Financial advice or financial planning, what do you need?

Published by Terry Burgum on 19 May 2021

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Looking for help with your financial matters can be a confusing business. For starters, you will need to identify who really offers the help you need.

Whilst Wealth Managers, Investment Advisers and Financial Coaches abound, the two titles you are most likely to come across will be the traditional ‘Financial Advisers’ and the more forward thinking ‘Financial Planners’.

But what, if any, is the difference?

In some respects, not very much. They may each have very similar qualifications and come from similar backgrounds. And whilst each will be capable of providing both ‘planning’ and ‘advice’, for me it is important that you understand the key driver.

Financial advice harks back to industry as it was pre the Retail Distribution Review. In days gone by, advice would generally centre around the identification and provision of a suitable investment, pension or insurance product to meet your needs, resulting in a commission for the adviser as a way of paying for their services.

This generally led to more transactional relationships with the focus largely on the performance of the investment selected, rather than a wider understanding of the client’s needs and life plans.

There may have been little emphasis on finding out about your deeper concerns and dreams or using elements of the advice process such as Cashflow Forecasting to build a picture of your future financial position to identify if and when your aspirations could be met.

So, in my opinion, if you are looking for more than just a recommendation for a suitable investment, pension or insurance policy, and want help to understand what you really want out of life, and whether or not you may get it, seek help from a good ‘Financial Planner’.

A good financial planner will firstly help you understand where you are now, discover what may be possible in the future and advise you as to how you may get there.

In doing this they will follow these 6 steps:

  1. To establish their relationship with you, such as whether advice will be independent or restricted, the scope of areas you wish to review and how you will pay them.
  2. They will then collect information about you and your circumstances, including your existing financial position, your attitude to risk and of course your dreams and aspirations.They will look to understand your priorities and what compromises you are prepared to make and which trade-offs you are not.
  1. The next step is to analyse your position, to build a picture of your financial strengths and weaknesses and identify the opportunities to improve your future outlook. This should include appropriate use of Lifetime Cash Flow Forecasting to build a picture of what your future may look like.At this point a further discussion would help you to understand what may or may not be achievable and allow you to state your preferences and refine your objectives.
  1. Armed with this knowledge, the planner can now develop a financial plan tailored to your individual needs, including actions to take immediately and signposting additional steps to take along the way.At this point the planner may also need to consider any suitable financial products and services needed to meet your needs, giving them the opportunity to show their ‘financial advice’ skillset along the way.
  1. Once you have considered and understood the final financial plan that has been prepared, it is the planner’s responsibility to help you implement the immediate recommendations you have agreed to.
  2. The last step at this initial stage is to agree the nature of your ongoing relationship.

I cannot overstate the importance of regularly monitoring and reviewing your progress against your financial plan to ensure your objectives are met and take immediate action to resolve any issues.

An annual review with your Financial Planner will enable you to react to changes in future legislation, adapt your investment policy to changes in the economic environment and take account of changes in your own circumstances and future aspirations to keep your financial plan on track.

To discuss your own requirements please contact Kreston Reeves Financial Planning on +44 (0)1227 768231 or provide your details on our online enquiry form.

The content of this article is for information only and does not constitute formal financial advice. 

This material is for general information only and does not constitute investment, tax, legal or other forms of advice.

You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation.

Kreston Reeves Financial Planning Limited, Independent Financial Advisers. Authorised and regulated by the Financial Conduct Authority.

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