Financial Planning

Financial
Planning

What is a Financial Adviser/Advisor?

A Financial Adviser/Advisor is a professional who suggests and renders financial services to clients based on their financial situation. 
Financial advisors have to complete specific qualifications 
and be regulated to provide advice.

What is a Financial Planner?

A financial planner is a qualified investment professional who helps individuals and corporations meet their long-term financial objectives. Financial Planners do their work by consulting with clients to analyse their goals, risk tolerance, life or corporate stages and identify a suitable class of investments/pensions/protections plans for them. 

They create a financial plan to help the client meet those goals by distributing their available savings into a diversified collection of investments designed to grow or provide income as desired.

What is the difference between a Financial Adviser/Advisor and Financial Planner?

Financial Adviser/Advisor is a broader 
term for those who help manage investments/pensions and advise on the products and investments, not the overall reason/plan.

Financial Planner is a professional who helps companies and individuals create a financial plan to meet long-term financial goals.
Financial planning is the task of determining how an individual/business will afford to achieve its strategic goals and objectives. 

The Financial Plan describes each of the a resources pensions/investments/savings that are needed to achieve these objectives, as well as the timeframes involved.

Wealth Management

Wealth Management is an investment advisory service that combines other financial services to address the needs of clients. It is a consultative process whereby the advisor gleans information about the client's wants and uses set investment strategies which have been created in house.

The client will only be advised/recommend to use the set in house investment funds/strategies/products.

The biggest example of this is SJP – St James Place Wealth Management Ltd – their advisers can only use SJP products and unlike Independent Financial Advisers who charge fees they are paid by commission which is paid out of the SJP products they advise on.

Independent Financial Advisers (IFAs)

Independent Financial Advisers (IFAs) are professionals who offer independent advice on financial matters to their clients and recommend suitable financial products from the whole of the market. The term was developed to reflect a United Kingdom (UK) regulatory position and has a specific UK meaning.

Typically an independent financial adviser will conduct a detailed survey of a client’s financial position, preferences and objectives; this is sometimes known as a factfind. The adviser will then recommend appropriate action to meet the client’s objectives; and if necessary recommend a suitable financial product to match the client’s needs.

Advice would consider an investment(s) within a trust or investment into a Business Property Relief Investment, both of these would take into account the suitability.

New rules for financial advisers 
in the UK from 2013

From 2013 the law changed in the UK and IFAs can no longer receive commissions from financial services companies on new sales of investments. Instead, they set their own fees, based on the services they offer, and agree with the client on fees before providing any services. Any advice that does not meet this standard must be labelled as restricted. IFAs should also be able to demonstrate to the FCA that they review all the suitable products in a market and that they give fair, unbiased and unrestricted advice. 

These changes are intended to make their charges more transparent and advice more genuinely independent.

Qualifications for IFAs 
in the UK

Look out for FCA requirements when choosing an IFA. To offer financial advice an individual must represent or be an appointed representative of a firm registered with the Financial Conduct Authority (FCA). The FCA require that firms ensure that individuals acting for them have appropriate qualifications at Level 4 or above. (This is about the same as completing the first year of a university degree.) 

IFAs must also annually obtain a Statement of Professional Standing. This statement confirms that the adviser is suitably qualified, that they subscribe to a code of ethics and that they have kept their knowledge up-to-date through continuing professional development. Most financial qualifications are assessed under the Qualifications and Credit Framework (QCF). You will see that these have a QCF grade, from level 1 to level 8.
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