The cost of going it alone

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Building your wealth can mean building the life you want. Are you ready to change your money mindset? Everybody ought to be planning. What wealth gives people is opportunity and flexibility and choice. You have to build a relationship with a client and as you go on that journey with them and you see what you've built together actually come true and enable them to do what they want to do, it's really satisfying. You're privileged to be able to have that sort of exposure to your clients and that honesty with them and the relationship. It doesn't have to be scary. Yeah, exactly. So that's the top tip.

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Welcome to the Power of Good Advice, a series built on a simple belief good advice shouldn't be kept behind closed doors. Everyone deserves to have clarity, to feel confident, to build a prosperous future and to unlock the good advice that can lead you there. We believe wealth isn't just about numbers, it's about your goals, the people who matter to you and the life you want to build.

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I'm Katie Derham and I'm joined by two leading experts from Evelyn Partners, investment management managing partner Holly Merriman and financial planning managing partner Leon Buckley.

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There's a lot we'll be covering across this series, but we're going to kick things off with some pretty fundamental questions. Questions such as, are you ready to take control of your financial future? Do you know the cost of not doing so? Where and how should you start? And best of all, can you use this knowledge to get where you want to be in life? Let's start at the very beginning. Basic question, exactly what is wealth management? If somebody had never heard the term before, and you said that's what you did for a living, how do you describe what you do? Leon, do you want to crack up? It's not how I necessarily describe it per se, but actually wealth management is the concept of investing money and financial advice, financial planning. So the way we would typically describe that actually, as we sit down with our clients, we'd sit down with you, we'd understand really what is it that floats your boat, what is it you're trying to achieve, what's your family dynamic,

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really what are you personally working towards? And that actually takes quite a lot of time to get that understood properly. And once you know that, our job is to say, OK, we're going to put a plan in place, and that plan is going to have thought through about the roadblocks that could get in the way and make sure you're not going to step into those, but also making sure you take full advantage of every opportunity available to you today.

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And you build that plan with the investment element of it as well, so that the two things are really combined and everything's pulling in the same direction. Yeah, so you'll bring together all your knowledge about the regulatory system and changes that might have happened in the last budget and all that good stuff. Come up with a plan, and then, if I understand this correctly, Holly, over to you, to make that pot grow. Exactly. I think the second element of it is always taking what you've got and making sure that you grow that well. So you're managing it, but also managing it and growing it in the most appropriate way, given what you want to achieve later in life. And presumably also your comfort level with risk, I guess, as well, comes into that. Yeah, we have lots of detailed conversations around what people want to achieve, what risk they need to take to get there, what roadblocks they might meet, and ultimately what risk they can afford to take, or what we feel about risk. And what risk really is and what it means. You say high risk to anybody about anything, and it sounds terrible, but actually when you put some colour around that, what it means in real terms, and what the pros and the cons of it are, it's an easier concept to accept for people. They realise why they're taking that risk. You say risk means different things to different people. Of course, wealth means different things to different people as well. So what kind of level of income are we talking about in a typical client, or does it matter? In short, it doesn't matter. Everybody ought to be planning. What wealth gives people is opportunity and flexibility and choice, really. That's what we're talking about. The more you have choice over, the greater amount of planning you can put in place. Now, that doesn't necessarily just mean being richer. That might mean that actually your normal lifestyle isn't really that expensive. So your income doesn't need to be relatively high. Likewise, you won't necessarily need as much capital in the bank. But when it really comes down to it, it's about how does that apply to what you're working towards. And you can do that if you earn 30,000. You can earn that if you earn 300,000 or 3 million, whatever the number. And ultimately we're in a position that we can speak to most people about their requirements. So you find a broad variety of people are coming into your office. Absolutely. I mean, you get people seeking wealth management for lots of different reasons. So it could be a high earning professional who has got surplus income and wants to know what to do with it. You might have someone who isn't earning, but is inherited wealth and has never had that sum of money before and therefore doesn't know what they need to do to make it work for them. You may have someone who's going through divorce, who again hasn't really taken control of finances or is about to have a very different financial position. People selling businesses, entrepreneurs who suddenly come into substantial wealth may not have had to deal with that before as well. So, you know, you've got those that are potentially coming into wealth and those who are perhaps more already there or are working and earning and saving. And ultimately it doesn't really matter how you get it, but it's what you do with it that's important and making sure you're asking the right questions and you've got a plan. And actually we talk about the type of person there. In practice, we're talking to families. So most of our clients will come to us with a parent and that parent might have their planning needs. And they need to be talking together because if a child is in their 30s or 40s and they're planning to do X, Y and Z and their parents are planning to do something completely different, those two things need to be aligned to make those plans work together. So it might be that they come in and talk to us about one question and actually that conversation is a lot broader about their wider family. So if you've got a person or a family, you'll have some planning and some investment needs really. I've suddenly got this vision of what my daughters would tell me I should be doing with my money.

