Quite possibly the most common question early in the initial meeting I am asked is “what is the difference between a Financial Adviser and a Financial Planner?” The real answer, for some at least, is not a lot. However, this article is aimed at those who will appreciate both the differences and more importantly the impact it will have on them and those they love around them.
For many, a Financial Adviser will do an acceptable job. The adviser is usually brought in to solve a client need or problem. Typically, it will revolve around a specific product. This can involve extensive research, technical expertise and specialist knowledge. Advice will focus on the suitability, recommendation and/or management of appropriate products, investment or tax advice and implementation thereof. The service tends to be transactional in nature with any ongoing service focused on reviewing progress or performance. Broader aspects such as putting it into context are usually driven by the need to meet regulatory requirements.
For me, giving advice to the client in such a limited way is simply insufficient. It is the feedback from our clients who have been through our financial planning process which has convinced me of its importance and value to them. As a financial planner, I work with the client to produce a living comprehensive financial plan, that consider, the client’s entire circumstances and financial situation – including thorough analysis of all assets, liabilities, current and future income, current and future expenditure requirements (requiring the use of cash flow modelling/financial forecasting software). I cannot conceive of a better way to properly plan for and achieve client goals with the underlying aim of providing for, and protecting, the clients desired lifestyle throughout life.
Once this has been done, it is often (but not always) followed by the provision of financial advice including the implementation of any products, tax planning and investment management, (if such products are required) in order, to achieve the objectives of the financial plan. A financial planning service does not depend on the sale, implementation or review of financial products for its survival and should be charged for separately. Yet, many people jump to this stage.
Put another way, if you were going on a long holiday you would expect to know your end destination, you would probably plan for a few steps on the way and double check for the obvious dangers – traffic, weather and that your vehicle is safe. I find it worrying that many people will spend more time and money planning a single journey thus ensuring their financial planning is on track, yet the impact it could have and the cost of it going wrong maybe life changing.
In my view, a comprehensive financial plan can only be provided by two entities: the input of a proven level of technical competency, which for convenience, means a Chartered Planner or above and the enthusiastic engagement of the clients themselves.
We recognise that it is a leap of faith in both time and money which is why we have an unequivocal guarantee: ‘if you don’t think it has been worth it¸ then don’t pay us.’. Why not talk to us and find make that first step on the financial planning journey?