Ever wondered how much wealth you will have accumulated by the time you retire? Will the nest egg built up be sufficient for you to live your remaining years in relative comfort? If not, it is time to start planning.

“Without a financial plan, you will end up where you may not want to be when you retire,” cautions Peeyush Gupta, chief executive of Australia’s ipac securities limited. Those might be strong words, but they represent sound advice.

You see, Mr Gupta remembers serving two totally different individuals – the first, a barrister, was raking in A$1 million a year and the other, a railroad worker, had a take-home pay of just A$35,000 per annum. “In the end, both had A$500,000 in their superannuation fund [a type of pension scheme],” says the head of ipac securities.

While the lawyer frittered away his income on luxury goods and fancy items, the railroad worker toiled away over the years to build up his hard-earned savings. The end of the road for both men was the same despite the contrasting jobs and lifestyles.

“My counsel is to have a plan and to have it reviewed regularly,” says Mr Gupta. “Articulate your goals to the financial planner… The goals may not be realisable and it takes great courage for a financial planner to tell their clients their objectives are not achievable, therefore your goals should be prioritised.

“Next,” he continues, “ensure that your finances are properly structured. For example, check that your tax issues are well addressed. Finally, decide on your asset allocation for your investments. Some questions one should ask include how much would one be saving while working; how long one would be working before retirement; how much will be spent following retirement; what is one’s risk profile; and the expected returns.”

But try to avoid placing too much emphasis on investments – Mr Gupta suggests spending up to 60% of your planning time on formulating your goals. Once that’s done, an adviser can come up with a framework of the key issues likely to affect a client’s long-term future.

The best type of adviser, Mr Gupta believes, is the “cultural guide”, someone well-versed in product knowledge and technical expertise, and someone good at coaching and empowering customers. “In the 1980s and the 1990s, clients said, ‘Plan for me’. Today, they say, “Plan with me’,” he notes.

“These are the ones actively seeking coaching advice from financial planners. Adults learn best through experiential counselling and they do want leadership, but a coach can’t run the race so, ultimately, clients have to be the investors,” Mr Gupta concludes. “Too often, clients tell financial planners they are the money gurus. The truth is, it is not the role of the financial planner. Clients have to plan with their financial planners. It is about shared responsibilities.”

THIS ARTICLE IS REPRODUCED COURTESY OF SMART INVESTOR MAGAZINE