One of the things I’ve noticed over the years is that we spend most of our lives doing the same thing.
Accumulating wealth.
We leave education, start work, buy homes, raise families, build pensions and gradually create a degree of financial security. There are bumps along the way, of course. Redundancy, negative equity, market downturns and the odd unexpected surprise that life likes to throw at us.
But generally speaking, for 40 years or so, we become accumulators of wealth.
And after doing that for decades, it’s hardly surprising that we become protective of what we’ve built.
Which brings me to a phone call I received recently.
I had a enquiry from a gentleman whilst I was driving between a client meeting and the office in Bristol. We hadn’t spoken for nearly 20 years, although I remembered him immediately. In fact, I also remember an incident involving a bedroom door at a party about 40 years ago, but that’s probably a story for another day.
His reason for calling was his mother.
She had recently moved into a care home and his brother was convinced that all the family’s inheritance would disappear in care fees.
“It’s all going to go,” he told me.
Now, when people are worried, that’s often where the conversation starts. We jump to the worst-case scenario.
So I asked a few questions.
His mother was receiving a State Pension, Attendance Allowance and a survivor’s pension following the death of her husband. Together, they provided a meaningful level of income. There was also a property worth a reasonable amount that was likely to be sold.
As we talked through the numbers, the situation began to look rather different.
The point isn’t whether a particular investment return would fully cover the care fees. Every situation is different.
The point is that there was more than one option.
And that’s something I’ve seen time and time again throughout my career.
People come to us worried about inheritance tax, retirement income, market falls, care fees or helping their children financially. Very often, they arrive believing there is a problem with only one outcome.
But financial planning rarely works like that.
When you slow down, gather the facts and look at the whole picture, there are often more possibilities than first appear.
I suspect part of the reason is that we’ve spent so long learning how to accumulate wealth that any perceived threat to it can feel alarming.
Yet experience teaches you that panic is rarely helpful.
Most financial challenges aren’t solved by worrying about them. They’re solved by understanding the options available and taking a considered approach.
So if there’s one thought I’d leave you with, it’s this:
Don’t panic.
Whether it’s care fees, inheritance tax, retirement planning or something else entirely, the first assumption is rarely the whole story.
Take a breath, look at the facts and explore the possibilities.
Over the years I’ve learned that most financial problems look bigger when you’re facing them alone. One of the benefits of having a trusted adviser is having someone who can step back, look at the whole picture and help you identify options you may not have considered yourself.
And if a friend or family member comes to you worried about a financial issue, encourage them to speak to their adviser too. Chances are they’ll be pleased to help, and a short conversation may be all that’s needed to turn a problem into a plan.
In my experience, there’s almost always a way forward.
Until next time,
Digby
