Oct 8, 2021 | ABI THOMAS

DO YOU KNOW WHAT YOUR ADVISER DOES?

The difference between financial planning and financial advice.

The terms financial planning and financial advice are often used interchangeably, and it’s not always clear what you’re getting.  

Financial advice refers to the provision of a specific financial solution to meet a particular goal or need. It usually involves recommending specific products and it’s regulated by the FCA. 

Financial planning often results in financial advice and involves a detailed understanding of your values, goals, and concerns, recommending the best course of action to take. That might be stopping paid work, building the home of your dreams, paying for private school, the trip of a lifetime, or just knowing that you have enough financial security that you won’t run out of money! Planning itself isn’t regulated unless it results in financial advice. 

Typically, financial planners will discuss and advise on all areas of your finances from retirement, school fees, legacy planning, tax, and investment planning. They should also help you manage the risks, not shying away from the unpleasant aspects of planning such as death, illness, and loss of income, all of which can scupper your plans for your future. 

We believe good financial advice only follows a sound financial plan that’s clear and achievable over an agreed timescale. The plan should alleviate your concerns and provide a road map to get you where want to be. It should cover the basics such as day to day money management right through to long term cashflow planning. It should also take into account whether a lower or higher investment risk strategy suits you, or is needed, for you to achieve your goals. 

Financial planning doesn’t stop once the advice to set up a certain product has been completed. Life, the world, and regulations evolve continually, and so should your financial plan. Work plans change, your business grows or might be sold, children and grandchildren are born, disasters happen. 

A good financial planner should be there to coach you through these changes, reviewing your cashflow and investments. 

So, is your financial adviser also a financial planner? Do they take time to listen and understand your goals, your work, and your family? And do they want to work with you over time creating a trusted  relationship? If they’re just talking about financial products and why you should have one, may be its time you called time, and get yourself a financial planner instead.