Wealth Coaching: Why Everyone Needs A Wealth Coach

If you have money, you have wealth, so don’t be put off by the term ‘wealth’ and its connotations. If you want to improve at something, you get a coach. So, if you want to manage your money, make it work harder for you, and take sensible, forward-thinking decisions, it makes sense to speak to a wealth coach. Just make sure you’re talking to a fully qualified, professional, regulated financial adviser, not someone who is just calling themselves a wealth coach.

There are many aspects of your financial journey you can take control of yourself. A wealth coach can help you prioritise and plan. They can advise you on the areas where you can do things easily yourself and those where you really need professional or regulated advice. They can help you get your money to work for you to help get you in a position to be able to retire in the way you want to, when you plan to.

It’s never too early to start managing your money and planning for the future. How many times have you heard of lottery winners, footballers, or popstars with huge fortunes ending up penniless? With a bit of planning and the right advice they could have grown their wealth rather than losing it all.

A wealth coach’s seven steps of wealth planning

Wealth planning is a series of steps that are connected rather than a checklist of things you can tick off. Follow these steps and, with the right advice along the way, you can manage your wealth more effectively. Most importantly, don’t assume that advice coming from your friends, family, or colleagues about what works for them will work for you.

The seven steps of wealth planning are:

1. Know your goals
2. Know your numbers
3. Improve your financial health
4. Build on solid foundations
5. Make effective investments
6. Access your plans
7. Pass it on

1. Know your goals

Do you want to retire early? Do you hope to travel or live a quiet life? Do you plan to leave money to the next generation? Firstly, you need to know what you are aiming for so you can understand how much you will need and when. Take some time to think about what’s important to you.

Things to think about:

• What you will need to retire
• When you will need it
• What you want to save for
• When you want to retire
• What you want to do when you retire
• What your future lifestyle requirements are
• What you want to leave behind

Figuring out what you actually need to live on frees up the rest for saving, and starting early multiplies your options. So, once you know the basics, you can move on to step two.

2. Know your numbers

• Income

Figure out where you’re making money and where you’re spending it. For some, working out income is just a question of looking at payslips. For others it may be harder to assess. If you’re self-employed, have a variable income, or multiple income streams, make sure you know what should be coming in and when - and how reliable it is.

• Expenses

For expenses, include all the bills you need to pay during the year. If you don’t know what you pay for food, utilities, or entertainment on a monthly basis, for example, go back over old statements and work it out. Don’t forget to include amounts for those ‘unexpected’ expenses that often occur. This helps you build up a realistic picture of your financial wellbeing.

• Other income

Work out what you have in savings, investments, and pensions – it all needs reviewing regularly anyway. You might need to do some detective work to find them all initially!

• Debts

You might have loans, credit card debt, or other debts that you need to pay either now or in the future. Make sure you know the amounts, interest rates, and payment terms of all the debts you have.

When you know your numbers, you can make a start on step three.

3. Improve your financial health

Once you are clear on what’s coming in and going out, you can make adjustments to improve your financial health.

For example, can you find a better deal on your utilities or insurance? Do you need all the streaming services you pay for? Can you pay off expensive debts and consolidate others and look to pay them back as soon as possible? Is there another income stream you haven’t considered? If you have your own business, do you have a strategy to reduce its reliance on you and provide an exit?*

Take some time to help maximise what you have. This won’t just help your financial health both now and in the future, it will also help your general wellbeing and mental health. Improving your numbers doesn’t just reduce financial stress. Once you’ve got the foundations, you can start building with step four.

4. Build on solid foundations

Protect what you already have before you start investing by building on your now solid foundations. This is where income protection, life cover, and medical insurance come into play. In the event of the income you are dependent on not coming in for a while, or unforeseen medical expenses cropping up, they could make all the difference.

• If you’re self-employed, income protection is particularly important as there’s no employer sick pay to fall back on.
• Life insurance covers a certain period of time and will pay out if you die within the insured period. Life assurance pays out when you die, whenever that may be.
• Medical insurance: make sure you check what will and won’t be covered when you take out medical insurance.
•  Critical illness cover: this pays out a tax-free lump sum in the event of a critical illness occurring during the policy term.

Once your foundations are in place, step five comes into play.

Please note, most protection plans do not have a cash-in value and stop if payments to them cease. 

5. Make effective investments

By starting early, using the compounding effect, spreading your risk, and using tax efficiencies you can create an effective investment strategy. Understanding risk and reward as well as avoiding emotional triggers with investing are key. This is an area where good professional advice will save you money rather than costing it.

Speaking to a financial adviser will help you identify decisions that are right for you. They will work with you according to your attitude to risk, goals, and timeframes. They can help you spread savings and investments between short, medium, and long term, diversify, and use available tax opportunities, whilst reminding that investments can rise and fall in value meaning returns aren’t guaranteed and you could get back less than you invested.

However, it’s no good having a retirement plan that you can’t access, which is why step six is so important.

6. Access your plans

Know how and when you expect to access your plans and make sure that what you have fits with what you want. Different elements of your wealth will be accessible at different stages, and it is important to know what your options are. You’ll want to make sure you have everything set up to work in the way you want it to. As retirement timing can change according to varying circumstances, make sure you revisit your plans periodically too.

The age that you can currently access your pension is 55. However, the normal minimum pension age is set to increase in 2028 to 57 instead. Don’t be tempted to unlock, or release, your pension before 55 (or 57) unless you find yourself in very specific circumstances that would make it preferable. Avoid scams offering to do this for you! Always seek advice from a qualified wealth coach before making any drastic changes.

Long-term investments often require you to give an extensive notice period to access your funds. You may need to arrange to sell shares or liquidate positions. This may take some thought and planning.

Make sure you have a good idea of what you are going to need and at what point so you don’t suddenly find you’ve run out of funds. It may then cost you more to access the next pot than it needs to.

7. Pass it on

Nobody wants most of their wealth to go to taxes if it can be avoided. Make sure your loved ones and worthy causes get what they deserve with tax-efficient planning. Inheritance tax (IHT) is payable at 40% after any allowances for which you are eligible have been taken off¹. There are ways to manage your finances to reduce the amount of IHT your estate will be subject to, and a wealth coach can advise you.

• Know and use your allowances: make sure you minimise your inheritance tax exposure sooner rather than later.
• If you have a business, make sure it’s structured carefully.
• Plan the right strategy for legacies you have been left but don’t intend to use.
• Make sure all the information your loved ones will need will be easily accessible in the event of your death to enable your executors to carry out their jobs quickly and with the minimum distress.

Getting advice from a good wealth coach

Here at Paula Bicknell Wealth, Paula is always available to help you. Part of our process is coaching our seven steps of wealth planning. Remember, it’s a process and each step builds on the last. Rules and regulations around different instruments and options can be complicated: make sure you’re getting the right advice as it will save you and your family time, worry, and money.

If you would like any further information or help making the right decisions to ensure you have your future financial security under control – especially if you are time poor - please get in touch. We’re based in Theale, near Reading, in Berkshire and work with our clients both in person and remotely.

¹How Inheritance Tax works: thresholds, rules and allowances - Gov UK

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Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.   

*Please note that advice with regard to exit strategy planning may involve the referral to a service that is separate and distinct to those offered by St. James's Place.