Financial planning is a lifelong process

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Play, download and edit the free video Financial planning is a lifelong process.

Jason Butler & Robin Powell

RP: Something that many investors often fail to appreciate is that financial planning isn’t
something you can do once in your life and then forget all about it, it’s a lifelong process. Sure, there’s a great deal of work to be done at the outset — deciding on your financial goals,
working out how much you need to invest to achieve those goals, and of course devising a
strategy. But that still leaves plenty of things your adviser will need to do on an on-going basis.
Jason Butler was for many years a very successful financial adviser. He now works mainly as
an author and a consultant.
JB: That planning process of what’s important to you, do the numbers, project managing, isn’t
just like, you know, turning up to a gym with a two month session with a gym trainer, it’s about
evolving new habits, regular, positive habits, proper decision making, accountability and a
proper discipline to continually check in with your plan and your finances. Sometimes you’ll
have to do lots of changes, sometimes you won’t.
Sometimes there will be difficult decisions, sometimes they’ll be simple. Sometimes the way
ahead won’t be really clear, it won’t be obvious, but you’re going to have to plump for
something. And so, I remember when I was working with clients sometimes they’d say well, it
hasn’t been a busy year, but when we said what did you value, I value the discipline, the
structure, and the sense of peace of mind that I have.
RP: One of the most important tasks for your adviser is to rebalance your portfolio, perhaps
once or twice a year. It’s something you need to do, but investors who try to manage on their
own, without the support of an adviser, often fail to.
JB: Rebalancing is just really simple. If I start out with fifty per cent of my portfolio in bonds,
and fifty per cent in equities, and regardless of the value of the portfolio if the equities now
represent sixty per cent of the portfolio, and the bonds represent forty, I have to sell some of
the equities to bring them back to fifty and buy more of the bonds, now what that means is
you are selling off something that has gone up which is counterintuitive and behavioural
science sats we’re unable to do, and you’re buying more of something which has fallen which
makes us compound our fear and our pain so it’s counterintuitive but what it does is it means,
it doesn’t mean that you maximise your return, but what it does mean is it means that you
keep the risk-return profile of the portfolio in check.
RP: So, when choosing a financial adviser, make sure it’s someone you’re happy to work with
for a very long time. Thank you to Jason Butler, and to you for watching. Goodbye.

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