Professional advice on attaining financial independence

Professional advice can help you reach your financial goals whether it’s gaining more stability or saving for a comfortable retirement, writes Sandra Dick.
Gaining your financial independence can take some expert planning.Gaining your financial independence can take some expert planning.
Gaining your financial independence can take some expert planning.

When the Duke and Duchess of Sussex revealed plans to strike out alone, the question of their financial future received as much attention as the implications for the future of the Royal Family.

How could the Queen’s grandson and his wife achieve the “financial independence” they craved – the type that would maintain their expensive lifestyles, avoid conflict with the House of Windsor and achieve enough income to enable them to plan for the rest of their lives?

Who would pay for their personal security and their homes – and what kind of income might they hope to achieve?

According to Chartered Financial Planner Jenny Madhoo of Acumen Financial Planning, Harry and Meghan are not so different from anyone else seeking the financial stability to go it alone.

She says she is receiving a rising number of inquiries from people in Harry and Meghan’s age group – mid to late-30s – seeking financial guidance.

To help investors understand their options, Acumen presents them with their own “statement of financial independence”, setting out where their finances are now and what they may achieve in the future.

“There are signs that younger people are becoming more aware of wanting to achieve financial independence,” Madhoo says.

“A big question for most people is how to get to the point where you can stop work. That’s the number-one topic most people who come to see me want to talk about.

“They know they should be doing something to prepare for the future, but they’re not sure where they should be putting their money.”

Sitting down and having frank conversations with financial experts who can offer honest, non-judgemental guidance through the financial maze, unravelling jargon, helping to set goals and to make the most of savings and income, is the first step to achieving that yearned for financial independence – regardless of age, she adds.

“The best thing is to do with money is to talk about it. But money is often well down the list of priorities.

People come in and ask if they’ve left it too late to start saving. The answer is always, ‘No’, but the longer you leave it, the more drastic you might need to be. It’s always better to start early.”

Younger investors often benefit from a straightforward explanation of options such as ISAs, savings bonds and pensions, the risks and benefits of stock market-linked investments and, for people with children to consider in the future, inheritance tax and children’s savings.

“We start by going through a process to help the individual or the couple work out where their tipping points are; whether they have started saving or already have investments; when they would like to stop work, what kind of lifestyle they want to live and the cost implications,” says Madhoo.

“We put that into a calculator that gives a savings goal or a target which is helpful for people at that early stage in their financial planning to have context around what they are putting away.

“Sometimes people feel they are putting money away in a pension but it’s very far in the future and they would rather spend their money now.

“Or perhaps they can’t find the motivation to put away money each month when there’s no context for what it means in the future.

“That exercise gives them that context. They see that if they save a certain amount of money each month, there’s something realistic at the end – perhaps stopping work before they reach state pension age.”

Achieving financial independence and early retirement is something an increasing number of millennials seem to crave. At the extreme end, the “financially independent, retire early” movement – known as FIRE – has emerged in the United States. This advocates strict spending rules and maximising saving from the moment your first salary arrives.

While it has led to extraordinary stories of people barely in their 30s announcing their retirement from work, the downside is giving almost all your income to savings, living an extremely frugal life bereft of nights out, holidays, gigs or new clothes, and spending every penny wisely.

However, for most 20- and 30-somethings, that may prove challenging when there are often hefty living expenses to consider, student loans, stagnant wages, unstable jobs and the gig economy to deal with.

The altered pensions landscape also means a generation faces hitting retirement age without the comfort of the workplace final salary pension schemes enjoyed by their parents, with personal pension investments tied to the stock markets adding risk and uncertainty to the mix.

Plus, just as Harry and Meghan are trying to disentangle themselves from relying on income from the Crown, there are many other 30-somethings still looking to extract themselves from leaning on the “Bank of Mum and Dad” to help them get by.

With so many variables, it’s understandable that some may be inclined to park hopes of achieving financial independence for a few more years. But Madhoo points out, financial planning doesn’t mean sacrificing being able to enjoy life now.

“It’s not for us to say to someone they should not be spending money on things like clothes or holidays – it’s not for me to tell them how to live,” she stresses. “Instead, clients tell me how they want to live, and I help them achieve that.”

Founded in 2002 and with a clutch of awards to its name, Acumen is among a handful of accredited and chartered financial planning firms in Scotland, meaning it meets strict professional and ethical standards.

Its modern approach to financial planning involves using specially designed technology to help clients visualise how their savings and investments can grow, underpinned by a personal touch that sees planners build strong relationships with clients.

Because they get to know clients’ goals and changing circumstances, they can provide bespoke guidance towards the most appropriate savings and investments.

“Having a partnership with financial planner gives people more discipline because they feel a bit more accountable. It means there’s someone to talk things through with so you can make informed decisions,” adds Madhoo.

That might be deciding how much cash to keep easily available for emergencies,

how much to invest in savings bonds or a cash ISA, or a stocks and shares Investment ISA.

It may be whether it’s beneficial to invest in property while understanding the tax implications and risks of each choice.

Further ahead, Acumen’s planners in its offices in Aberdeen, Edinburgh, Elgin and Glasgow are there to help clients as their focus shifts towards paying for school fees, saving for children’s weddings, investing an inheritance and ensuring their pension income is up to scratch.

Madhoo says: “We have 20-somethings dealing with an inheritance, 30-somethings with £100,000 in the bank because they have saved and clients in their 50s who have accrued various private pensions and want to retire.

“No two clients are the same. All have different objectives and we are always looking to help them achieve their goals.”

For more information visit www.acumenfp.com.