Case Study: Investing for the long term – Accidents will happen so plan for your financial future

  • Cara Casey
  • 18 May 2023
  • 5 mins reading time

Could you tell us a little bit about how you got to where you are today as a financial adviser?

I started my finance career in 2005 working as a bank manager. The financial adviser in the branch that I worked in at the time took me under his wing and he began to show me some graphics that he used with clients to encourage and educate them about their finances and investment options best suited to their circumstances and life stages. I really liked what I saw, and I said to him at the time, I think this is really what I want to do. I went down the management route first and was a bank manager for about a year, but I always thought about what it would be like to give financial advice. Whilst I was a bank manager, I completed my exams and became qualified as a financial adviser in 2008.

What I like the most about my role as a financial adviser is connecting with people. I can build very deep relationships with my clients and it’s this ongoing supportive relationship that I really like. I always say to my kids – that’s how the world goes round, everybody has got to make a contribution and I feel like this is mine.

Each client you form a relationship with and give advice to is different. They have different needs, circumstances, preferences, and willingness to take risk. Is there a key piece of advice you tend to share with all clients around the importance of investing for the long term?

I tend to share a lot of graphics with my clients to evidence to them why at Schroders Personal Wealth (SPW) we believe you need to have a long-term mindset. Advisers at SPW are provided with some really good tools and the graphics that our investment team produce are extremely useful. I show clients the different graphs which highlight how long-term investments are working for them. I always try to relate to what each individual client is wanting to do – they nearly all want to grow their wealth but it’s about understanding why they are growing their wealth and what it’s for. I think graphics allow for clients to better understand what I am talking to them about, its more visual and when they see the effects, they may begin to realise the potential for them to grow their wealth if they invest for the long-term. This understanding really encourages clients to look more into it.

Often, the conversation around investing for the long term is an educational piece. A common reaction when talking with younger clients about their plans for retirement is that they think it’s too far away for them to be thinking about it. We do have a lot of clients who are aware or conscious of it and are already seeking advice to improve their long-term position.

Is there a particular scenario that you’ve experienced with a client where you’ve helped them with understanding the importance of long-term investments?

I have a client in his mid-40s who had inherited some money. He loves his job which involves helping the community, but due to an accident at work, he endured a physical injury. As a result, he had to take time off from work to recover. Through our conversation I was able to draw out that this was a big concern to him. We thought about the long-term and what this could mean for him in the future. Will he have to give up work earlier than planned? Will he have to reduce his hours or change to an office-based job? He was really comfortable chatting about it and it plays very much on his mind that in the long-term he may not be able to continue to work in a career that he loves. So I raised the question, what are we going to do about this financially? This was an emotional question for him to answer as it could mean that he’s not able to do what he loves but also, there may be a financial impact for him and his family. We needed to do something about that.

He is in a fortunate position financially as he inherited quite a significant amount, so we spoke about what portion of that we could use to aim to protect his future. Through analysing his cash income and outgoings, I was able to show him different outcomes to different scenarios such as, if he needs to bring his retirement forward or if he has to reduce his income. I was also able to show him that he could take my advice and invest the money which could potentially improve his long-term position and allow him the flexibility to give up his job sooner than expected. This took the pressure off him a little bit in terms of questioning if his injury gets worse, what will happen.

After our meeting the client shared that our conversation had confirmed what he already knew: he had to take action to help create more future financial stability for him and his family. Our open conversion has also led to a strong ongoing relationship with him choosing to take ongoing advice and he’s already been back in touch with me and invested further funds as more of his inheritance came through. The first piece of advice I gave him was to invest a lump sum. We invested with the view to long term tax efficiency using a General Investment Account (GIA) to fund his Individual Savings Account (ISA) each year. This was a great solution for that amount of money. We have continued to have a really good working relationship which means, when the time comes, I can support him to use the money to fund his potentially early retirement if that does indeed happen.

Important information

The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.

The different scenarios discussed are examples and what is right for each person will depend on individual circumstances

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