Zooming towards a plan

I had some Zoom calls with clients this week about personal financial planning.

I’m joined at the meetings by an Independent Financial Advisor (IFA). He’s the expert and runs the meetings and I observe and occasionally chip in if the conversation strays into my realm of a client’s business interests or tax matters.

My IFA buddy and I have been doing these meetings together for a few years now. What strikes me is that surprisingly few people plan their finances and align the management of these with the their personal life goals.

Stuff just tends to happen. 

We have various jobs and accumulate several pensions. Maybe we invest in a buy to let property because it seemed like a good opportunity at the time or we inherited mum and dad’s house and decided to let it out. We have a few ISAs and maybe some premium bonds. We were made redundant from our last job and started the consulting business. We still have a hefty mortgage on the family home. 

And we don’t have a plan.

This is a typical scenario for a reasonably ‘successful’ person in their 50s. They have a patchwork of assets, active and potential income streams but they are not joined together into a coherent strategy.

Often its at this stage that people will start to think they need a plan. 

Maybe they’d like to retire and they don’t know if they can afford it. Maybe they want to help the kids out now and leave them a reasonable inheritance. Maybe they just want to travel the world and enjoy life when they still can.

This is where a good IFA can really add value by pulling all the strands together and helping to construct a plan. I’ve seen cases where an advisor has been able to present options which individuals had not considered or thought would be unrealistic. 

In short, a good plan can be transformational. It can bring clarity, open up new horizons and turn possibilities into realities.

Not everyone is ready to commit to a plan of course and many people will leave our meetings still undecided and will carry on as before. 

An exploratory meeting can be a great way of unblocking the inertia. An external expert looking at your situation and putting forward some options you may not have considered can be a catalyst for change.

That change, in the context of a plan which can then be implemented, can be the difference between muddling through and living life as you really want to.

www.base52.co.uk

Knowing when to call it a day

Some do it early.

‘I’ve sold my business’, your business pal blurts out over an early morning coffee. ‘What?’ You didn’t even know they were contemplating selling up, let alone having the deal all done. Signed, sealed and delivered. How did that happen?

Your pal is in their early fifties. This is something that they have been thinking about for a long time apparently. The proceeds from the sale will give them a comfortable retirement. After a short ‘Earn out’ period where they work in the business to hand over to the new owners they will leave, hopefully to enjoy the rest of their lives.

The chat leaves you a bit unsettled. You don’t have a plan. You’re a business owner like your friend and a few years older. From time to time, usually when going through a difficult period at work, you think about slowing down and doing less. Then things pick up again, you get stuck in and the cycle continues. You need the money. You have your old employment pension which will start to pay out soon but there’s still the mortgage to pay off and savings are minimal.

So it feels like carrying on is the only option.

Some entrepreneurs do that. Literally keep going until they drop or ill health forces retirement upon them. The smarter ones have at least put some plans and an infrastructure in place so that the business can continue without them.

There is a saying that a business owner should start to think about their exit on the day that they start.

Essentially an orderly exit breaks down to a few choices:

• Business sale with the owner leaving immediately or after a period of time
• Partial sale or merger with the owner retaining a stake in the business and some ongoing involvement and income
• Retaining full ownership but with gradual handover to a new management team

Exiting well takes time to plan and implement. Those plans may change over time as the owner’s circumstances and aspirations change. 

We may not all be as organised and decisive as our fifty-something retiree at the start of this blog. But a little thought and planning in advance might help us get closer to the retirement we want.

www.base52.co.uk

It ain't over 'til it's over

Turning 60 this week was something of a milestone. 

I had a nice relaxing day off work and England rounded things off by beating Colombia on penalties. Not that I could watch the finale, I had to walk around the block and learn the result when I got back. A good ending.

It does make you focus on your mortality. I'm set to draw two occupational pensions this year. So if I had stayed employed that would be it. I could hang up my boots (metaphorically speaking) and like Marlon Brando in the Godfather tend my vegetables and play with my grandchildren. Marlon did become a nicer version of himself in his old age (It's not hard to improve on murder and corruption) but he came to a sticky end in his pepper patch. Although I love my grandchildren, that's not overly appealing.

One of the plusses about running your own business is that you have choices.You can sell up and retire. You can carry on with 50 or 60 hour weeks and hope you keep your health and energy levels. Or you can keep going but change how you work and what you do. Maybe do less of everything but more of the things that you like and are good at. This last option appeals to me most.

My favourite quote about retirement comes from an unlikely source. Ex US President, Richard Nixon may not be everyone's idea of a role model. Sure, he had his faults but a strong work ethic and sense of duty (occasionally flawed) were part of his make up. His view on retirement was, 'To me, the unhappiest people in the world are those in the watering places, the international watering places like..uhhh..the south coast of France and Newport and Palm Springs and Palm Beach; going to parties every night, playing golf every afternoon, then bridge. Drinking too much, talking too much, thinking too little. Retired. No purpose.' The Palm Springs set may disagree. Pottering about in the sun sounds fun but I think the novelty would soon wear thin. So I'm with Richard on this

Then there is Stephen Hawking who says, 'Work gives you meaning and purpose and life is empty without it'. People find meaning and purpose in different things. To Stephen it was understanding the universe. Most of us have more modest ambitions. For me, being 60 changes very little. I still find purpose, great enjoyment and satisfaction in running a business. If that changes I may try something else but for now its business, more or less, as usual...

www.base52.co.uk