How your clients could make the most of financial planning in these 5 life stages

As your clients progress through the various stages of their lives, they could benefit from retaining a long-term relationship with a financial planner.

But what your clients may not realise is that financial planning could have different advantages depending on their age.

We’re able to help entire families to plan for a more secure financial future – so let’s take a look at how financial planning could add value to your clients at the following five life stages.

1. Early years (13 – 17 years old)

If your clients have teenage and young adult children, working with a financial planner could help them build a strong foundation for their future.

Firstly, your clients could make investments on behalf of their children. Here are two channels they might use:

• A Junior ISA (JISA). Your clients could open a Cash JISA or Stocks and Shares JISA – a junior account that operates similarly to a regular ISA. JISAs have a standalone contribution limit of £9,000 a year as of 2023/24. Once the child turns 18, the JISA turns into a regular ISA, and they have full access to the funds.
• A child pension. As of the 2023/24 tax year, your clients can invest up to £2,880 (net) into their child’s pension every year. Starting a pension for their child could mean the young person already has a substantial pot when they start working.

In addition to investing on a child’s behalf, your clients could also use the teenage years to teach young family members about the value of money.

This might include encouraging them to save some of their pocket money for later, explaining the basics of how money works, and instilling a sense of responsibility in their children.

If your clients already have a solid foundation of knowledge and financial skills from their relationship with a financial planner, they could pass this down to their children before they enter the adult world.

2. Young adulthood (18 – 25 years old)

At this stage, your clients might introduce their adult children to a financial planner, or visit them as a family.

Young adulthood comes with its ups and downs, but at this stage, financial planning could help individuals to:

• Learn the basics of earning, budgeting, investing, and saving
• Find the balance between spending money on important experiences and saving for later
• Navigate their first few years of earnings, including making pension contributions from an early age
• Create a medium-term financial plan for what they want to do next.

High-standard advice might come in extremely useful here, especially in the age of the “finfluencer”. According to research from Deloitte, 25% of banking customers aged 18 to 24 use social media for financial advice, and 20% have made investments based on guidance from influencers.

So, ensuring that young adults have access to a qualified financial planner might help them to make informed decisions from an early age.

3. Settling down (26 – 45 years old)

The age bracket between 26 and 45 is vast, varied, and contains several key life milestones for many people. These might include:

• Marriage
• Starting a family
• Buying a property
• Progressing up the career ladder.

Maintaining a relationship with a financial planner at this stage might help your clients and their children to:

• Find an affordable property that meets their family’s needs
• Keep putting money away for the future in the form of pension contributions, an investment portfolio, and cash savings
• Put a package of protection in place that might increase their long-term financial security
• Remain tax-efficient as their income increases over time.

Taking advice in this period of their lives could be extremely constructive for your clients, especially as, according to Legal & General, the “mid-life responsibility peak” hits at age 45. This peak is the culmination of both wealth accumulation and costs, meaning your clients might have the most money coming in and going out that they will ever have.

The study found that:

• Support costs rose by £300 a year between 2007 and 2022
• Midlifers (those aged between 40 and 60) spend £10 billion a year supporting others.

As such, managing the support of loved ones at this crucial wealth accumulation stage might be a difficult task for your clients to take on alone. Financial planning could enable them to ensure they can afford the support they offer, while helping them to make the most of the amount they earn.

4. Planning for retirement (46 – 65 years old)

While handling the mid-life responsibility peak, those aged 46 to 65 may also be taking on a new challenge: retirement planning.

Although paying pension contributions should be part of your clients’ financial plan long before the age of 45, these 20 years are crucial for solidifying their retirement plans.

Consulting their financial planner during this life stage may help your clients immensely:

• We can use professional-grade cashflow modelling software to project how much more your clients need to save for retirement, when they can afford to retire, and what their later-life income may be.
• Your clients could learn about key pension rules that may improve their tax situation in retirement.
• They may also put plans in place to use other savings and investments to fund their retirement, like ISAs and General Investment Accounts (GIAs).
• We can review your clients’ insurance cover and ensure that it adequately protects their finances from serious illness and death where possible.
• Your clients could learn about estate planning, which will become even more important in the next stage of their life.

Remember: it is never too early for your clients to begin planning for their retirement, but paying special attention to their later-life plans between the ages of 46 and 65 could pay dividends later on.

5. Retired (65 +)

When your clients reach age 65, it’s time for them to reap the rewards of their hard work.

Each stage in their life has led to this point, in which they can hang up their boots and enjoy spending time with their family, travelling, and taking care of themselves.

Nevertheless, this does not mean that financial advice is not valuable for those who are already retired.

Making sure they take their pensions and other retirement income sustainably and setting money aside for later-life care, for instance, are crucial aspects of retirement that a financial planner could assist with.

What’s more, those at retirement age are often the most concerned about putting provisions in place for the next generation.

Your retired clients’ goals might include:

• Helping their children onto the property ladder
• Placing funds into trust for the next generation
• Setting money aside to leave as a tax-efficient inheritance.

So, even if your clients are already well into their retirement, it is never too late to benefit from bespoke financial planning.

Get in touch

If you have clients who could benefit from holistic financial planning both now and in the future, put them in touch with us. Email enquiries@prosserknowles.co.uk or call 01905 619 100.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, will writing, cashflow planning, or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.