This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
What’s the difference between a financial planner and an accountant? Why might you use one over the other? In short, the latter helps with auditing and financial statements – such as your tax self-assessment leading up to the financial year (April in the UK). The former helps you with the big questions of how to build and protect your wealth, covering areas such as pension planning, investments and financial protection.
Whilst there are certainly important times to consider an accountant’s services, there are at least 8 areas where a financial planner may offer you more value. In this article, our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire explain these in more detail. We hope you find this content useful. If you’d like to speak to an independent financial adviser then you can reach us via:
T: 01282 772938
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Financial goals & dreams
An accountant can be very valuable in helping you gain a clear picture of the taxes you need to pay in the present moment. Yet most cannot identify long term financial goals with you and set a plan in place to move you towards them. A financial planner can assist with this, laying a road map to help you build that investment portfolio – or retire early.
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Investing
An accountant can tell you how much tax you owe on your investments – such as dividends and capital gains. If you want to know how to construct a suitable portfolio for your needs, however, then a financial planner will be much more helpful. He/she can also suggest ways to invest in a tax-efficient manner – such as through a Stocks & Shares ISA.
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Wealth growth projection
To understand where your net worth currently stands it can be useful to consult an accountant. For a clearer picture of how your income, expenditure, life events and investment growth may affect your wealth growth over time, a financial planner will enable you to achieve this through cashflow planning.
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Pension savings
Do you know how long you are likely to live, and whether your retirement savings will cover your expenses during your latter years? Research suggests that men between 40-54 typically expect to live to 78.9 when they will more plausibly live closer to 87.5. Women in this age bracket also underestimate their lifespan by nearly ten years. A financial planner can help you reduce your risks of running out of money in retirement with some careful cashflow planning.
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Wealth protection
How do you ensure that your hard-earned money is not suddenly eroded by a catastrophic life event, such as the premature death of a breadwinner in a household? Here, a financial planner can assist with crafting an effective wealth protection plan. This might involve bringing together a set of appropriate policies for life insurance, critical illness cover (CIC) and/or private medical insurance – to support your loved ones should your earnings be lost due to serious illness, injury or death.
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Estate planning
It isn’t nice to think about, but all of us die one day and leave a legacy behind us. What kind of wealth situation will you pass on to your loved ones? A financial planner can help you find out what your estate is likely to look like in your 80s or 90s, and craft an effective plan to mitigate unnecessary inheritance tax (IHT) which might eat into the wealth you wish to pass on to your loved ones in the future.
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Exit strategies
For business owners looking to sell their business in the future or leave a legacy to their heirs, there can be many complex decisions to make. How will it function once you leave, and how can you use the lump sum from the business sale to best serve your financial goals – in a tax-efficient way? A financial planner can be of great help here – guiding you through the complex choices involved with succession planning and estate planning.
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Retirement income strategies
Should you rely on the state pension to fund your retirement? Could you simply rely on the income from the tenants in a wide property portfolio? What about simply living off your pension savings, or using them to buy an annuity (i.e. a financial product providing a guaranteed retirement income)? Perhaps a mixture of some or all of the above? A financial planner can help you assess the suitability and risk involved with different retirement income strategies. This can all be done to mitigate unnecessary tax too – particularly IHT when your estate passes to loved ones. For instance, defined contribution pensions in 2020-21 are currently exempt from IHT but ISAs are not. Perhaps a financial planner can help you devise an income strategy which gives you a comfortable retirement, but also reduces unnecessary taxes on your estate.
Invitation
If you are interested in starting a conversation about your own financial plan or investments then we’d love to hear from you. Get in touch to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
Reach us via:
T: 01282 772938
