Why financial planning is like installing your dream kitchen

We’re currently in the process of getting a new kitchen installed, which isn’t, as it turns out, the most relaxing way to spend a summer…

From living in a temporary building site to finding a near fatal mistake with the measurements, it’s been a lesson in the importance of good communication, trust and service.

These are, of course, three important elements of financial advice: but it’s easy for us as planners to get complacent about them. However, being in the client’s shoes for once gave me an opportunity to think about what it’s really like to embark on the financial planning journey.

So here are my thoughts on the parallels between kitchen planning and financial planning.

1. Trust: a leap into the unknown

For me, the idea of even contemplating working with someone on a major project like a kitchen is enough to put me off from the start.

As soon as you start thinking about it, you can’t stop imagining worst case scenarios – cowboy builders, unfinished plumbing or unsafe electrics. This means you’re primed for the worst to happen. You may not know anything about fitting a kitchen, but you know what could go wrong.

Starting from a point of negativity - and even fear - isn’t pleasant, so you’re eager to find reassurance as soon as possible.

Naturally you’ll do a bit of digging to find your expert. You’ll look at their credentials, check their Google reviews and have a read of some case studies of their previous work.

But no matter how much due diligence you do, at some stage, you still have to hand over the reins to someone else. This is the truly terrifying part. You wait for a ‘sign’ that you’ve made the right decision. But how do you know what to judge them on?

Once you see ‘evidence’ that you can trust them, everything changes. You start to relax and even enjoy the process.

So what’s the lesson here? To think carefully about every single touchpoint a prospect might experience before – and even after – they start working with you. Is it giving them what they need to feel confident, informed and engaged about working with you? Or could it be misinterpreted and strike alarm bells?

2. Experience: sing it from the rooftops

To install our kitchen, we’re working with both a designer and a builder.

While the designer is great, she’s never physically installed a kitchen – or “been on the tools” as the builder describes it.

This has led to a few crucial details that have needed to be reworked. For example, the washing machine was placed somewhere that would look great aesthetically, but there are no pipes there to connect it to the water mains. 

Without practical knowledge, it’s impossible to know that this wouldn’t work. The builder noticed because he’s getting his hands dirty and looking at what’s going on inside the walls.

Just like financial planning, it’s important to speak to someone who understands things at a deeper level.

Investing might seem easy on the surface, and it can be tempting for clients to think they can do it themselves. But they need to know that there’s a lot of hidden knowledge, expertise and experience that’s crucial – both to creating a kitchen and a financial plan. 

Yes it can be quite dull, but it’s essential to at least point out the level of ‘behind the scenes’ stuff we do on a continuous basis.

While it’s easy enough for a kitchen to be rejigged retrospectively, no one wants that for their pension.

3. A long-term view is key

We might be living in a building site and surviving on microwave meals for now, but we know it’s a case of ‘no pain, no gain’. We need to focus on how we’ll feel in the long term – once everything is in place, we’ll instantly forget about these tough few weeks.

Taking the good with the bad is all part of financial planning, too. Just look at the market right now. There’s volatility, high inflation and rising interest rates. Clients are understandably tempted to move their money into cash where they could get 5%.

Short-term panic can upset the overall plan, but it’s a natural reaction. Yes, it’s uncomfortable – but unfortunately it’s all part and parcel of being a long-term investor. It’s important for us to remind clients of this – that even in good times, the important thing is to focus on the horizon and what’s ahead.

It’s good to encourage clients to think about their future selves and that successful investing is about staying the course, being patient, and not worrying about the amount of Pot Noodles you’ve eaten over the last month because in the grand scheme of things, it doesn’t really matter.