If you read my last blog you will know that I love a good analogy, so I will be using one again here. (indulge me if you will!)
Picture the scene, you are on a plane, you have taken your seat, you have checked that there are no screaming babies in the vicinity and you have ordered your free drink, champagne of course despite it being a 7am flight! You get yourself comfortable and a voice comes over the tannoy ‘Good morning ladies and gentleman, this is your Captain speaking. We will be taking off shortly and heading due south towards our final destination, Cape Town. The weather en route is expected to be fine and we are scheduled to arrive slightly early, I will check in again with an update once we are airborne, but in the meantime please sit back, relax and let my crew look after you’
Lovely! You are now feeling reassured and you can look forward to your holiday, the champagne arrives and you chink glasses with your partner and you sit back and relax and get ready for take off.
Two hours into the flight and you hear the familiar bong of the tannoy, it’s the Captain again. ‘Hello ladies and gentlemen, we are now at our cruising altitude of 35,000ft and making good progress, we are however expecting a little bit of turbulence, nothing to worry about, just a few bumps. However for your own safety please return to your seats and fasten your seatbelts, again if the crew can be of any assistance please do not hesitate to ask’.
Despite little contact from the pilot he hasn’t been doing nothing for those two hours, firstly he ensured that every element of the journey was planned, he then checked that the aircraft was safe, fuelled and that the crew were briefed. He liaised with the ground crew, and air traffic control and taxied to runway 29. He got the plane airborne and pointing in the right direction so that you will arrive at the chosen destination roughly on time. In those two hours, you weren’t worried that the pilot wasn’t doing anything and you knew that if you had any questions you could ask a member of his crew. You could therefore enjoy the flight, and the free drinks!
A financial planner is a bit like a pilot (in fact I actually wanted to be a pilot whilst growing up but I was scared of heights!). Through the financial plan that has been put in place (see previous blog) you are now clear on what you need to do in order to get to your chosen destination (retirement as an example). You know when you want to get there and what is going to be expected along the way.
This is when the pilot over the tannoy bit above becomes relevant. A financial planner will confirm all of the above with you and he will help put in place the necessary vehicles (savings, insurances, pensions and investments) to allow you to get there. He will also check in with you at regular intervals to provide an update on your progress.
At these updates, which are held either annually or every six months, he will check that you are on course to arrive at your chosen destination. This destination may and often does, change over time. That’s fine we just steer the plane in the right direction to get you to the new destination.
We can also report on any turbulence either already experienced or on the horizon. Turbulence is to be expected along the way but you should have a good idea of how much turbulence there is likely to be and your financial planner should understand how much turbulence you are comfortable with, as long as you are on course to arrive at your destination, roughly on time, we can cope with the turbulence together.
We then agree when to have the next update and the Financial Planner goes back to ‘flying the plane’, keeping in regular contact with air traffic control or as we call them investment managers and you can sit back and relax again. If you need anything in the interim you can contact any member of the team (including the pilot), they are here to look after you and ensure that your journey is as comfortable as possible.
So that’s my analogy on what a Financial Planner does. There will be another more specific blog on what a Financial Planner is and importantly what a Financial Planner isn’t but for that I am thinking I will draw some pictures rather than use another analogy! All that is left for me to say here is I do hope that you have had a pleasant flight, that you enjoy your holiday and we look forward to welcoming you aboard WBW Airlines again soon.