Your Life Plan
GWM’s Life Planning process is designed to give you a clear picture of your financial future.
Each plan is completely bespoke for the client in question and helps us and the client make informed decisions.
The value of having a Life Plan
A Life Plan can give a target for income and become a great motivator. It can also serve to show that there are already enough assets and income to satisfy your financial objectives, thus allowing all concerned to ‘ring-fence’ those assets/income so that you have peace of mind that your financial objectives are achievable and sustainable. Capital and income above this level can then be used differently for non-essential expenditure.
Starting your Life Plan
All planning relies on present facts together with assumptions about the future, matched against goals and aspirations. The Life Plan starts with a base plan, which helps ensure that normal living standards are sustainable. We then move on to the goals and aspirations, which could range from retirement, funding house purchase for children, buying a new car, and equally they could be positive cash flows such as sale of a business, downsizing property to release equity and so on. We call these items Events and they are crucial. They give the shape and direction to your Life Plan. At its simplest level, a LifePlan projects forwards all income and all expenditure, and will show whether you will run out of money. By building in Events, whether they are goals or inevitable circumstances, the Life Plan becomes personal and valuable, both as a planning device and a map to keep you on track.
Testing ‘what ifs’
One significant benefit of this process is the ability to build in ‘what if’ scenarios. This helps our clients assess options and identify opportunities such as whether retirement 5 years early is viable, whether they actually need to downsize property, and also to model the potential consequences of long-term care or the impact of a critical illness. The plan also lets us model different rates of investment return, different price escalations and also to model for the impact of a stock market crash. Sustainability can be achieved by balancing costs/outgoings, assets, specific financial goals, investment returns and tax planning.
Key elements of your Life Plan
The starting point is to capture the current situation – incomes, expenditures, assets and liabilities – in detail, together with the key milestones and Events. The following is not an exhaustive list but an indication.
- Income – salary, bonus, Director’s loan drawings
- Benefits in kind, share schemes
- Other income
- Pensions in payment
- Anticipated inheritances
- Amounts regularly set aside.
- Cash balances on deposit
- Equity based investments, by type – direct shares, EIS, ISA OEIC
- Assets held as investments – fine wine, property, art work
- Bonds, gilts
- National Savings, Premium Bonds
- Personal Pension plans
- Company pension plans.
- Your home
- Other property
- Personal possessions – jewellery, furniture etc
- Credit card balances
- Business financing/overdrafts/loans
- All life, health and critical illness plans
- Endowment policies
- Policies effected for Inheritance Tax purposes
All the above items are ones that we would obtain detailed information on as a matter of course in our advice process.
Your commitment to the Life Plan would be to provide input on the following items.
- Basic expenses
- Household, utilities, food, cleaning
- Council tax
- Buildings and contents insurances
- Travel and leisure costs
- Subscriptions and memberships
- Luxury expenses
- Milestone expenses, such as major gifts to be made,
- Basic expenses
We have attached a typical list of items that should be considered as an aide memoire.
In addition, we would need to include the following factors:
- Planned changes in expenditure
- Target dates for retirement
- Any Event information
The above will form the basis of the Base Plan and include what we can call ‘standard objectives’. Once that is established and agreed, we can work on ‘what if’ scenarios and create real value to this LifePlanning process.
The goals and specific events that can be planned for through ‘what if’ scenarios are things such as:
- Moving home – up- or down-sizing
- Funding a deposit for children’s house purchase
- School fees
- University costs – fees, accommodation, livings costs, transport
- Selling or buying a business
- Car or boat purchase