Financial Adviser, Financial Planner, Financial Coach….it’s all getting a bit confusing. The question you want to know is - who is best to help me with my money? Not to go through an alphabet soup of titles trying to find who is the right person to speak to. So let’s provide some context:
If I was to refer to myself I would say a ‘Financial Planner’ first and foremost. That is because I believe that for most, the value of a proper Financial Planner is far more valuable than that of transactional advice. Having spent years working as a Financial Adviser, I do believe there is a difference and the realisation of this completely changed the trajectory of my career. Both are regulated positions and both have a duty to ensure any recommendations are the best thing for the clients. Unless you are an industry insider, you’re unlikely to know in advance if there is any difference.
A Financial Adviser
A Financial Adviser is generally a bit more ‘transactional’ in nature as far as, they may help you with a specific or one-off piece of advice where a need is clearly identified. For example, a pension transfer on a one-off basis, organising some financial protection (insurances) or perhaps a mortgage broker. This is not to devalue the high level of expertise and skill required to do this type of work or to say the above is mutually exclusive for a Financial Adviser of Planner. It is just to say, that there will invariably be more focus on the product above the plan. This is where the weight of the regulation is.
A Financial Planner
A Financial Planner as the name suggests will be more concerned about making sure your finances are planned to live the life you want. So for example if you were to say ‘how should I invest £100,000?’ A Financial Adviser may talk about the process for assessing what would be the right portfolio, tax wrappers and how to generate the best return. A Financial Planner would do the above but would look to the question - ‘what would having more money mean to you?'
It’s about more the understanding that a financial goal is meaningless unless it addresses the context around it of the life you want to lead. That an 8% return instead of a 7% return is not going to be the thing that gets you out of bed every morning. However, feeling you are financially secure and achieving the life you want, or on track for the retirement you've dreamed of, is powerful and if we can understand those core goals and beliefs, constructing and sticking to a plan is going to be far easier.
It’s my view that most people will understandably organise a meeting based on a question for a Financial Adviser but actually want the answer a Financial Planner gives. For example, they may have concerns about pension performance, savings etc however what is keeping them up at night are the fact they are concerned about their ‘real goals.’ Whether that be - do we have enough to retire/gift to our children/take time off work. A planner’s focus is to look at the bigger picture and deliver a holistic strategy, which considers all elements of a financial plan. This will normally use sophisticated modelling that considers taxation, trade-offs, different scenarios and market performance. Geared to answer the big questions:
Are we going to be ok?
Do we have enough?
Notice how broad both of those questions may be. They take no account of wealth - a millionaire may not have ‘enough’ and someone retiring on £15,000 per year may have all they ever need. It is about maintaining a lifestyle for you that leads to a good life. After all:
"True wealth is the ability to underwrite a meaningful life."
(Brian Portnoy)