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If you didn't think your money needed a purpose, you're not alone. But the fact is, it's crucial. Here's where a wealth planner comes in. “What we're always trying to do is encourage people to take a step back and ask 'What is the actual purpose of this wealth?'" explains Nick Ritchie, senior director, Wealth Planning at RBC Wealth Management in the British Isles.

“The advice wealth planners give clients can be very different depending on what that client's plans are, what their intended journey is and where they are on that journey," adds Ritchie.

Let's break down how a wealth planner can help you define and realise your personal and financial ambitions.

What does a wealth planner do?

You might think a wealth planner's role is about managing investments and reporting returns, but that is more the role of an investment manager. Wealth planning takes a broader view. A wealth planner will ask a lot of questions to find out who you really are and what matters to you, and base their bespoke advice on what they discover.

“There's no point talking about investments before you've got the wealth plan right," says Dean Moore, head and managing director, Wealth Planning at RBC Wealth Management in the British Isles. “Imagine you were buying a car – how many doors do you need? Where is it going to go? The investment part is really putting fuel in the engine to get you there. But first you need to know the destination."

For instance, say you're a serial entrepreneur in your 50s and have sold a few businesses in the past, you probably have different priorities from someone younger who has shares in a company and "wealth on paper" but has yet to release that money from their enterprises. While they might be thinking about growing their wealth, you might be focused on protecting what you have, investing it wisely and making it last. The conversation with your advisor might revolve around "How much is enough?" and "How can I live well on this money while also passing it on to the next generation?"

In order to create your personal wealth plan, your financial advisor will collect both "hard facts" and "soft facts" about you. That means financial information gathering, but also exploring your values, what's important to you and what you want to achieve with your wealth. For example, will you spend all your wealth? Will you gift some? Do you want to leave a legacy? Explore philanthropy? They will ask about your family, career, lifestyle and property to build a picture of your life and priorities. Sometimes this comes as a surprise to people, says Ritchie, who explains this holistic approach is “such a crucial part of us being able to give good advice," because these are the things most likely to drive your financial decision-making.

A wealth planner can then use this information to create a cash flow model that maps your assets to desired outcomes, giving you the answers to big questions such as:

  • How much is enough to retire?
  • How do I secure financial support for my family for when I'm no longer around?
  • How can I protect my family wealth for successive generations?
  • How much should I gift – and when and how?
  • Would a move abroad make sense?

"If you don't understand what you're trying to achieve – for example, you haven't thought about the level of retirement income you require or the value of the legacy you want to pass on – you're stumbling around in the dark a little bit. You might complete a risk questionnaire that says you're a medium-risk investor, but what does that mean in terms of estimated investment returns? It's not related to a plan or a goal, and that's where cash flow modelling can really help in bringing the numbers to life," says Moore.

Wealth planners can then make specific recommendations and revisit them every year as your life changes. "Depending on what stage you're at in life, you might reach certain milestones where significant lump sums are required, such as paying for school fees or a wedding, putting down a deposit on a house or buying a second home." A wealth planner can build a timeline and then look at the assets and income you have to support that journey, explains Moore.

Adjusting for changes in inflation, interest rates and actual (versus estimated) investment returns, wealth planners can help deliver income and capital when you need it, minimise your tax burden, and preserve and grow your wealth so you can pass it on simply and efficiently.

A wealth planner can also help you in ways you might not have thought of. Typically, they will have experience in investment structuring, trust and estate planning, pensions and retirement, and business and family protection. Taking a holistic approach to your finances means that, where they identify gaps in your wealth plan, they can connect you with other professionals in their network, such as a solicitor to draw up your will, or an accountant or a tax advisor when you are selling a business.

By helping you navigate opportunities, changes and challenges as they happen, wealth planners and their extensive networks can give your aspirations the best chance of success. Here are a couple of examples of how wealth planners can provide value.

Case study: Corporate professional

Hassan is 45 and a chief commercial officer at a FTSE 100 company. He earns £1m a year but has only recently started earning at this level following a couple of promotions. He has regular financial commitments that are a significant drain on his family finances. These include a large mortgage on his townhouse in Fulham, two high-end cars, four children in private school and a lifestyle that includes regular long-haul holidays. Because of his outgoings, he doesn't feel wealthy, but as he amasses savings from surplus income and annual bonuses, his wealth will increase.

Hassan's priorities are to look after his family, maintain his lifestyle and continue to grow his wealth. His wealth planner structured his savings and investments so that he could fund his lifestyle while creating a buffer. Because the family's future prosperity was so dependent on Hassan's ability to continue earning, they also added income protection to support his family in the event he is unable to work, as well as a substantial life policy to provide a lump sum in the event of his premature death.

Case study: Private equity partner

Julia, 59, is a partner in a private equity firm. She had substantial liquid assets from the recent sale of a business. As an entrepreneur, she focused a lot on her company's numbers but less on her personal balance sheet. A wealth planner worked with her to model her future cash flow and plan how much cash she would need to sustain her lifestyle indefinitely.

Determining she would never be able to spend all her money, her wealth planner set up nil-rate band trusts to start the process of sheltering her capital from inheritance tax, and made use of allowances out of excess income to make further contributions to the trusts. They made sure she and her spouse were using all their allowances – including ISA allowances – each tax year, and set up an international bond for long-term tax deferral and so she could make gifts from it to her grandchildren in the future. Owning three properties, Julia's heirs would have had a sizeable inheritance tax bill when she died, so her wealth plan included a protection policy to cover the bill without the need for a fire sale of her houses.

By understanding you and your unique circumstances, a wealth planner can help you define your personal and financial aspirations. “In essence, a wealth planner's role is to remove effort so clients and their families can spend time enjoying their wealth rather than managing it," says Ritchie.


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