5 valuable financial lessons your clients could learn from Clarkson’s Farm

Jeremy Clarkson has been a familiar face on Britain’s TV screens for many years.

While he’s probably best known for presenting the award-winning motoring show, Top Gear, his most recent offering, Clarkson’s Farm, has become a surprise hit.

The season three premiere attracted 5.1 million viewers, breaking Amazon Prime Video’s UK ratings record.

The show follows Clarkson as he attempts to run his 1,000-acre farm in the Cotswolds. With no previous farming experience, Jeremy – aided by his wife and several farming professionals – struggles to overcome a string of obstacles and turn a profit.

While the series has been applauded for raising awareness of the challenges many farmers face, it could also help your clients understand how to manage their money more effectively.

Read on to discover five valuable financial lessons your clients could learn from Clarkson’s Farm.

1. Crunch the numbers with care and set a clear budget

Throughout seasons one to three, there are countless examples of Jeremy rushing to get things done without taking the time to review the costs and potential profits first.

In the third season, he has the ingenious idea to make soup from the copious number of nettles on his land, to sell in the farm shop.

Unfortunately, it’s only after spending considerable time and money making his first batch that Jeremy realises he must sell each pot for £10 to turn a profit.

While the nettles were free, Jeremy had to pay to rent a tea harvester to collect the nettles. He also hired local young people to sort the nettles from other plants that were harvested unintentionally. The total cost of producing the soup also included packaging and Jeremy’s labour.

As a result, Jeremy is stuck with a product that fails to sell due to its inflated price, resulting in a considerable financial loss.

Your clients could avoid making a similar mistake with their finances by taking the time to calculate the potential costs and returns of any new opportunity before committing to it.

This could allow them to create a realistic budget for their project and avoid overspending or making unnecessary losses.

A financial planner can help your client evaluate new opportunities and gain an accurate insight into their finances. This could allow them to plan effectively and reduce the risk of costly mistakes.

2. Don’t be afraid to try something new – diversify your investments to reduce risk

Jeremy is constantly seeking to diversify his income stream.

In the first series, he sets up a farm shop which initially only sells potatoes. Over time, he expands the product range on offer.

He also sets up an on-site restaurant, introduces various livestock, grows mushrooms, and attempts to “farm the unfarmed”.

Of course, not all of these ventures are successful, but by diversifying, Jeremy balances his risk. If one experiment fails, he could potentially recoup some of these losses elsewhere. For example, while the nettle soup lost money, the mushrooms delivered substantial profits.

Similarly, balancing risk by diversifying is a cornerstone of successful investing. By investing in different sectors, geographic areas, and asset classes, your client could help to protect their portfolio from the potentially damaging effect of market fluctuations.

Unfortunately, DIY investors often fail to diversify well, as they may favour investments that they’re familiar with. For example, your clients could develop a “home bias”, resulting in a disproportionate level of investment in the UK market, potentially exposing them to a higher level of risk.

A financial planner is an objective expert who can help your client create a diversified portfolio that balances risk and helps them progress towards their long-term goals.

3. Focus on your goals rather than being swayed by others

In the third season, Jeremy sets up a competition with Kaleb to see who can make the most money from their section of the farm.

Concerned about Jeremy racing ahead, Kaleb takes a high-risk decision to plant oilseed rape, despite being told that it’s too late in the season for the crop to thrive.

“Cheerful Charlie” – a professional agronomist and land agent who advises Jeremy – warns Kaleb of focusing too much on the competition rather than what’s best for the farm.

However, Kaleb stubbornly proceeds, and the crop ultimately fails, resulting in a financial loss.

This highlights an important financial planning lesson: There’s no one-size-fits-all approach.

Your clients each have unique circumstances and aspirations, so they need a bespoke financial plan that aligns with their specific goals.

In contrast, focusing on what other people are doing could sway your client into making financial decisions that don’t serve their needs.

For example, in 2020, as investors began to snap up GameStop shares, many people, fearing they were missing out, rushed to follow suit. While some of the early investors made a profit, those who were slower on the uptake, and many of those who followed the crowd, made significant losses.

Read more: What happened with GameStop and what important lessons can investors learn from it?

4. Prepare for the unexpected

Clarkson’s Farm is awash with examples of Jeremy’s plans going awry due to unexpected events, such as extreme weather conditions, broken machinery, changes in the rules around farming subsidies and restrictions imposed by the local council.

All of which had a significant impact on the profitability of the farm.

Your clients could also face unpredictable events that may affect their financial situation, such as ill health or divorce.

That’s why it’s incredibly important to keep an emergency fund.

The standard recommendation is to save at least three months’ worth of essential outgoings to fall back on. However, the amount your client needs in their emergency fund will depend on their specific circumstances. For example, if they’re self-employed or have dependants, they may benefit from building a larger contingency fund.

What’s more, it may be a good idea for your client to review their emergency fund periodically to check that it’s still enough for their needs. Factors such as inflation and the cost of living, as well as changes in personal circumstances, may mean what was a sufficient emergency fund two years ago is not now.

5. Consult an expert before making big financial decisions

Charlie is a constant source of expert advice and support to Jeremy throughout all three series. Indeed, Jeremy relies on his knowledge and objectivity.

Additionally, when Kaleb ignored Charlie’s advice and planted the oilseed rape, almost the whole crop failed, losing the farm thousands of pounds.

Just as Jeremy benefits from having an experienced professional in his team, your clients might find it helpful to seek advice from a financial planner.

A financial planner can help your clients review their finances, assess new opportunities based on facts rather than emotions, and create a long-term plan that aligns with their unique goals.

Get in touch

If your client would like to know more about how to create a financial plan that helps them achieve their goals, we can help.

Please email us at mail@delaunaywealth.com or call 0345 505 3500.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.