The problem with life stage planning advice

We’ve all heard the saying “If it ain’t broke don’t fix it!” however this doesn’t mean “don’t take care of what you have”.

Most of us understand the importance of maintaining our vehicles, our homes, investing time in our children and doing regular health checks. We do this because we see the value of a small cost outweighing the bigger financial impact of not doing so.

Unfortunately for most people the same cannot be said about our finances.

In fact researchers have found over 50% of Australians live in constant financial stress and 85% say this is stress is effecting their wellbeing.

While this is unacceptable, it is completely understandable.

Why? Well simply because life gets in the way.

The following is a list of major life events I have considered we face throughout of lifetimes

1. New job/ business
2. Job loss
3. New long term relationship (marriage)
4. End long term relationship (divorce)
5. Big holiday experiences
6. Vehicle sale & purchase
7. New dependent (own/adopt)
8. Saving for home deposit
9. New home finance
10. Home renovations finance
11. New school funding
12. Dealing with health issues impacting employment
13. Empty nest syndrome
14. Financial assistance children (university/home/marriage)
15. Elders care (relatives)
16. Inheritance or financial windfall
17. Sale of home/ downsizing
18. Retirement/ relocation
19. Loss of partner
20. Self-funding lifestyle/ social security assistance
21. Estate planning
22. Add more ……

Compounding this list is the probability of times these events will occur and impact us throughout our life

• Number of employers on average during career is 12
• Number of times we move home through our lifetime 9
• Number of long term (12 months+) relationships in life 7
• Number of vehicles owned in one’s lifetime 9
• Number of children is 1.9
• Number of loss of employment income due to illness 1 in 3
• Percentage of people over 65 requiring social security assistance 77%

But that’s not all folk’s.

We need to overlay these events in the context of larger wheels outside of our control. Such as changes in laws related to taxation, employment income, family matters. Changes in money markets, interest rates, investment returns, economies and governments.

My biggest surprise from the above researcher was that only 50% of Australian’s are stressed about money.

Personal and professional experiences

Often a potential client will approach me after a significant event has occurred in their life i.e. see above life events. As opposed to wanting an ongoing service/relationship.

I commend the public and media for calling out lazy advisers and holding them accountable to deliver clients more value i.e. an advice relationship for the fees they paying instead of financial salesmanship and product distribution.

Advice and particularly ongoing advice because of its very nature being a service, rather than a commodity will always remain of higher value than one off transaction and vertical intergration distribution model

Just like I have found Siri to a great tool, it’s a poor substitute for a real relationship. Technology has put the power in our own hands but at the same time we are the least happy and satisfied with life.

More importantly providing relevant ongoing personal advice is the value clients expect to receive for their time and money too.

It is within this very choice i.e. a relationship opposed to a commoditised transaction where both the client and adviser experience the most value or very little from the relationship/transaction.

The point I wish to underpin is, that life is hard.

Time and time again we are shown that choosing to do everything ourselves is a recipe for underperformance.

Life is complicated and made even harder when we try to do everything ourselves. Especially when we need to make choices along competing priorities, personal challenges, expectations and constant changes outside of our control.  

Anyone can build their own home and should be commended for doing so. Building a home requires a vison, commitment, time, money, training and sacrifice. Unfortunately the endeavour also often ends in an unfinished project, a relationship breakdown, cost blow outs, a decline in one’s health and negatively impacting ones quality of life.

The same can be said about achieving true financial independence and expecting you can plan, execute and manage all your important financial decisions yourself i.e. trying to do so will impact your life in other areas you may not have initially considered.

So just like moving into your dream home, an ongoing relationship with your adviser not only heightens your probability of success to achieve financial independence, the journey can be experienced with far less stress, greater certainty, less distraction, fewer mistakes and most often in a shorter period of time than trying to do everything yourself.

If you are stuck in a funk or you’re lost in a cloud of complexity feel free to contact me. Most often in life we just need someone to talk things through and to lighten our load a little. The following articles may also be of help

Why Making Money Is Counter Intuitive

What does success mean to you?

Confidence - The Only Plan You Need To Achieve Your Goals

Why Investing in Experiences and Ourselves Heightens Our Happiness

This post was written by Peter Horsfield, as such they are his personal views. Peter helps you to focus on what’s most important, the right strategies at the right time. To learn more about How to become Financially Independent visit Peter Horsfield Smart Advice

General Advice Disclosure 

Sources of this information are considered to be reliable but are not guaranteed. Information published in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this document is General Advice and does not take into account any person's particular investment objectives, financial situation and particular needs.

About Peter Horsfield 

Peter Horsfield in an Authorised Representative and Investsure Holdings Pty Ltd ABN 16 050 286 630 as trustee for Horsfield Family Trust ABN 55 609 068 513 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523