3 things Business Owners should do to avoid having to pay for a Financial Planner
I have been thinking. If there were just 3 things that Business Owners could do to avoid having to pay for a Financial Planner (like me!), what would they be?
It is a little tricky because there are so many things to consider and each particular thing has at least 10 different options on top of that. The Financial Services in the UK really is a bleeding basket case. I am working on a formal 10 point dossier of exactly what to do to avoid paying us and I will release that when it’s done.
For now, though, I have narrowed it down to 3. These 3 things I believe can really propel you along a great financial path, without having to invest time and effort in working with a financial expert and, more importantly, without having to pay their fees!
1. Insure your Good Self
Life Cover, Income Protection, Critical Illness… these are all industry buzzwords which can be confusing and obscure what is really required.
The reality is, you simply need to insure yourself against something bad happening, something that is out of your control.
Ask yourself, what would happen to your financial landscape if you became ill and unable to work or lead your business? What would happen to your team and your plans for the business?
Worse yet, what would happen if you died? Would your family be able to cope? Would your employees still have enough coming in to get paid?
At a real simple level, you should be insuring against death or serious illness, for both your family AND your business. You can apply for insurance through most comparison websites, there are loads to consider but if you look to insure against your death (few hundred grand insurance is quite cheap!) and insure against serious illness or injury, then that is certainly better than no cover at all.
If you go direct, you can save yourself thousands of pounds in commission payments and have the premiums reduced. Remember, Life Assurance and Income Protection are the two main ones you need… there are loads more, but this is a good and affordable place to start.
2. Invest towards your unknown future
If the business is going well and you’re paying yourself a salary and dividends, you should get into the habit, early doors, of investing a set amount on a monthly basis into the stock market.
Over the many decades that Financial Advisers have been plying their trade, investing has become very difficult to understand, full of jargon and heavily sales-oriented. The reality is that if you have a proper investment strategy and follow certain behavioural rules, then the stock market will be the only thing working for you when you are not working yourself.
Investing in the stock market is a long-term game. Equities are volatile and will bounce up and down. This is normal and to be expected. You need to be investing with the mindset that this money is future spending money, for decades down the line.
There is a lot to learn and understand, about volatility in particular, before you start on your investing journey but there is plenty out there to help educate you and if you wanted to start that on the path of creating wealth for decades to come, then investing on a monthly basis, as early as you can, will stand you in great financial stead.
As I regularly say, I have never met anyone who regretted saving and investing too much… and yet pretty consistently I meet someone who regrets not doing so.
If you were to consider using any of the following companies to kick off your voyage into investment, you couldn’t go too far wrong: Money Box, Vanguard & Hargreaves Lansdown. (This is NOT investment advice).
3. Make Pension Contributions to yourself
Pensions get a bad name and although I understand why, they actually get a bad deal and are really very worthwhile. Pensions have been caught up in the headlines in the recent past with words the media love to use like “mis-selling” and “fraud”.
The problem, though, is not the pensions themselves, it is the dodgy advisers and rogue wealth managers who have incorrectly sold or advised on pensions. That or the investors in a pension have not behaved as they need to during temporary market declines and this has resulted in a loss. Either way, it’s a people problem, not a pension one.
As a business owner, you can make a pension contribution as an employer, but directly to yourself. As an employer contribution, it is deemed tax deductible and therefore you can offset the Corporation Tax and National Insurance if it suits. It is also a great way to get money out of the business, because after salary and dividends your options are pretty limited.
Furthermore, you get to invest the money yourself, with tax-free growth. Better yet, you cannot touch the money for many years (depending on your age of course). This insures good investor behaviour therefore the money has the best chance of growing.
Honestly, if your business is doing well and you have residual cash that you’re not going to need in the short-term, sticking it into a pension for yourself is almost a no-brainer. If you don’t want to pay anyone else to set this up for you, then you can go to Hargreaves Lansdown and set up a Pension in about 7 minutes. Easy. (Again this is NOT Pension advice)
As a business owner, what have you done to help save from paying fees to a professional service? I’d love to know.
Any ideas for my white label document would be most welcome! There might even be a beer in it for you?
Alfie Mullan, June 2019
Want to hold a conversation that will quite literally change your life? Well drop me an email and we can get this new life on the road.