Case study Brief

Sarah was, in her own words, a late starter when it came to putting money away for her future. Indeed her life only really started after she escaped from a terrible marriage in 1997. But she was determined to take her future into her own hands and work hard to secure a retirement for herself to enjoy.
The cashflow modelling exercise she went through as part of the Financial Planning process took her from being convinced she wouldn't even be able to run a car when she stopped work, to being excited about the true possibilities her future held. All she needed was some perspective and the impetus to continue saving hard to reach her goals.
She did not need complex planning or clever investment strategies. She just needed to keep following the basic rules of Financial Planning and her future was secure.
This is a real life case study. Names and some other details have been changed to protect confidentiality. 
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Sarah is an optometrist. She sold me the glasses I am wearing right now.
At my eyesight check three years ago she asked me my occupation and I told her I was a Financial Planner.
At my most recent check she confirmed with me if this was still the case and said that she really ought to come and see me.
A few days after my eye appointment, I received a call from her and we arranged to meet in my office, I explained how we work and she agreed to proceed to the Design, or planning stage of our process.
Sarah had escaped from an abusive marriage in 1997 with her life and pretty much the clothes on her back. She had no financial safety net of her own at that stage, and mercifully there were no children involved. An incredibly disciplined and determined lady, she decided that she needed to take her financial future into her own hands and had begun to save.
She had a good salary as an optometrist and began to put it good use.
On the back of my business card I wrote down the address of my financial education website, MeaningfulMoney and suggested that she might like to watch the video entitled What is Financial Planning? She promised to do so.
When she came into my office at age 58, 15 years after her divorce, she was convinced she was going to be destitute in retirement. She had started too late, or so she thought, to make anything like a comfortable retirement for herself.
She had vague thoughts about moving somewhere cheap in Spain when she retired but hadn't really dared to hope that she might actually be able to do so. She told me that she doubted she would even be able to afford to run a car and get around. In reality she was already saving 45 per cent of her net income and had quickly worked up to that level from a standing start.
She had amassed over £100,000 in Isas and £200,000 in a personal pension. She had also paid off her mortgage. As she was spending only £20,000 per year out of her £45,000 per year net income, this became the baseline income we wanted in retirement. She lived frugally now but had everything she needed.

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Using cashflow modelling I was able to show her that by continuing to save at the current rate, and including her state pension, she would have amassed enough money by age 65 to provide an income in excess of the amount she was currently spending on herself. As is so often the case, this was the point at which she leaned back in her chair with a big smile on her face and exhaled deeply. She had done it; she had done what she needed to do to secure her financial future. But she had a question:
Could she reduce her hours immediately and still be able to retire at age 65? I showed her that she could do so. Reducing the hours she works now would have an effect on the amount she is able to put away but still it would be enough to give her the retirement funds she needed. By carrying on working full-time, she was in effect working to secure the 'gravy' on top of her retirement plans - the treats and holidays that she never dreamed she'd be able to have. The same was true for retiring a couple of years early, though combining these two scenarios, working part-time and retiring early, showed she was cutting things a little fine.
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Another question: Could she retire right now?
This showed a different outcome, a likelihood that she would actually run out of money in her mid 70s. Given that her mother was still alive in her late 80s, this was not attractive to her.
So we had established that she needed to work for the time being, but not full time if she didn't want to. I saw her jaw set as she determined that even having already secured the retirement she needed, she would now work towards the retirement she wanted, finishing work as originally planned at age 65.
At our next meeting we began talking about the investment strategy underpinning her plans. Like most people she had amassed various Isa holdings and a couple of different personal pensions on the advice of a two different financial advisers. She mentioned at this point that most advisers don't honour their promise to keep in touch after the initial sale had been completed. I assured her that her experience with me would be different.
There was no cohesive investment strategy in place, just a mish-mash of different flavour-of-the- month funds. We talked about risk, taking in her investing experience, particularly during the recent financial crisis and her tolerance for loss. She registered on our risk scale as a Balanced investor, and I explained what that means in terms of
portfolio construction and likely variance of returns. We do not select investments at Jacksons or even run model portfolios. I remain convinced that very few advisory firms have the time, skills or resources adequately to construct portfolios or manage them appropriately. We certainly do not have these things, so we'd rather let the experts do it. I introduced her to the way that our chosen DFM, Seven Investment Management, run their portfolios and showed them how they had performed
admirably even in the depths of the crisis.
Sarah is a bit of a technology junkie and, like me, is a fan of Apple products. When I suggested to her that we group her plans together for admin purposes onto a single platform, invest cohesively across all her tax wrappers, and that she would be able to log in to view her entire portfolio at any time
using her iPad, she liked this idea very much. Our platform is white- labelled so her statements and login page would all be branded as Jacksons, further reinforcing that we were the ones who showed her that she was in very good financial shape. She agreed to all my recommendations, including surrendering an expensive whole of life plan that she didn't need. We consolidated her Isas and pensions on to our platform and tracked the whole thing through from beginning to end.
Once all the transfers had happened and the new direct debts were up and running smoothly, Sarah and I met again to tidy up the remaining paperwork and agree a schedule for reviewing her portfolio. We agreed to meet six-monthly initially, as she was in the final stretch of her working life before retirement and we needed to keep a close eye on things.
We went through the files she had on her old plans and I let her know which she could destroy and which she should keep hold of for now. It occurred to me that even
though we hadn't done any complex planning for her, just tidied things up a bit and tightened up her investment strategy, we had still provided significant value to Sarah in giving her the context she needed to understand her true financial position. She agreed and handed me a thank you card. Inside she had written:
"I will always be grateful to you for helping me see my finances in the sunshine, rather than the rain" And that is the value of Financial Planning, right there in a client's own words. Most clients don't need Cypriot QROPS or complex trusts. All they need is perspective, a visualisation of their future which gives them something to hang on to, to get excited about. The adviser who helps them achieve that perspective and then guides them towards their future will gain a client for life.

What happened next
Since our initial planning meetings, Sarah has left the private opticians practice where she had worked for several years and has begun working for a national high street optician. When she told me this and provided me with details of the pension scheme at her new employer,
I presumed that she would join the scheme and cease contributing into her Sipp.
Nope. Sarah had already determined that she was going to pay in the maximum possible into the new scheme, which would be matched by her employer, while continuing to contribute over £1000 per month gross into her Sipp. Indeed, she had taken the job with the intention of putting the higher salary she would receive straight into her retirement portfolio, working harder than ever to secure the retirement she desired.
I was astounded by this, but she reminded me of our cashflow planning session, telling me that she was intent on providing as much gravy for herself as possible!