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Your clients’ financial goals get your time and attention. But are your own getting the same care? When you’re busy advising clients and running a practice, it’s easy to put your personal and business finances on the back burner. With year-end approaching, make time to review your plans and address any gaps.
Your personal financial plan
Your own financial plan deserves the attention you give your clients’ plans. Review your budget, savings and investments, insurance policies and debt. Have your circumstances changed? Make sure your plan reflects where you are now and what you want to achieve.
Quick check-in
How healthy are your finances? Ask yourself these nine questions:
- Is my financial needs analysis (FNA) up to date?
- Do my financial goals still reflect my circumstances and priorities?
- Am I saving and investing enough to reach my long-term goals within my planned timeframes?
- Is my retirement plan on track?
- Have I planned for a healthspan gap, which is the difference between how long I may live and how many of those years I will spend in good health? Later in life, a chronic disease or disability could mean I need extra funds for long-term care, potentially including round-the-clock support.
- Is my budget realistic, with room for everyday expenses, debt repayments and savings?
- Do I have adequate insurance for myself, my income and my assets?
- Is my will valid and up to date, and have I planned for enough liquidity in my estate to cover debts and expenses?
- Are my taxes up to date and am I making the most of the tax benefits available to me?
Top tip: Set a recurring calendar reminder to review your financial plan twice a year.
Your business's financial plan
Dedicate a few hours each month to reviewing your targets, budget, cashflow and insurance.
Goals and targets
Set targets for what you want to achieve over six months or a year. Use past sales and cashflows to help forecast future income. Product providers’ reporting tools can help you analyse past sales, commissions and fee payments. If you are just starting out, ask experienced advisers and business owners for guidance on building a business and setting achievable targets.
Your business budget
Your business may generate a healthy income, but turnover is not profit and profit is not the same as disposable income. Business expenses, staff costs, training, accreditation and compliance, technology, tax and other overheads all need to be accounted for. If you rely on commission income, you may also need to factor in clawbacks. The best budgets are those that are realistic, flexible and regularly monitored.
Top tip: Make sure your budget accounts for the money you pay yourself.
Cashflow management
Cashflow planning is about having enough money today as well as understanding and planning for what you may need tomorrow. It deserves particular attention in a profession where income can fluctuate monthly. Areas to assess include:
- Required reserves to cover operating costs during quieter periods such as December and January
- Liquidity available for unexpected expenses such as a clawback or temporary interruption to your income
- Access to finance if necessary
Protect your assets
Your vehicles, offices, IT equipment, software and data all need to be protected and insured. Professional indemnity is also required unless a Category I exemption applies. Keep your cover up to date and assess and manage risks such as cybercrime and data breaches as part of your monthly business review.
Succession and continuity plan
This is critical for your clients as well as your retirement. Your clients need to know they will continue to receive advice and support if you are unable to work and when you retire. Review these plans regularly. To support succession and retirement planning, value your business each year so you know where you stand. Identify potential successors or buyers in advance for a smooth transition.
Consider getting your own adviser or skilling up
Even with just the basics, the to-do list for your personal and business financial plans is long. An independent professional perspective can help you identify gaps, test your thinking and hold you accountable for implementing your plans.
A financial adviser can assist with your personal financial plan and aspects of your business planning. An accountant, a business consultant or your product providers can offer additional business support.
To help grow your business, consider a short course in business management or entrepreneurship at a local or international university.
Final item for your to-do list: take care of your health
Financial wellbeing cannot be separated entirely from physical and mental wellbeing. An adviser who is constantly exhausted, financially stressed or neglecting their health may find it harder to give clients the attention they deserve.
Make time for preventive healthcare, including screening, as well as exercise, adequate rest and meaningful relationships. Looking after yourself is not a distraction from running a successful practice. It is part of sustaining one.
Give your own plans the attention they deserve
You help clients turn their goals into practical plans. Make time to do the same for yourself and your business. Start with the most pressing gap, decide what needs to change and set a deadline to act. Your own goals deserve a place in your diary too.