Short-term financial planning apparent among 8 out of 10 non-advised individuals



People without a financial adviser struggle to save effectively for the long-term, according to the industry, with a survey revealing eight out of 10 non-advised individuals only have short-term financial plans.

Financial advisory firm the deVere Group asked more than 650 people whether they typically looked one year ahead, one to three years ahead, or three years or more ahead, when planning their finances. An overwhelming majority – 82% – chose the first option.

Respondents were aged between 25 and 75, and ranged from middle income to high net-worth individuals. They were based in a number of countries, including the UK.

Speaking to Blue & Green Tomorrow, John Ditchfield, co-chair of the financial adviser membership group, the Ethical Investment Association (EIA), was not surprised by the results.

Click here to read The Guide to Ethical Financial Advice 2013

In the 10 years that I’ve been working as an adviser, my experience certainly supports this research as unfortunately the overwhelming majority struggle to save effectively”, he said.

A particular issue is retirement planning which has to be a long-term decision and very few people really have the inclination to try and structure a retirement strategy.

This is where advice can be of huge benefit: in providing a structure approach to retirement savings and medium-term investment.”

Lee Smythe, managing director of Smythe & Walter Chartered Financial Planners, agreed with Ditchfield’s sentiments. He attributed the short-termism within the non-advised community to the global economic situation, job security and the effects of austerity.

He said that those without a financial adviser often did have long-term plans in the form of pensions and ISAs, but usually don’t completely understand them, and the products are in many cases not suitable for their requirements.

Perhaps more worrying is the lack of financial protection those without an adviser tend to have”, Smythe added.

Some people will have benefits via their employer and maybe cover for a mortgage, but beyond that we find that most people are quite inadequately covered financially in the event of long-term ill health or death.

By taking appropriate advice, people are able to ensure that their concerns and objectives are met in the most efficient manner and that by working with an adviser over the long-term plan can be kept on track to achieve the desired outcome.”

The deVere Group, which conducted the survey between June 2012 and May 2013, said the results chime well with international data into the short-term nature of financial planning.

Founder and chief executive Nigel Green said, “In Japan, 40% of all share trades are now day trades, whilst in Britain a growing number of divorcing parents are reportedly raiding their pension pots.

It is alarming as longer term planning gives people more opportunities and more time to reach their ultimate financial objectives – which for most of us is financial freedom. 

The earlier you start your financial strategy, the easier the journey to your financial goals will typically be.”

Blue & Green Tomorrow’s Guide to Ethical Financial Advice 2013 gives details on financial advisers that specialise in long-term, sustainable investment planning. Read it to find an adviser near you.

UPDATE: Helen Tandy, a financial adviser at Gaeia, said, “Often clients contact a financial adviser about a specific point rather than long-term planning. It’s very much the financial adviser that starts to make clients thing about planning.

If people don’t receive focused financial advice from a financial adviser going forwards I don’t think many people would make clear plans for the future.

It’s also important that clients think about how investment impact on the legacy for future generations. The benefit of sustainable investments is that they can be used to reach long-term goals and protect the environment we live in.”

Further reading:

Three-quarters of IFAs get requests for ethical investment options

Graduate training programme launched to stop IFAs fleeing the market

Why the best financial advice includes ethical investment options

‘Advisers can lead by learning about sustainable investing’

The Guide to Ethical Financial Advice 2013


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