The benefits of a financial plan

  • Leanne Lancaster, Personal Finance Writer
  • 10 November 2023
  • 5 mins reading time

In today's complex and ever-changing financial landscape, individuals and families often find themselves navigating many financial decisions. These choices can be overwhelming, and without a clear roadmap, it's easy to get lost along the way.

This is where a comprehensive financial plan could help, and here’s why.

1. Provides you with clarity about your financial goals

A well-structured financial plan starts by defining your financial goals, whether it's saving for retirement, purchasing a new home, funding your child's education, or simply growing your wealth. Having clear objectives is the first step towards building financial foundations. A financial adviser will work with you to identify your goals and create a plan tailored to your specific needs.

2. Helps you understand your willingness and ability to accept risks

Every financial journey comes with risks. A financial plan helps you assess these risks and develop strategies to help mitigate them. By considering factors like market ups and downs, inflation, and unexpected life events, you can make informed decisions which aim to protect your financial future.

3. Develops an investment strategy that suits your needs

A financial adviser will develop an investment strategy aligned with your individual financial goals as well as your willingness and ability to accept risks. One way to do this is through diversification. This means investing across a range of asset classes in order to help spread risk with the aim of lessening the potential for loss of value and increasing the potential for growth and income.

With a solid plan in place, you can make more educated investment choices which aim to grow your wealth over time. Remember though that the value of investments and the income from them can fall as well as rise and are not guaranteed and so you might not get back your initial investment.

4. Enables you to make tax efficient decisions

Minimising tax liability is an important aspect when it comes to managing your wealth. A financial plan will help you identify tax-saving opportunities and optimise your financial decisions to reduce tax burdens. This could result in significant savings over the long term however, tax treatment depends on your individual circumstances and may be subject to change in the future.

5. Helps you to plan for your retirement

You’ve worked most of your life to be able to enjoy a comfortable retirement. A comprehensive financial plan will outline your retirement goals, estimate the funds required, and create a savings and investment strategy to help you achieve them. The aim of such a plan is to provide you with a retirement which is as financially stress free as possible.

6. Establishes your wishes as part of an estate plan

A financial plan also incorporates estate planning to ensure your assets are transferred according to your wishes. You don’t have to be wealthy to have an estate plan in place. Your financial assets cover anything of notable value, including property (your house and other physical items of value), savings, investments and pensions. Your plan could include strategies for minimising estate taxes, establishing trusts, and designating beneficiaries, ensuring a smooth transition of wealth to the next generation.

7. Gives you the opportunity to regularly review your financial goals

A financial plan is not a one-time document; it's a dynamic tool that evolves with your changing financial circumstances and market conditions. At Schroders Personal Wealth one of our principles is to have regular reviews with an adviser. This allows you to review and adjust your plan to keep it on track with your goals, making necessary changes as needed.

8. Provides peace of mind

Perhaps one of the most valuable benefits of a financial plan is the peace of mind it provides. Knowing that you have a well-thought-out, personalised plan in place gives you confidence in your financial future. It helps you stay on course, even during turbulent times in the market.

We believe a financial plan is the cornerstone of successful wealth management. It provides clarity, structure, and strategy to help you achieve your financial goal. Don't leave your financial future to chance – invest in a financial plan today.

Important information

This article is for information purposes only. It is not intended as advice.

Fees and charges apply.

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or part) without our prior written consent.

In preparing this article we have used third party sources that we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.

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