Financial Adviser
A financial adviser is an expert whose primary role is to provide advice on financial matters. This advice is usually specific and actionable, often telling the client what they should do in a particular situation. The key aspects of a financial adviser are:
Expertise:
They possess specialised knowledge in financial matters.
Advice:
They offer professional opinions and specific recommendations.
Decision-making:
They often tell clients what actions to take.
Legal Liability:
Their advice carries a legal responsibility, as they are held accountable for the guidance they provide. However, there are no protections under the Competition and Markets regulations. Instead, claims (against firms) are considered by the Financial Ombudsman Service.
Professional Service:
They are paid for their advisory services, creating a formal client-adviser relationship.
Product Limitation:
They only give advice on a limited range of financial products, which may be restricted to particular manufacturers or the whole market, excluding advice outside this range.
Financial Planner
A financial planner, in the context of a non-adviser planner, is an expert who focuses on helping clients create a comprehensive plan for their financial future without necessarily providing direct advice on what to do. The key aspects of a financial planner are:
Expertise:
They possess specialised knowledge in financial matters.
Planning:
They assist clients in formulating a detailed proposal or method for achieving financial goals.
Client Decision-making:
The client makes the final decisions about their financial actions.
Comprehensive Approach:
The plan includes all aspects of the client's financial life, such as assets, liabilities, incomes, expenses, insurances, and intangible assets, both present and future.
Neutrality:
They explain the consequences of various actions in a neutral, unbiased manner, providing information rather than direct advice.
Legal Liability:
Since they do not tell clients what to do, they do not carry the same legal responsibility as advisers.​ As traders, they must provide factually correct information under the Competition and Markets Authority regulations. Claims are considered via the courts.
Professional Service:
They are paid for their planning services, creating a formal client-planner relationship.
Methodology:
The plan is a detailed method devised for achieving the client’s goals, which may include mental formulations and graphical representations.
We are Financial Planners
Financial Adviser: Provides specific advice and recommendations on a limited range of financial products, carries legal liability for their professional opinions.
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Financial Planner (Non-adviser): Helps clients create a comprehensive financial plan, where the client makes decisions based on neutral, unbiased information provided by the planner. The planner facilitates the process but does not provide direct advice or give opinions. The information must be factually correct.
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Where financial planning is done by a financial adviser, then the financial planning becomes part of the financial advice.
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Download the Financial Life Coach "Rule Book" for detail on how this works in practice.