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I'm not sure you'd agree.

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All right, so I've decided that, yes, you've convinced me I need some financial planning. I need the help of a wealth manager. What happens next? Do I come in and see you or is it filling in a form? What's the process? It's what works for you. So typically speaking, you would have a conversation with Holly and I, a 20 minute coffee chat, if you like, talk about what it is you're trying to achieve, and if that's a good fit. From there, you would come in and have a more in-depth conversation with us, really about what your family objectives and priorities are. And again, the two of us would be in that meeting.

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And from there, we'll sit down and we'll do some analysis, we'll do some reviews, we'll look at your financial position and we'll sort of see, you know, basic SWOT analysis, what's working well, what could you do better, what's missing from your plan now, and we'd therefore identify where we're going to move towards. And that's your financial plan. And the financial plan is really very simple. It's going to be some actions that you need to take, stop doing, and actually an understanding of why, which is crucial. And then as part of that, almost a final sort of piece of the jigsaw is what is that investment strategy going to be like? And therefore, it's crucial that Holly and I are in that process throughout, because even though that the investment element might be the final piece, it's vital that that Holly has understood you as a client throughout that process. So it's right for you. And once you've come up with a solution or a plan, how involved does the client have to be after that? Can they just let you crack on? Yeah, absolutely. And well, different clients have different levels of interest in what we do. We've got some clients who really want to be involved in the detail. They want regular updates. Actually, some clients want to be involved in the investment decision making. We have, you know, services where we can give advice and they have the final say. We also have a service which I'm, you know, majority of our clients give us the discretion to make decisions on their behalf. So we call it a kind of discretionary portfolio service. So that's more suitable for people that, you know, want to agree the strategy with us and are happy for us to kind of get on and do it for them. And then we will meet with clients at least once or twice a year.

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But again, all guided by the level of detail that clients want. There's want and there's time as well. Like a lot of clients would like to sort of be involved more but simply don't have the time. So knowing that they can actually engage us to do that for them is it just takes another thing off their plate. Yeah, I can imagine there must be people who come in and say, you know, I've just I didn't know I had a great aunt, but she's left me a cottage or, you know, somebody's told me I really have had a death of a great aunt. Have you really? I genuinely had that. Well, you see, they have a tendency to have a lovely little cottage as well in my experience.

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But I'm sure people come in with very clear ideas or they've or they've been given some advice by a mate and they've said, I've been told I ought to be buying X or I should be investing in Y. And they come in hoping that you'll just make that happen. I mean, how do you deal with that? The advice from a friend and all the rest of it, I think typically the client is sitting in front of us. They kind of recognize that actually there's probably a bit more of a need than asking their mate in the pub about what they ought to be doing. It's not that challenging, really, because people are talking to you about a question. You just have to make sure you get to the hub of what they're really asking you, because a lot of the time people will come to you with a solution and they say, this is a solution I've got. How do I get it? Or what do you think about that? And the process is to take them right back before that to understand what we're really what problem are we working to fix? Is that quite hard to get to that sometimes? I think it's done badly a lot of the time. If somebody comes in and says, I've got a million quid I want to invest, I think a lot of advisers out there will be very quick to say, great, let's stick it 100 percent in video. In practice, actually, it's about taking the time and people don't really understand what they are trying to achieve a lot of the time. So when are you going to retire to pick on the most obvious one? A lot of the time that was defined as sixty five because that's when we got our state pensions without actually really thinking about what do I want to do? So you need to spend quite a bit of time to challenging the clients. The other one we get all the time is I don't want to pay inheritance tax.

