Why the process is as important as the plan

A common misconception about financial planning is that once the plan is created, that’s it.

However, financial plans are not set in stone, and nor should they be! Life isn’t rigid and plans change all the time – goals, budgets, circumstances, not to mention Government legislation – and it’s vital that your financial plan changes with them.

So I thought I would share a few stories that highlight the importance and benefits of treating the planning process, rather than the plan itself, as the most important thing to focus on.

Being realistic and making it personal

Back in October, I mentioned I’d got myself a running coach. I remember going to her with grand plans for my training regime, filled with elaborate ideas I’d seen online of how other people had trained for marathons.

I distinctly remember her sitting me down and saying, “Jon, these plans are great, but they’re not your plan. The best plan is the one you can stick to.” She was right, I’d got distracted by the flashy approaches and big gestures.

We then discussed how much time I would have available to train, when I preferred training, my current fitness level, and timescales for my next running challenge, eventually coming up with a tailored training programme that fits around my other commitments and took my preferences and ability into account.  

I’m so grateful for my coach as she reminded me that for a plan to actually deliver results, it must be both personal and realistic.

And the exact same goes for financial planning. If your plan doesn’t account for your starting position, your budget as it changes, and what your specific goals are, you won’t be able to achieve the results you want when you want them.

It's also crucial to be realistic, and that’s where the guidance of an adviser comes in handy. Sometimes this involves having frank conversations with clients about what they can realistically expect. It’s very inspiring to read about the exciting new fund everyone’s talking about; it’s also very easy to get distracted by what other people are achieving with their retirement and think “I want that”.

However plans like this don’t work. The ones that do may not be flashy, but they’re rooted in reality and therefore more likely to succeed. I firmly believe it is part of my role to manage client’s expectations early, rather than let clients cling on to pipe dreams only to be disappointed further down the line.

Keeping it simple and reviewing often

I recently saw a client who’d received an inheritance after losing a loved one. We had a really heart-warming chat about the life they had enjoyed together and what my client was thinking of doing with the money they’d been left.

They described how over Christmas there had been moments where the deep joy of simply having their grandchildren around really hit home. This reminded me of a John Lennon quote I’ve shared before, “Life is what happens to you while you're busy making other plans”.

I love this quote because it reminds us that if we spend all of our time looking to the future, making grand plans, we’re going to miss the beautiful, everyday moments that make life worth living; the moments that should be savoured.

My client didn’t want to travel the world, go sky diving, or any of the other stock bucket list ideas (which are just as valid for some). Instead, they wanted to prioritise enjoying quality time with their family and friends, and taking their grandkids on fun daytrips.

All this goes to show that your financial planning goals don’t have to be grand to be meaningful. There’s nothing wrong with travelling  the world or white water rafting, of course, but sometimes just keeping it simple is the way to go.  

For my client, a terrible loss led to a period of reflection about how they wanted to live their life. This is something we should all do more often, not just in times of hardship, but as a regular habit.

How many people do you know who make a point of setting time aside to purposefully contemplate where they are heading? This is another benefit of focussing on the planning process, it allows you to regularly reassess your priorities and goals.

When you first start working with a financial adviser, your goals might be unclear. But over time, with guidance and by taking an active role in the review process, you can build a clear picture of where you want to go and how to get there.

Taking control to achieve satisfaction

Finally, this time last year I won a prize to spend a day at a small, family run brewery making my own beer. I took my dad, and we had a fantastic time.

We went through the whole process from start to finish: cleaning and sterilising the 200lt tank, deciding on the blend of hops, pouring, stirring, and finally bottling our very own beer. We finished the day with the most satisfying pint of beer I’ve ever had.

Now our beer (all 300 pints of it!) is bottled and ready for us to share and enjoy whenever we fancy. Having experienced the process and chosen the ingredients, it’s a very different experience to tasting a beer off the shelf. I think that’s down to taking ownership of the process. This isn’t any old beer; this is my beer.

And you’ve surely guessed it by now, the same goes for financial planning.

Choosing the hops and going through the whole brewing process is just like taking the time to really think through your goals, needs, and wants, and crafting a financial plan that is highly personalised. Taking agency over your planning process will give you a profound sense of pride over the fruits of your labour.

This is your life, so it should be your input that decides what your financial plan should achieve.

And when you do achieve it, the sense of satisfaction will be so much greater knowing that you were involved in the planning process every step of the way.