When you’re making financial decisions, it helps to get good advice, but who do you speak with?
Some people speak with friends, or go to online forums to search for guidance, answers, or validation of decisions. One of the sources of support may be your partner. Yet, despite seeking financial advice from a partner, some research suggests it’s often not acted on, particularly when it comes to investing.
Investing is a big decision and there are many factors to consider, from the amount of risk to take, understanding your core objectives, ensuring you are compliant, that investments are regulated, and down to the detail of which product to invest through. It’s natural to want to discuss some of these aspects with someone.
Like some other aspects of life like health for example, finance and investing can attract uninformed advice. This may be well meaning but unqualified individuals, or more malicious opportunists, plus the raft of keyboard warriors espousing their ideas and feedback about investing on forums. Like health, getting it wrong can have serious implications; it can be good to validate your decision-making process with your social network, but you should leave the formal advice and decision making to qualified professionals.
Expert advice can help you understand investment options and how they suit our goals. You don’t have to choose between getting professional advice and discussing your financial options with a confidant. It is more important to ensure that the financial professional is qualified and regulated. After that, you have to make sure they ‘get’ you. It is sensible to discuss this process with a friend or especially, your partner. In fact, working with a financial planner as a couple when investing can be beneficial.
Here are three reasons why.
1. It can help you understand you and your partner’s priorities
Priorities and goals should drive your financial decisions. What you want to do with your money and your long-term goals will affect which investment options are right for you. Part of the financial planning process involves looking at what your long-term aspirations are.
Going through this process as a couple can help bring both your aspirations together. It is often the case that people are too busy in daily life to take time to discuss what is important to them. When we discuss goals with our clients, its often an area that has been overlooked. It is important to understand each other, and work out what is best for each of you and both of you.
Investment decisions should focus on what you want to achieve. As a result, an open conversation with a partner about short-, medium-, and long-term goals is a core requisite before making investment decisions. In many cases, you can create an investment strategy as part of a wider financial plan that reflects a variety of goals.
2. It can help ensure you both feel comfortable with investment risk
It is common for us to see two people in a relationship with widely different risk profiles. Whilst investments have different risk and return profiles, so individuals have different attitudes to market volatility and risk. It is an important process to go through this analysis to understand yourself and each other better so you feel comfortable with the recommendations and that the that is being taken is appropriate. Investment risk should link to your goals and other factors, such as the timeframe and other assets you hold.
A financial planner will be able to create an investment portfolio that reflects your risk profile and marries the tension between your risk profile and your objectives. If you’re making financial decisions as a couple, it can provide added confidence about your financial security and that of your partner. It can also help you answer “What if?” questions about the future, such as what to do if investments perform poorly over the next few years or whether you need to stop regular contributions, for example.
3. It can make investing part of your wider financial plan
You shouldn’t make investment decisions in isolation. They should be a part of your wider financial plan, but it can be difficult to know how they fit in. Discussing your goals with your partner and a financial planner can help you build a long term, goal focused plan that suits you and brings together all your assets. It means all your assets are helping you work towards what is most important for you, whether that’s early retirement, paying off the mortgage, or leaving a legacy for your family.
Please contact us if you’re thinking about investing or would like to review your current investment portfolio. We’re here to help you make investment decisions that reflect your goals and those of the people most important to you.