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But the next question typically is, well, is it the inheritance tax you don't like? Could you want your family to inherit more? And the two don't necessarily go hand in hand. They just recognize inheritance acts as the problem. So you just have to take the time and really listen. But listening really takes quite a bit of asking the right questions first. And that comes with having sat in. I don't know how many meetings we've sat in with clients, but a lot. Yeah, must be very satisfying, though, when you get the nugget of actually what you're really saying. Is that you want to leave a nice lump sum for your grandchild or, you know, I really want to be able to finance my windsurfing hobby or whatever it might be. You know, it's it must be pleasing when you get to the heart of it. Yeah, absolutely. I think when we ultimately you have build a relationship with a client and you really understand where they want to get to. And as you go on that journey with them and you see what you've built together actually sort of come true and enable them to do what they want to do, it's really satisfying. It's nothing better than kind of growing with a client in their life journey. Some people come to us and, you know, they might be unhappy in their role at work or, you know, they want to know if they could afford to stop. Or it's the decision around I want to carry on working because I love it, not because I have to. And, you know, I absolutely love coming out of those meetings where you sort of can say, look, I've actually demonstrated to you that now that if you want to stop tomorrow, you can. Or if you love your job, you can carry on doing it, but you don't have to. And it's those meetings are really sort of rewarding when you come out of them. You think, well, actually, that's why we're doing what we're doing because we are helping people. Yeah, we get to take part in our clients lives. Yeah, it's fantastic. You get that update of what the kids are doing, the union, all those things. And they finally get the house or they've done the development. Yes. Like you're part of it. It's really nice. It's really nice thing to be you're privileged to be able to have that sort of exposure to your clients and that honesty with them in the relationship. And any particular life stories that stick in your mind that you sort of witnessed or helped shape mold? There's a lady that sticks to my mind who came to us for a problem that she thought she wanted us to fix. And actually, what she really wanted to do was get out of her job. The advice ended up being quite complex. And in that instance, we actually took Holly and I took risk off the table for her. And that actually facilitated her to retire sooner. And it's usually the meeting afterwards, the year later or six months later, when they're sitting there regaling the stories of holidays, etc. But they're now doing that you helped them facilitate.

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It's great. I mean, at that point, you saying, OK, let's take a view as to where you're going to be in 10 years, or do you look all the way through to retirement at that juncture? Ultimately, you will take a glance all the way through to retirement. But I would say the younger you are, the shorter that time frame. So when you've got that first job, it's about just doing the basics. And it's possibly about saving towards a property. But when you're getting into your 70s and 80s at the other end of the spectrum, you might be saying, well, actually, this is my next 15, 20 years. That's what I'm going to need. This gives me an amount of money that I can help my grandkids with and the kids and get them on the property ladders, etc. So it comes down, as will be a lot of answers to the individual. But you're always keeping an eye on the long term. Yeah. Yeah. And I think there's quite a common sort of lifecycle for most people. So and what you what help you need or what advice you need at different stages in life is quite varied. So, you know, when you're a bit younger and you're working, it might be you're saving a little bit of what you can or it's about your pensions. Then, you know, maybe you have a family and suddenly your expenses go up and you've got debt and you can't necessarily afford to put money away in savings. So it's that you might be a high earner. So then you've got to think about your pension and all of those things. And then, you know, I think the kind of relationship that we have with our clients with our kind of different hats on the sort of dynamic shifts as people's needs shift. So there'll be some clients where, you know, actually the financial planning and that side of things is like the real priority. And then the investment piece is, you know, ticking along in the background. And then sometimes that can switch when the sort of planning requirements are quite steady and clients focus more on how their portfolio is performing, because actually it's just about growing at that point. So I think the advice people need changes over the course of their lifetime. And we shift, I guess, our focus on what we want to do to help people. Historically, it's been an issue about sort of short and not long term. So the concept was always you do this because it's beneficial today without any concept of how you necessarily would unwind that in the future or actually turn that sort of growth and that capital into the money that's going to be your cash flow of another. So you always have to keep an eye on both. But it does really depend on what your immediate need is going to be. And without wanting to, you know, terrify anybody who's listening or watching to this, clearly you will have seen examples of when people didn't plan appropriately. And there's some pretty bad results from that. It can or, you know, certainly disadvantageous results, should we say. I mean, I don't know if you want to share any of those examples now. I mean, I've recently had an experience with someone that came to us, a high earner who hadn't understood the sort of impact that the pension allowance had had and had been overpaying into their pension for several years and just had to pay a massive bill to HMRC as a result. And that we would say is kind of the basic planning. But if you don't understand the rules, which are changing a lot, change regularly and are often opaque. Yeah, very hard to know. And actually, the costly mistake has actually is what's brought them into kind of wanting to seek advice because they don't want that to happen again, but also have realised that they just haven't paid attention to things and need to. So the mistakes are not unheard of. But I think what we typically will see is you get people have just come in with a whole disjointed financial circumstances. One thing is pulling left. The other is pulling right and not really working for them and certainly not based on their individual circumstances or the family circumstances. So I think it's usually that hodgepodge piece that we see is probably the problem from a planning perspective. The other issue, the thing that probably had clients say the most is I wish we'd come to speak to you X years ago, either because they've stayed in cash for too long or they're sitting in front of us and they find out that there's things that they could have done. The longer you sit with your planning team and your investment team, the better the outcome will be when you get to the whatever it is you're trying to achieve. It's really that simple. I mean, chatting to the two of you makes it seem like everybody should come get advice from a wealth management company. No question. So what stops people doing that? Because lots of people don't. I think there's a combination of things. I think there's a misconception of what Holly and I do. Holly is the sort of 55 year old bloke in whatever you call those things. What are we called? Braces. Holly's a 55 year old chap in braces who's picking stocks. And the financial planning world came from a thing where I'm going to flog you a product. So I think there was a historic misconception. But also, I think people don't really know the question they ought to be asking and therefore they don't see an automatic need to come and speak to us a lot of the time. I think one of the issues is people don't think they have enough. And as we've touched on this, there's no lower limit.

