Why we say: “It depends”

When you first start looking into the world of wealth planning, it can feel overwhelming. There is a lot of technical language out there, with few concrete answers – at least at first. 

You may notice a theme in the articles, podcasts, and guides you come across. The answer to any query you may have is some variant of “it depends”. 

What should you do about inheritance tax?

It depends. 

How should you invest your money?

It depends. 

Will you be able to retire when you want?

It depends. 

It can be confounding to face this response over and over again. It may even cause you to doubt the usefulness of financial planning entirely. 

But this apparent lack of certainty from the outset demonstrates exactly why you should reach out. We cannot give exact plans or recommendations until we know the ins-and-outs of your circumstances. Even two seemingly identical starting points could require drastically different plans to reach the same goal. 

To help you understand why this is the case, we’ve provided some common scenarios that regularly emerge in financial planning – and broken down the variables that can drastically alter the road ahead. 

Despite starting off with similar goals, the differences between these two clients would result in drastically different plans. 

Client A has more money to begin with but with such a large family, they may need to support their descendants with housing and other costs. Also, regular trips abroad will prove to be expensive, which could require more robust spending planning, especially considering they don’t want to return to work. 

Client B has less money to start with but with no dependants, and relatively meagre spending plans, that may not be much of an issue over time. The heightened healthcare risk may result in care costs arising but as they’re willing to go back to work if needed, there could be more flexibility in how they handle unexpected challenges down the line. 

Two very successful professionals, with very distinct circumstances and outlooks. 

As Client A works freelance, there is the risk that their income could dry up if there’s a downturn in their field. Although, this could be partially offset by the fact that they own their home outright, minimising housing costs. The fact that they invest regularly indicates they may have a higher risk tolerance, but given their spending habits – efforts may be needed to balance their books. 

Client B appears to be in a relatively stable position with their salaried income, and savings habits. But given that their income is unlikely to rise much further, and that they leave a lot of capital in cash, there is a big inflation risk here. Also, with a mortgage still to pay, there could be limits on how much extra capital they can devote to investing. 

Both of these clients will need to consider how much risk they’re willing to take on to achieve the substantial growth they desire. There could be a need to be more adventurous with investments if they want a better chance of securing growth, while still utilising pension tax efficiencies as much as possible.

Given they want to retire at 55, there isn’t much time for client A to build a decent retirement pot. Indeed, as they hope to start a family, it will make it even more difficult to save. Although, with a high risk tolerance, inheritance on the way, and a wider property portfolio, it may be possible to set them up for a comfortable retirement with some immediate planning. 

Client B has fewer routes ahead of them, given they are risk averse, and don’t have wider assets to draw upon. Not wanting children should limit their costs however, and given they plan to retire much later in life, it could be possible to build a decent pension pot, even with more conservative investments. 

We wish we could tell you instantly what you should do, and how you should prepare following your first enquiry or call. It would make life easier for both you and us. 

But evidently, we can’t. In fact, it would be inappropriate to even suggest that we could. We say “it depends” because everything in wealth planning depends on individual circumstances. 

Yes, there are some principles that can generally apply across the board. But those principles can quickly be undone by the uniqueness of you. 

So, if you want more robust responses to your questions – reach out to us to get a meeting booked in. There is no charge for the initial no-obligation consultation but fees and charges will apply you take out a product or service. Also, eligibility criteria applies.

This article is for information purposes only. It is not intended as financial advice. 

The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors might not get back their initial investment.

Tax treatment depends on your individual circumstances. Tax rules and your circumstances may change in the future

The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed and can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.

Any views expressed are our in-house views at the time of publishing. This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.