In some countries the use of the title “financial planner” is tightly controlled and regulated, but not here in the UK. There is nothing to stop anyone from using this title, regardless of whether they really are actually a financial planner or not.
In financial services, advisers use a wide range of titles, but you need to check if it really does describe what they do. Are they really a wealth adviser, financial adviser, financial consultant or a financial planner? And what is the difference?
There are many similarities between financial planning and financial advice. In my view they both involve a process that should get to know the client’s current situation, discover what resources they have available and understand what their goals and objectives are as well as have a duty to put the client first.
So what is the difference?
Advice is more about a single-need. This means that often it has a more limited scope, if not blinkered approach. Giving advice means the adviser must ensure that the solution they recommend works for the client, but often only in the specific area where advice is given. The danger to this approach is that something more important may have been missed. Also even though the advice in isolation may be right, it might have a knock on effect in the overall financial picture that leads to a negative outcome for the client.
Also with financial advice, the solution usually means recommending a product. Once that product has been bought, what ongoing services will be needed and what value will they bring?
So what about financial planning?
The process of financial planning puts the client’s goals, needs and objectives at its core. It’s an integrated approach that looks at the whole holistic picture and looks to balance the different strategies recommended in a way that puts the client in control of their financial future with clarity and confidence. The solution is the financial plan, and implementing the recommended actions. This can then be augmented by an ongoing relationship and service that develops to ensure the plan remains current and on track.
Those that have qualified as a CERTIFIED FINANCIAL PLANNERcm professional, are well aware that financial planning is a six step process, which if followed, leads to excellent client outcomes.
Creating a detailed financial plan often involves looking at a client’s likely long term cash flow forecast and then recommended actions that will ensure their goals are achievable and are not left to chance.
Our experience is that our clients are happier following a financial planning process as they know that the planner is sitting on the same side of the table as them. They see that their goals and aims in life are the driver of the process. They feel empowered and excited by the knowledge of what they need to do to achieve their goals.
In fact I do not believe anyone should be investing their money, before they have developed a financial plan. The reason for this is because you could end up investing in the wrong tax wrapper, or the wrong investment strategy that goes against what you would actually need for your financial life plan to be successful.
If you are trying to get somewhere in life you have to work out how you are going to do it. You need a plan! The plan needs to be real and tangible, written down and also it needs to be regularly reviewed to take into account actual performance against the plan, changes in your own circumstances or in tax and legislation.
To find a registered CERTIFIED FINANCIAL PLANNERcm professional, click here.