Friday, 24 August 2012

School Fees Planning Benefits

The benefits of school fees planning are often misunderstood. I wish I had a pound for every time someone asked me "is IT a savings plan." The incorrect assumption underpinning this question is that people think they are about to sold something, a product.

School fees planning IS NOT a product, it is a service. For far too long the financial services industry has relied upon products and the transactional nature of product sale to support itself.

The way I see it the product (pension, ISA etc) is at the bottom of the food chain. The real value in school fees financial planning is helping people to establish a plan. Showing them the size of the problem (amount of school fees), what impact that will have on their lifestyle and future plans and then finally and most importantly show how we can achieve it.

I had a meeting recently with someone whom unlike many people I see had more than sufficient  capital to pay his school fees up front.

He unsure how I could help. This is never a problem because of course at that point, neither do I... The point of a first meeting is to understand a client's requirements, aspirations and lifestyle expectations and to identify and explore some of the options which may be beneficial to them.

He was indeed in good shape financially but what he didn't have was a plan. He had an idea on when he wanted to retire but beyond that, very little in terms of a plan. He missed the vital truth, as your circumstances change your plan needs to change.

At the end of the meeting I had described to him how his position lent itself to a huge array of opportunities and that I could definitely help with school fees. I outlined a plan and we arranged to meet again the following week by which time I would have put meat on the bones and be able to give him a "roadmap" of the plan.

Previously he was paying for his son's education twice, once in tax at 40% to HMRC and then again to the private school. Now we have removed this unfair tax arrangement and allow him to pay his school fees in a much more tax efficient manner. He still pays plenty of tax however what he is not paying for is a state education that he isn't using!!!

Ultimately there are often products sitting behind advice but the products are not the important bit, having a goal, working out how to achieve it and continually working toward that goal is what's important and for that you need a plan.

If it was called school fees product I could understand but it's not it is called school fees planning because that is exactly what it is, a plan!