Is subscription financial planning right for me?
On 1 April we introduced Future intro, our newest service providing financial planning from just £50 per month. But who is it for and more importantly, could it help you?
In our case study we take a look at Lucy and Simon and how Future intro helps them.
Lucy and Simon
Lucy and Simon are both aged 35 and have recently had their first child. The birth of their daughter has made them start to think a bit more about their financial future.
Current circumstances
Simon works for an IT company earning £40,000 a year and has recently received a bonus of £25,000. He is unsure whether to invest the money or repay some of their mortgage, Lucy runs her own consultancy business earning £25,000 a year.
Both Simon and Lucy have pensions from previous employment and Simon is a member of his workplace pension scheme. They have cash savings of £20,000 in a joint account. They own their home which is valued at £175,000 with a mortgage of £100,000. They have some life cover in place for their mortgage and Simon receives sick pay from work for up to 4 weeks.
Future Vision
We worked with Lucy and Simon to put aside the concept of money and think about how they want their future to look. They identified the following short and long-term goals.
· To buy a new car and redecorate the kitchen in the next three years.
· To repay their mortgage as soon as possible.
· To both retire by the age of 60.
· To ensure that the remaining partner and their daughter would be protected should something happen to one of them.
Although they weren’t sure exactly what their expenditure would look like in retirement, they wanted to make sure they could maintain their standard of living and enjoy holidays and meals out.
Collaboration
We asked Lucy and Simon to complete risk tolerance questionnaires and discussed their attitude to risk and feelings towards money and debt. The results indicated that both Lucy and Simon were fairly cautious. Their mortgage concerned them and although the repayments were affordable, the outstanding debt was a worry. In view of this we agreed that it would be a good idea to use some of the bonus to reduce their mortgage.
We prepared personal cashflow models and explored options. Our analysis showed they would need to save a little more to be able to retire at age 60. After an analysis of their budget, we identified that they could afford to invest a further £200 per month for their future.
After completing our analysis, we proposed the following:
· Retain their existing cash savings as an emergency fund.
· Keep a further £15,000 in cash to cover the cost of a new car and kitchen and use the remaining £10,000 from Simon’s bonus to reduce their mortgage.
· Set up a new personal pension for Lucy and begin making employer contributions from her limited company.
· As Lucy’s existing pension had high ongoing charges, we recommended transferring her existing pension benefits to the new plan.
· Simon’s pensions were low-cost and met his needs, however the investments were not in line with his risk profile. We recommended rebalances into appropriate funds.
· We recommended additional life cover plans to protect their family and income protection so they could continue to receive an income if they were unable to work due to ill health.
Implementation
Once we agreed on a course of action, we were able to handle all the paperwork on their behalf. We set up new plans and liaised with Simon’s pension providers to ensure his existing plans were invested in the recommended funds.
Results
When Lucy and Simon approached Future, they were unsure what to do with Simon’s bonus and whether they were on track for their future plans. By understanding their future vision, as well as their personal feelings towards risk and debt, Future intro was able to give them the answers they were looking for and ensure their family was protected.
If you’d like to find out more about Future and how financial planning can help you, visit our website: www.thefuturefp.com
