Are FIRE retirees the new Financial Planners?

By Philip Reynolds

To answer this question, we need to understand what the term ‘FIRE’ means. FIRE stands for Financial Independence, Retire Early.

It is a movement that started in the US but has a strong community in the UK, with a number of groups popping up on Facebook bringing people with an interest in FIRE together.

The basis of it is to aim for financial freedom as early as possible through investing and building assets that pay an income so that you can stop work altogether, or make it optional and only take on work that you genuinely enjoy.

I think the basis of this is a great idea. It reflects societal changes that people have more control over their time, and I congratulate anyone for taking ownership of their financial future and the freedom that comes with that to enjoy life. This movement also shows that more people than ever before are interested in financial planning and upskilling themselves.

Does this make FIRE retirees the ideal people to become Financial Planners?

Yes, is the simple answer. If we take the term Financial Planner in its simplest term, it literally means someone who plans financial futures. The difference, of course, is that a FIRE retiree is planning their own financial future, whilst a Financial Planner in the traditional sense is qualified, regulated and appointed by clients to assist them with their finances.

Of course, FIRE retirees are not authorised or regulated to give other people financial advice, although many FIRE retirees have built personal brands around providing their audiences with generic financial guidance, which is not deemed advice, although the line between the two is quite ambiguous. This is an interesting area that the FCA have become involved in, although in regulated firms, we know there is a lot of nervousness around this blurred line between guidance and advice.

Do FIRE retirees need an independent Financial Planner?

This is an area for some potential debate.

I think that yes, they absolutely do, and anyone who has successfully navigated through the FIRE movement and is now retired will agree.

Without generalising, the vast majority of the FIRE movement are in the accumulation phase of their financial journey, and most have relatively simple financial arrangements. Once they have done some basic research, it is totally feasible that they can invest their own money and review their own arrangements. Additionally, no one knows their goals and objectives better than them.

The FIRE movement is based on keeping fees low so money saved on financial planning fees can be invested.

However, for balance, I think that Financial Planners provide a good external experience in challenging a client’s goals and strategy. Additionally, I think that it is appropriate to say, ‘you don’t know what you don’t know’, and there is always the risk that good planning opportunities are missed that could tangibly pay a Financial Planner’s fee several times over. Planners are also good at stopping you from making potentially costly mistakes.

This can be seen in the discussions within these groups, where misinformation is spread often, as well as crypto being the future of investing. We aren’t here to talk about crypto though…

The future of FIRE and financial planning

I can only see the FIRE movement continuing to gain momentum as more and more positive stories come out of it, with an increasing desire for a better work/life balance across the UK.

With this, and with the fact there is so much brilliant financial education out there, I see more accumulators deciding to go it alone. I don’t think this is all bad for financial planners, though: I can see the offering of drop-in review services and one-off financial plans or reviews of financial arrangements becoming more common.

It also allows Financial Planners to focus on the complex areas of holistic financial planning and ongoing services for those that have more complex arrangements or are less confident in managing their own affairs.

However, as more FIRE retirees approach retirement and seek to access their money in a tax-efficient way, whilst also ensuring they won’t run out of money, there are good opportunities for Financial Planners to add considerable value to the FIRE community.

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