A Guide to Financial Planning

Financial Planning can help individuals understand their current financial position and consider how their finances may support future objectives. Whether planning for retirement, saving for a significant purchase or considering how wealth may be passed on to future generations, a structured approach can help individuals make informed financial decisions. 

Personal circumstances differ from person to person. As a result, financial planning and advice should be considered in the context of an individual’s objectives, priorities and attitude to risk. This guide provides an overview of Financial Planning and some of the areas that may form part of a wider financial strategy. 

What is Financial Planning? 

Financial Planning is the ongoing process of reviewing finances and making decisions to help achieve short-term and long-term objectives. 

Financial planning and management may include a range of activities such as budgeting, saving, retirement planning, investment planning, inheritance tax planning and succession planning. The approach taken will depend on an individual’s circumstances, priorities and financial goals. 

Effective financial planning and advice can help individuals understand their options and consider how different financial decisions may affect their future plans. 

Why is Financial Planning Important? 

Financial priorities often change throughout life. Financial Planning can help individuals review their financial position and consider how their plans may need to adapt to changing circumstances. 

Life events such as purchasing a property, starting a family, changing employment, receiving an inheritance or approaching retirement can all have a significant impact on financial priorities. Financial planning and management provides a framework for assessing these changes and considering how they may affect future objectives. 

While no financial outcome can be guaranteed, a structured approach to Financial Planning may help individuals make more informed decisions and regularly review their progress towards their goals. 

Types of Financial Planning 

There are various forms of Financial Planning that may be relevant at different stages of life. 

Retirement Planning 

Retirement planning involves preparing financially for life after work. This may include reviewing pension arrangements, considering future expenditure requirements and assessing whether existing savings and investments are aligned with retirement objectives. 

Retirement planning is often reviewed over time as personal circumstances, financial goals and retirement expectations change. 

Savings Planning 

Savings planning is the process of setting money aside to help meet future financial goals or provide a financial reserve for unexpected expenses. 

Savings objectives vary between individuals and may include building an emergency fund, saving for a property purchase, funding education costs or supporting other future financial commitments. 

Inheritance Tax Planning 

Inheritance Tax planning involves considering how assets and finances may be organised when wealth is passed to future generations. 

The most appropriate approach will depend on personal circumstances, objectives and current legislation. Tax treatment depends on individual circumstances and may be subject to change in the future. 

Investment Planning 

Investment planning involves developing an investment strategy that reflects financial objectives, time horizons and attitude to risk. 

As part of financial planning and management, investment planning may play a role in helping individuals work towards longer-term financial goals. However, all investments carry risk and it is important to understand that the value of investments and any income derived from them can fall as well as rise. Investors may receive back less than they originally invested. 

Financial planning and advice can help individuals understand the characteristics, risks and potential outcomes associated with different investment approaches before making decisions. 

Financial Planning and Advice 

Financial planning and advice may be considered during significant life events or when individuals wish to review their existing financial arrangements. 

Examples may include marriage, divorce, starting a family, changing careers, receiving an inheritance or approaching retirement. During these periods, individuals may wish to review their financial position, objectives and any existing plans. 

Financial services advice can provide guidance based on an individual’s circumstances and objectives. The suitability of any recommendation will depend on a range of factors, including financial position, goals, attitude to risk and personal circumstances. 

Financial Planning is an ongoing process and financial plans may need to be reviewed periodically to reflect changes in personal circumstances, legislation, taxation and financial objectives. 

This guide is for general information only and should not be considered personal financial advice. The suitability of any financial strategy will depend on individual circumstances and objectives.