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Financial Adviser, Planner or Wealth Manager - which is right?

31.07.2012

Our industry is going through a period of change, brought on by new regulations in part aimed at increasing transparency for the consumer. The key changes are that from 31st December 2012 the current commission system will be replaced with “client agreed remuneration” for any new products and advisers will have to be qualified to a higher level than previously required. Seems like a good idea.

One area that remains subjective and open to interpretation is what financial adviser’s call themselves. The titles themselves are wide ranging, as are often the service and investment propositions delivered by advisers. So what does one title mean from another? There are no clear boundaries but we’ve provided an overview below of a general approach, taken by job title, which will may help you select an adviser that’s right for you.

Financial Adviser/Financial Consultant

The general title given that can be all encompassing. Typically, advisers that are tied to advising on the products from one Company, or a number of companies only, will use this title. The banks often use it for their tied salesforce.

Independent Financial Adviser

A title that can only be used by those advisers who make recommendations based on a comprehensive and fair analysis of the relevant market, and provide ‘unbiased and unrestricted’ advice. This relates to all products from across the whole market. Still commonly used and one that provides the consumer with the knowledge that the adviser is able to select from a wide range of products to meet the client’s requirements.

Financial Planner

A relatively new title used by those who arguably take a more strategic approach to financial planning, often incorporating tools such as ‘cash flow modelling’. The financial planning approach will often map future events and goals and build a plan to achieve build, maintain and protect financial wellbeing. Often, the products, such as a pension or investment policy, will be secondary to the plan itself.

Lifestyle Financial Planner

As above but with a bias to exploring the deeper meaning around the client’s relationship with money. The concept of lifestyle financial planning arrived on our shores from the US. The adviser will tend to spend longer probing and questioning the client’s beliefs, values and motivations before building a financial plan. The advocates of this approach believe that this results in designing a financial plan that is far more fulfilling for the individual.

Wealth Manager/Wealth Consultant

Where this title is used, the adviser or firm will tend to focus more on the management of money and investment process. More sophisticated investment processes and techniques may be employed to try and achieve greater returns for the client.

With the exception of choosing an adviser who is ‘independent’, there is arguably no right or wrong approach to financial planning. As with all industries, the delivery of financial advice as a ‘product’ or ‘service’ evolves. New approaches and techniques regularly come to market, some better than others, some simple, some more sophisticated.

All types of adviser referred to above may employ the same strategies and approach in delivering advice; the title alone is not a reliable indicator of the quality of advice. We firmly believe that financial advice succeeds where there is a high degree of trust between the adviser and client, where there are common beliefs and values, underpinned by an advisory proposition entirely centered on the client’s needs and wants.

When choosing a financial adviser, to some extent the title may be irrelevant. It’s important that in the first meeting you feel you can get along well with them, your ‘gut feel’ is good and that they ‘talk your language’, in the broadest sense. Always ask to speak with existing clients – do your homework, check out their website and speak with those who may know them. In the same way you don’t buy the first car you see, arrange to meet with a couple of advisers first to see which one will work best for you – the first meeting is often without obligation and you’ll get a fuller understanding of whether they are right for you.

Choosing a financial adviser is possibly one of the most important decisions of your life. The right adviser will make a significant difference to you wealth, health and happiness. Make sure it’s the right one.

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Keeping our savings performance on track. Mr O - Worcestershire

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Adrian Smith

Chartered Financial Planner
Chartered Wealth Manager
CFP-CM

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