing: people hide their heads
in the sand, or fear of making the wrong decision results
in inertia. But when it comes to retirement planning you
now have more opportunity than ever to tailor financial
arrangements to suit your individual personal and
financial requirements.
When you engage a financial planner to help you make these
decisions, you will be taken through the financial planning
process. An early stage in this process is fact-finding. If
you’ve not visited a financial planner before you may be
surprised by the number and the nature of the questions
they will ask in this data-gathering, or discovery, process.
Just like Monty Python’s characterisation of the Spanish
Inquisition you may feel that the chief weapon of the
financial planner is surprise and fear. But if you don’t
understand why your planner is asking so many questions
you may feel that this exercise is intrusive, resent the time it
takes and then not engage fully with the process.
This in turn will make it difficult for your financial planner
to create a successful plan for you to achieve your goals
and aspirations.
So we thought it would be helpful to explain why your
planner asks so many questions. We know that the clearer
the vision you can set out of the life that you want to lead
in retirement, the more tailored your financial plan for your
retirement can be.
So what is fact-finding?
At its simplest, planners must collect enough information
to be able to give you suitable advice. However, for many
financial planners it means knowing enough about you
and your finances to help you work out if you have enough
money to live the life you want to lead (and what to do if you
haven’t).
Many planners send a checklist before your first
appointment to help you prepare for the meeting. Some
clients are well organised and have folders, lists and
spreadsheets. Others are not, and find it hard to even think
about money, let alone be organised. Don’t panic! Your
planner has seen everything and nothing will surprise them.
Most fact-finds start with basic information about you, your
family, where you live, your health and any dependants that
you may have.
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Adviser fact-finding: No-one expects the Spanish Inquisition!
Health and lifestyle
At retirement, the state of your health is key – you may feel
fit and well now, but tell your planner about any illnesses,
medication or treatments you may have had, now or in the
past. However well you feel now, a previous diagnosis, high
cholesterol, smoking, being overweight or blood pressure
treatments could mean a significant improvement in your
pension income!
Dependants
Increasingly those in retirement find themselves
looking after elderly relatives as well as younger family
members. Tell your planner about their ages and financial
circumstances, and whether you would like plans to be
made to preserve their financial security as well as your
own. For example, will you need extra income to help with
education or care costs, or capital to provide for property
deposits or weddings?
Income and expenditure
Work out what income you may need in retirement and
whether you need to provide any income for a surviving
beneficiary. Remember that the way you spend your money
will be different in retirement, with less spent on commuting
and work clothes, maybe offset by holiday travel and
club memberships.
You may wish to provide different levels of income for
different phases of retirement. Pension income may top up
part-time earnings, or be a temporary measure until a more
substantial employer pension scheme comes into payment.
Finally, don’t decide before you meet your financial planner
that your dreams are unaffordable. If the numbers really
don’t work out and it really is impossible to meet your
objectives, your planner will come up with a strategy to
help you make additional provision, or to prioritise your
goals differently.
Assets
Provide as much information as you can about bank
accounts, savings, ISAs, shares and property, although with
your authority your planner will be able to approach the
providers to get all the information needed to advise you.
Tell your planner if there are certain assets, such as inherited
property, that you do not want to sell, and what savings you
are prepared to commit to meeting your goals.
Liabilities
Many people go into retirement with outstanding debts.
Interest on loans and credit cards is a big drain on
anyone’s income, and your planner can help you with debt
repayment strategies.
Policies
Life insurance and endowment policies, income
replacement, critical illness and medical insurance may
expire on or near retirement. Your planner will assess these
products and recommend whether they could be replaced
with alternatives more suited to retirement needs, long-term
care provision and estate planning for example.
Pensions
Early income may need to be higher in a more active phase
of retirement, reduce as you take a more passive lifestyle,
and then increase again if you need domestic help as
you age.
Provide as much information as you can about current
employer schemes and any preserved benefits. Annual
statements are useful, but with your authority your planner
will get full projections of your retirement income.
How much ‘core income’ will you need as a minimum? How
much ‘lifestyle income’ would you like, which is not essential
and does not need to be guaranteed? Be realistic and be
honest. The starting point should always be the life you want
to lead.
Existing pension schemes and your state pension
entitlement will form an important part of your retirement
plan. Many people are surprised by the values, especially
if they left work some years ago, so don’t ignore them,
however small you think the amounts might be.
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Adviser fact-finding: No-one expects the Spanish Inquisition!
Wills and lasting powers of attorney
Talk to your planner about how you would like your assets to
be distributed after your death, especially if you have family
from more than one marriage. There are several simple
strategies for making sure your assets pass on to the next
generations in keeping with your wishes. And ensure you
make plans for your health and welfare provision, as well
as your property and affairs by putting lasting powers of
attorney in place.
Risk profiling
You will be asked about your ‘attitude to risk’, and you may
be asked to complete a separate questionnaire. Your adviser
may also discuss your ‘capacity for loss’ which will explore
how much capital or income you could afford to lose and still
meet your goals.
Financial planners and clients often have different
definitions of risk. Don’t be embarrassed to ask if you don’t
understand the question and give honest answers, not ones
you think your planner wants to hear! It’s your money so
you should be confident understanding the risks you are
taking on.
Remember that you can combine many different types of
investments in many ways, often under one (usually online)
administrative umbrella, or platform. So if you want some
guaranteed income, some inflation-proofed, occasional
withdrawals depending on how your investments have
performed, with some of your capital secure and the
remainder exposed to the potential for continued market
growth, then this can be arranged!
Values
Your planner will ask if you want your assets to be invested
in ethically screened or socially responsible investments.
However, there is a different discussion about your views on,
for example, the right balance between enjoying money now,
preserving and investing it for future security, leaving it to
family members, or using it to make a long-term difference in
some way.
Ask your planner about the values which influence the way in
which they run their business and how they advise you. The
planner-client relationship works best when these values are
both understood and aligned.
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Adviser fact-finding: No-one expects the Spanish Inquisition!
It may help to think of the fact-finding process
like painting a picture. Describing the life you
want to lead could be very detailed, or may be
clear in the foreground and more vague in the
background. However, making an effective plan
is about ensuring you have the income and
capital to meet your requirements now, but
with an element of flexibility in the planning
to deal with longer term goals and changes
in your circumstances as time goes by.
Once your financial planner has all the information they
need they will move on to the next stages of the financial
planning process and evaluate your financial position,
before moving on to develop and present your personal
financial plan.
We hope that you now have a clearer understanding of how
much easier it is to develop an accurate and meaningful
financial plan when your financial planner is fully aware
of your personal and financial circumstances, your values
and goals.
Finally, we trust this guide helps you to feel that fact-finding
is no Spanish Inquisition, but a vital part of helping you
achieve your personal, financial and lifestyle objectives and
enjoy your retirement, living the life you want to lead.
Find out more
The first meeting also gives you the opportunity
to discover more about your financial planner!
Follow this link for a guide to the sort of
questions you might want to ask:
financialplanning.org.uk/
wayfinder/planner-questions
If you would like more information and
resources to help you prepare to meet your
financial planner click here:
financialplanning.org.uk/
wayfinder/tips-tools
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