5 key financial planning myths, and why they aren’t actually accurate

Have you ever wondered what the difference is between financial advice and financial planning? Or questioned who really needs a financial planner? Maybe you’ve thought that financial planners are only for the rich and powerful, or that the costs associated with making a financial plan outweigh the benefits.

If you’ve ever had any of these thoughts or asked some of these questions, you are not alone, because these are just some of the widely held myths and misconceptions surrounding financial planning.

As with all untruths, you are best equipped to make informed and wise decisions once they are dispelled and you are rearmed with accurate knowledge and information.

So, if you’re looking for financial planning in Worcester but you’re still unsure exactly what it is or whether it’s for you, read on to find out five key financial planning myths and why they are inaccurate.

1. Financial planning is exclusively for the super-wealthy

A common misconception about financial planning is that it is only necessary for the super-wealthy. Yet, the reality is that most people could benefit from working with a financial planner to help them achieve their personal goals and secure their objectives.

Financial planning can benefit people from all walks of life, including:

• Young professionals. Young people starting in their careers might want to create a financial plan to develop and establish good habits that align their lifestyle and spending with their long-term goals.
• Families may need help with planning their finances for future outgoings such as university fees or holidays, while also covering costs such as child or elderly care.
• Pre-retirees and retirees. Whether you are approaching retirement or have already retired, a financial planner can help you manage your finances to keep your income secure and your tax bill minimised, ensuring you achieve the retirement you have always dreamed of.
• Business owners. Entrepreneurs and business owners could benefit from developing a financial plan to manage both their personal and business finances, and to find a balance between their life ambitions and business goals.

As you can see, a financial plan can support you at any stage and can help you navigate life’s journey with confidence, security, and the potential for prosperity.

2. You only need a financial plan when you’re approaching retirement

Although retirement is an important moment to plan for, many milestones throughout life may require creating goals and objectives that help to position you toward a future you can look forward to.

This could be saving for your children’s university costs, putting aside extra money for a new baby, planning the wedding of your dreams, or starting a business, all of which could feasibly come before you are near retirement.

A financial planner can help you prepare for these milestones, and ensure that your finances are well-positioned to support you through each of them in the best possible way.

There is no minimum age limit for working with a financial planner, and the earlier you develop a plan, the better.

3. A financial planner only offers financial support

Financial planners can offer you more than just financial support.

They take a holistic approach to your situation, working with you to develop your life goals and then creating a financial plan that helps you achieve them.

Although a financial planner is of course there to offer financial support, their ultimate objective is to work with you to plan the life you want based on objectives, goals, and dreams that are important and unique to you.

This can have positive repercussions in other domains of your life. For example, by working with a financial planner, you might find that it improves your overall mental health and family life, as well as your financial situation.

A well-crafted financial plan can provide peace of mind, financial security, and a roadmap for achieving long-term financial and personal success.

4. Financial planning costs more than you will make following the advice of a financial planner

While there are costs associated with financial planning, the benefits often outweigh the costs in terms of your decision-making, investment strategies, tax liabilities, retirement planning, and financial wellbeing.

Indeed, a report by the International Longevity Centre found that people who take financial advice are, on average, £47,000 better off in retirement than those who don’t.

A financial planner can help you avoid costly mistakes, navigate complex financial issues, and achieve your goals more efficiently and effectively than you might on your own.

5. Financial planning and financial advice are the same thing

While they might sound the same, the key difference between financial planning and financial advice is that a financial plan focuses on you and your goals, whereas financial advice is framed around your money and your investments.

Financial planning typically consists of examining the totality of your life and looking at your long-term objectives and how your finances align with them. A financial plan may be revisited and adjusted every few years to keep you on track with achieving your life ambitions.

Financial advice, on the other hand, could be offered over a long period, but it is also commonly used for specific transactions or investments.

So, while financial planning can include financial advice, it generally offers a more holistic approach that considers multiple aspects of your life. By aligning your financial strategies with your broader life goals, a financial plan can offer you personalised and effective guidance tailored to your unique circumstances and goals.

Get in touch

To find out how a financial plan could help you achieve the goals that matter to you, get in touch. Email info@britannicplace.co.uk or call 01905 419890 to speak to a financial planner in Worcester today.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate tax planning.