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And quite frankly, I've had that challenge from people who have more than enough to sort of have that conversation. And it's always surprised me that they would think that it wasn't something that they should do. Surprising how often we get asked that. Have I got enough? Am I too small for you? It's a very strange question. Yeah, so I think that I think the industry has generally done a bad job of blowing away this mystery around what wealth management might be and that it's only sort of deemed for the sort of ultra-wealthy, ultra-high net worth. But that's not the case at all. And actually, wealth management, financial advice, investment management, we don't help ourselves by labeling it in so many different ways. But I think that's the main misconception. So hopefully this kind of demystifies some of the misconception there about how what we do is really appropriate for all sorts of different people. Is it expensive? Is it a barrier to entry the fact that it might cost quite a bit to get advice from people like you? I think it's perceived as such. And again, there's historic reasons for why people have probably come to that conclusion. But I think it's because they're asking the same question, what a wrong question, what am I actually getting for the fees? And all too often, people might feel that they're going to be sold a product or just be told some investments that are actually not going to work well for them. If they've got a question and they have to recognize it's going to be an element of fees for that. But ultimately, we talk to our clients about value. You know, if we can't deliver a return on your investment in us, that's a timepiece, but also a professional fee. perspective, then we're probably not going to recommend you proceed with that advice in the first place. And actually, what's quite refreshing if you come and speak to us is we will be honest with you about fees and value and talk to you if you should be. The initial conversation is without a charge, have the conversation and then make the decision if it's the right thing for you. Yeah, I mean, the human relationships side of things is clearly key. I mean, obviously, there is a lot of information and advice out there increasingly through AI as well. And, you know, we can't discount that. I mean, do you feel there's a place for that in people's sort of portfolio of advice, if you like? What would or do you find people coming to you saying, well, you know, chat GPT or whichever AI model they decided to go with that they've, you know, they've suggested one thing. I mean, is that part of your life now? I mean, I think you've said it there, this is all about wealth management in particular is all about relationships. So I don't think you can replace the ability to ask those probing questions and have that kind of deep interaction with with a client. There is certainly a place, you know, particularly for those that are just starting out on investing and, you know, might want a simple solution to kind of to set up a regular savings plan where they don't need need a Leon or a Holly to be involved in a relationship at an early stage. That could work. But I think for most of our clients who are looking for a really kind of comprehensive holistic view on kind of what they want to get out of life in the future, an algorithm or AI is not going to be able to understand the nuances of the family or their relationships or, you know, it might be able to look at a tax calculation or something like that. But it's not going to understand the deep sort of understanding we have of our clients. They don't know the question to ask in the first instance. The real that's a big part of it, knowing what question should I really be asking here? So is there then a rule of thumb where you'd say to anybody listening or watching to say, OK, what's the perfect time for me to start getting some management advice when it comes to my money? The answer is yesterday. No matter what, the answer would always be the best time was yesterday.

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Would you agree, Holly? Absolutely. I go for now. The best time is always now, particularly when it comes to investing. You know, like there's never a right time to do it. Don't hold off. You know, even if you're starting with a small amount, something is better than nothing. So absolutely agree with Leon. Get the right advice, but make sure you start.

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And so the one piece of advice then that you'd want to give to somebody to take away from this from this conversation, would that be it? Just whatever you do, even if it's tiny, just start investing now. Would that be your? Yeah, start investing. But also, you know, speak to an expert, you know, in the same way that around your house you wouldn't. Well, some people might, but you'd you've call an expert to fix your heating. You'd call an expert to build something, you know, a carpenter to build a cabinet. Don't ignore the fact that this can be complicated. You know, there's a lot involved, a lot of decision making. You want to get it right. And I think the first thing to do is speak to an expert about it. Yeah, it doesn't have to be scary. Yeah, exactly. So that's the top tip. Start yesterday from me. Start today from Hallelujah. Amazing. Well, listen, thank you so much, both of you. Our pleasure. Pleasure.

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Thank you so much for joining me for today's conversation and thank you to my guests, investment management, managing partner Holly Merriman and financial planning managing partner Leon Buckley, both from Evelyn Partners.

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If you'd like personalized guidance or want to explore your own wealth management plans in more detail, then the team at Evelyn Partners are here to help. Just follow the link in the description below. Thank you for watching and goodbye.