Making the Case for Financial Planning

Everyone knows that money is important. Some say it makes the world go round but it is really only a means to an end. Money can provide security, opportunity and enjoyment to those who use it wisely but it can also cause stress, worry and anxiety if mismanaged.

The world of finance is incredibly complex and new financial products are being developed every day. Many people have an inherent distrust of financial institutions and the products they offer after a series of past scandals and negative stories. Even so, the vast majority of people still put their faith in these companies to provide their financial services and to ultimately determine the lifestyle they are able to live.

Many people simply do not have the time or experience to successful navigate their way through the financial maze. For these people, there are many benefits of using a highly skilled financial planner.

Firstly, quality financial planning can provide a level of certainty as to what the future might bring and a level of financial security should unforeseen events happen. Ultimately it is about providing peace of mind and helping clients to achieve their financial and life goals – getting them to a place where they have enough money to do everything they want to do and never needing to worry about money again.

As a profession, we focus on money and financial matters a lot of the time, but in our experience, the best financial planning firms always focus on their clients first.  Their situation, their worries, their life goals and their dreams are really what it is all about. Money is just the enabler of these things. Through effective management of money and with a great financial plan, financial planning can add real value and change lives for the better.


 

The Need for a New Approach

As we see it, there are a number of big problems with the provision of financial advice in the UK today. The main issue is one of price and affordability.

A combination of significant regulation and outdated technology means that providing financial planning continues to be an expensive business and many firms therefore can only afford to work with very wealthy clients with significant sums to invest.  These clients tend to be in their 50s and 60s as this age group typically have the majority of wealth. This leaves many people unable to obtain quality financial advice and reap the benefits it can bring. This problem is well known in the profession and has been termed the ‘advice gap’.

We see the fact that younger and less wealthy clients are underserved by the current financial planning community as a major issue to address.  Our view is that financial planning is often more important for this age group,  ensuring they start forming good financial habits early on that can bring rewards later in life. We believe that nurturing long-term relationships should be what financial planning is all about and that this should span a lifetime.

Another major issue is one of complexity within the financial system. The world of financial services is full of acronyms, jargon and confusing language. A big part of quality financial advice and wealth management is to cut through this language to present the facts in a clear, meaningful and insightful way so that the best financial decisions can be made. This is a big part of what we do here at NorthStar.

We seek to financially educate our clients as much as to provide them with advice. Only by understanding financial matters better, can people make the best decisions. Of course, we are here to guide our clients, answer their questions and ultimately to give our judgement and recommendations on the best course of action.  By empowering people to better understand their current financial situation and the options available to them we have seen first-hand how this can transform their financial outlook.

The final major issue we see with the financial landscape is the slow adoption of new technologies. The world has transformed radically in the past decade or two and we are now in a fully connected, cloud-based information age where most people would like the ability to access their investments and savings wherever and whenever they want to.

Too many financial firms (providers, advisers, banks, etc.) have been too slow to recognise this sea-change and develop adequate systems. Most people still live in a world of paper bank statements, an annual pension statement delivered thought the post, and various other financial paperwork which has to be filed away from time to time.

Even as people start to adopt online technologies, these are often very disjointed. You may log in to check your bank statements via a smartphone app, then have a login for an investment policy you have with another provide and have some products that are yet to develop any online systems at all. This simply adds to the financial confusion and makes optimal decision making almost impossible as even the simplest tasks (like finding out how much all your investments and savings are worth at any one time) become a long and arduous exercise.

We believe that it doesn’t have to be this way.

We harness a number of the leading software technologies to provide our clients with complete access to their financial information anytime, anywhere from any device. Our client portal, shows all your bank accounts, investments, pensions and even your house value in one place, all updated in real time.

We are so passionate about this technology that we don’t see it as a ‘nice to have’, we believe it is essential as the basis upon which great financial planning can be built.

We firmly believe that we have found a great solution to these three big problems with financial planning and are dedicated to bringing our solution to as many people as possible. Ultimately, it is about helping people really understand their money, become re-engaged and re-connected with it and realise their own financial possibilities.


 

How We Went About It

Many businesses say they started with a blank sheet of paper and employed some ‘blue sky’ thinking, but we really did. Over many years, we thought through exactly what a modern financial planning company would look like. Without accepting that anything in this profession was set in stone, we took apart all the pieces of the financial planning process and worked out how to improve them, how to increase efficiencies, drive down costs, use the best available technologies and get the very best people into the business.

We started by researching exactly what clients value and what range of services they need. This led us to a unique, modular pricing approach where each part of our service is clearly and simply costed so that each client need only pay for the services they want.

The next thing we did was look at how we could physically deliver our services. We know some people like to meet face-to-face and sometimes this does work best, but we found many people wanted to embrace new technology. We researched systems which could allow us to deliver high quality financial planning via the phone and via virtual online meetings as well as face-to-face. Using this range of delivery methods means we can provide advice when and how our clients want it.

Next on the list was the advisers we would employ. Financial advice has undergone a radical transformation in recent years with all advisers now required to hold a much higher level (level 4) of professional qualification in order to be authorised to give financial advice. We think this move is a great step and will stop the less qualified individuals from providing poor quality advice. But we go further and only employ advisers who are ‘Chartered Financial Planners’ (those who have achieved level 6) which is recognised as the gold standard in terms of financial planning qualification. We think the rest of the profession will eventually mandate this higher qualification, but we like to lead, not follow and think our clients deserve only the very best advice from the most qualified advisers.

We then looked at how we could drive down the costs of advice. This was essential as we wanted our services to be available to as many people as possible. We knew that through a combination of delivery methods (for example, using virtual online meetings rather than the expensive of commuting) and using the latest cloud technology to run our operations, we could radically cut the fees we charged our clients compared to most financial planning firms. With this in mind, we set about sourcing the best technology possible and integrating this into the business.

 

Our Vision Becomes Reality

In 2016, the idea for NorthStar was born. We (James Thompson and Derek Pegg), two friends with over 30 years’ experience in financial planning between us decided to embark on the creation of a company in our own image. We knew that a new approach to financial planning was needed, driven by technology and a desire to provide an efficient, streamlined service to their clients that really added value. A service that was responsive to clients’ needs, provided 24/7 access for clients to view their complete financial position and a service that used only the very best, chartered financial planners.

The aim was to create an affordable, efficient range of services that delivered tangible results to our clients. This started with identifying the core values of the firm and what the objectives for the business would be. After this, we set about finding the best technology partners we could find and developing market-leading internal systems.

Starting with a select group of clients, NorthStar has continued to take on new clients and grow its operational base since launching in April 2016. Our company never stands still and sees client feedback as one of the most important aspects of the business. This has allowed us to refine our existing services and develop new areas of specialisation to cover the widest financial needs of our clients.

The business continues to go from strength to strength as it takes on more clients and looks to add to the growing team of financial planners and support staff that make NorthStar what it is. Ultimately, it is the relationship between us and our clients that we are most proud of. Developing meaningful, long-term relationships that really add value to our clients’ lives is at the heart of everything we do. It gives us a great sense of pride to see the tangible financial improvements we help our clients realise and the life goals we help them achieve.