The financial services industry has suffered over the years from a lack of public confidence. This stems back to the 1980’s/1990’s where it gained a bad reputation for the large sales incentives that advisers received from insurance and investment companies, coupled with the fact that it was very much about hitting targets, so quantity was prioritised over quality.
But in 2016, who do you turn to when you want help and support to manage your money? Many people are unsure of the difference between financial advice and financial planning and others get confused by the wealth of options available and the difference between commissions and/or fees.
What is Financial Advice?
Financial advice normally comes from a financial adviser. Restricted advisers are limited either in the types of products they can advise on, or they only advise on the products of one company or a limited number of companies. These products may not be ideally suited to you, your needs or your objectives.
We would always recommend an Independent Financial Adviser (IFA). An IFA is someone who can advise you on the best financial products available – investments, pensions and protection, from the whole of the market, without any bias towards a particular product or provider.
With a financial adviser, it’s very much a transactional relationship; whereby the adviser must ensure that the products they recommend work for you. According to Julie Lord, Former IFP President and Chartered & Certified Financial Planner and Chartered Wealth Manager, “Financial products are simply the building blocks of your financial strategy, rather than a proper plan for achieving your desired lifecycle.”
What is Financial Planning?
Financial planning is usually undertaken by a Financial Planner. This is someone who looks after you every step of the way and helps you to create an accurate and robust financial plan for the future, taking into consideration what you want your future life to look like and whether your existing plans and policies will deliver this.
And that’s were financial planning software comes into its own. It enables a Financial Planner to model various different scenarios to show how things would look for you given certain circumstances. This could be early retirement, death or serious illness of you or a spouse/family member, an inheritance, selling your business or wanting a big holiday.
Modelling is invaluable as you can see visually what might happen and what you may need to do. Essentially, it helps you to feel more secure and confident, enabling you to make the most of your money and your life. Add to this transparent pricing and a first class service you can see why more and more people are choosing to plan for the future in order to get the right work/life balance.
How to choose
Not all financial advisers or financial planners are the same. Sometimes you need to look beyond their words and promises and instead focus on their qualifications, testimonials and case studies to ensure you get the best service possible. However, like most things in life, if a family member, friend or colleague can recommend or refer you to someone they have used themselves, often you find that you can get the best results.
Can you do it alone?
We understand that some people just don’t like the thought of paying someone else to plan their financial future and prefer to do it themselves. This is fine, if you have the time and the energy to do your own research and monitoring, and of course if you can be honest and realistic about your situation and your future objectives at the same time. But if you are in any doubt about the benefits of using a highly qualified professional, the following fact may be of interest.
The value of using a financial expert
The latest research from unbiased.co.uk, the UK’s No.1 adviser search, has revealed the remarkable cost-benefit ratio for those who take financial advice. If you take financial advice from a professional, the benefits can outweigh the cost by nearly 6,000%. And if you undertake financial planning too, then the benefits are even greater!