Financial Planning: the Start of the Journey

Sometimes it starts with the thought, "I need help with my finances". Financial planners want this to become a lifetime journey

James Gard 13 November, 2023 | 12:29AM
Facebook Twitter LinkedIn

colourful umbrellas

My local high street in Buckinghamshire has the usual collection of coffee shops, estate agents, charity shops, and hairdressers. There’s also a traditional bricks-and-mortar IFA, a legacy of a time when people would walk into a building and talk to a human being about their money. At some point in the last few years the signage changed from “independent financial advice” to “independent financial planning” and I didn’t notice.

A Google search of my local area now serves up more “financial planners” than “financial advisors”. My last article touched on why the phrase “financial planning” is now in vogue

Is this shift in emphasis significant? The regulator’s concern is very much with the client and whether they get good “outcomes” so let’s start there. A few months after the FCA’s Consumer Duty kicked in, financial professionals are under more scrutiny than ever and wording is as important as results.

Your average person is unlikely to sit down one day and say “I need a financial planner”; they’re more likely to say “I need some help with my finances” or “I need to some expert advice”. I found myself in just this position in 2021 and engaged an IFA. You may start with an IFA and end up with a financial planner, without realising that’s what you needed.

If you’re not used to dealing with financial professionals, you may wonder what help the government is laying on for free. Here’s an immediate obstacle for the unwary – “money advice service” as a search term throws up sponsored links to commercial companies that look like they’re government endorsed but aren’t.

The UK used to have three organisations to help those with money concerns: the Money Advice Service, the Pensions Advisory Service and Pension Wise. Now they’ve been subsumed under the  umbrellas of the Money and Pensions Service, which provides the (official) MoneyHelper website. Note the word “advice” has been excised from the names.

Now you may be curious about pension terms or be in real financial trouble; if it’s the case of the latter, people still lean on Citizens Advice, which deals with debt and money issues.

You may engage a financial planner if you have debt problems but it’s more likely that you’ll do so from a position of strength, wondering what to do with an inheritance, or how to consolidate your pension pots. The “worried wealthy” may be in a privileged position but it’s a growing cohort, especially after Pension Freedoms were announced in 2016 and citizens are now expected to go it alone on their financial journey.

What's the next stage in that journey? My next article looks at why professionals are moving away from "advice" as a term and embracing financial planning, which has its own limitations.

What is Financial Planning?

A key phrase explained

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

James Gard

James Gard  is senior editor for Morningstar.co.uk

 

© Copyright 2023 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures