Is it the car you are in or the road you are on that is more important?
We are frequently contacted by new clients concerned that the investment they have is inappropriate (be it a pension, ISAs or unit trust portfolio).
Often it is not performing how they would hope it would and they want to have it reviewed so that they can seek a better return.
Of course this is an important course of action to take and it is great that they are thinking about their investments (although often later than they should).
But this action should come at the end of the planning process, not at the start.
I like to compare it to a long car journey; your car may not be the most fuel efficient, it may be a bit slow and not very comfortable but all of this is irrelevant if you are on the wrong road.
If you want to get from London to Manchester it doesn’t matter what car you are in, if you are travelling on the M23 you are not going to get to Manchester.
Your investments are the same. You may be able to save 0.5% pa in charges or get a percentage point or two a year in growth but if you haven’t consulted your financial road map these small differences aren’t going to make much difference.
The starting point is therefore to review where you are now (what assets do you own, what liabilities do you have, and what is the difference between your income and expenditure?) and decide where you want to get to (at what point do you wish to stop working and start doing what you love to do?).
It is then possible to determine whether you are on course to reach your destination when you want to.
If you are not on course, more significant actions can be taken to get you on track; you can understand whether you need to take more investment risk, make larger pension contributions, remove the risk of an accident or illness (a puncture?) delaying you.
Once the big questions are answered you can then make your journey more efficient by deciding whether you are paying too much by way of charges or the funds in which you are invested are inappropriate.
Our LifeWealth Design service helps clients identify and achieve what matters most to them in life by determining if there are any gaps in their financial journey and put in place the necessary steps to fill those gaps.