We are extremely fortunate at Lyons Financial Services as we have a very varied and interesting client base, with people from all walks of life. We advise lots of people in the public sector, as well as people working in big and small companies in the private sector. We also advise many employers about solutions that they want to deliver to their employees.
With such a variety of clients, it can be hard to identify themes in terms of the solutions we deliver to our clients. After all, we always start off with each client with their own specific needs and we then build our solutions around that very personal and specific situation. You see financial planning is not an exact science. It depends completely on those unique circumstances; your current and potential earnings, your family situation and your assets and liabilities to name but a few factors. And it also depends on what it is you are trying to achieve. For you, is it all about comfort in retirement or are you seeking to maximise your wealth in the shorter term? Is the security of your family your primary concern?
However we do see that themes emerge when we look at the different age groups of our clients, and so we thought it might be useful to give you a sense of the type of issues that many of our clients see as the big financial challenges at various stages in their lives, and the typical solutions they seek out from us.
The carefree 20’s
Let’s be honest – financial planning is not exactly top of the agenda during these years. The top priorities for people in their 20’s are around commencing their career and getting established, while also having some fun! There are really just a small number of areas that they come to us looking for help with. The first is in relation to health insurance as they might be coming out from under their parent’s policy. Usually people in their 20’s are looking for a low cost plan, maybe being willing to forego some of the more expensive features. The next area of focus is savings, often with one eye on building a deposit for that eventual house purchase.
The changing 30’s
The 30’s are often years of big changes in people’s lives. Lots of this age group get married, start families, they often change jobs and maybe buy a first or even second home. Busy times!
And lots of clients come to us with a broad range of areas in which they want advice. Mortgages are often the first port of call, seeking help on getting on to the property ladder. As people get married and start families, they look to get financial protection in place against unforeseen events such as illness, accidents and death. Health insurance also features heavily for people in their early 30’s too as a result of the changes that were introduced in relation to Lifetime Community Rating. This introduced a loading of 2% for every year you are aged over 34 years at the commencement of your policy. This means a 40-year-old taking out health insurance for the first time will pay 12 per cent loading on top of the basic premium every year into the future, compared to someone who has had cover all this time. So you need to get started with health insurance in your early 30’s.
Income protection also features heavily among this group, as they don’t want to see their financial future going up in smoke as a result of an illness and being unable to work. There’s enough to worry about in this situation without having to worry about money!
The very forward-thinking of our clients who can eke out some surplus cash each month tend to look to the future. They turn their attention to building education funds for their children and also commencing or increasing their retirement funding. They realise that the earlier they start their funding, the more they are likely to have available at retirement!
The growth 40’s
And then life starts to settle down a bit. The late nights might not be quite so late any more and hopefully you are a little more secure in your financial situation. Your career is hopefully in full swing and the back is hopefully broken in relation to your mortgage.
This is where we see a very strong focus on pension funding. For those in the public sector or in employer sponsored schemes, we get a lot of enquiries about increasing benefits through the payment of Additional Voluntary Contributions (AVC’s). For others, their queries are about finding the best pension vehicle for them and then building a pension fund that reflects their own attitude to risk.
Not all spare money goes to pension. We get lots of queries about building investment portfolios and helping clients to earn a return on their money. Our clients are tired of watching their money treading water in the bank, earning no interest!
Some clients also look to improve their health insurance cover during these years and also look at their wider protection benefits to ensure they have sufficient cover in place.
Consolidating through your 50’s
Pension planning is the most frequent conversation with this group. Are they paying enough? Are they investing wisely? What will happen if the markets take a big hit close to their preferred retirement age? We make sure you’ve the right investment mix for you.
And now people start thinking about transferring some money to their kids, either now or when they die. The aim here is usually to reduce the big bite that will be taken out of any inheritance by the taxman! We help our clients to plan their inheritance strategy.
Kicking back in your 60’s and beyond
And now it is hopefully time to start enjoying the fruits of your labour and your foresight during the earlier years. This is usually the decade when you stop earning and start spending your pension. We work with clients at and after retirement, helping them to manage their money, which is probably now going to reduce each year. After all, you want your money to outlive you, not the other way around!
What we also see among this group is the amount of time they spend thinking about others and how important their legacy is to them. They are thinking a lot about their families in particular and how they can leave a lasting legacy (financial and otherwise) with them. Again we help them with their wealth transfer strategy to ensure their financial legacy is valuable and accessible for their families.
We hope this article gives you a sense of the types of challenges our clients face at various stages in their lives. If you would like to discuss your own particular situation with us, we would of course be delighted to hear from you.