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Definitions
Financial planning is a professional service for clients who need objective assistance in
organising their personal or corporate financial affairs to more readily achieve their goals
OR
a personal, confidential service for individuals, families and their businesses along the
lifetime path to security and peace of mind.
What the Government expects
In today's world the Government expects each individual to be his own financial adviser.
Finance has to be mastered at an early age to go forward in life. Poor financial decisions
can bring years of setback. On the other hand omitting to act or procrastination is often
seen as the enemy - what may have been.
Information Overload
The sources from which we receive financial advice are many and varied - please view
the financial planning wheel below. Everyone struggles to understand the complexities
and are concerned that they are taking, or omitting to take the right decision.
"Financial fatigue syndrome" quickly sets in as we are overwhelmed with financial information.
Decisions are often taken in isolation, not to an overall plan.
Financial planners' experiences show that individuals do fail in their choice
or omission of financial product or are recommended products that are unsuitable.
It is always important to plan before making a choice of product.
INDIVIDUALS seldom PLAN to FAIL - they simply FAIL to PLAN
Financial Advisers and Financial Planners
The definitions of financial planning make no reference to financial products or to the
sale of such products. Financial planners help identify the objectives the client wishes to
achieve and show how they may be best fulfilled. The valuable services financial planners
offer, help attain the agreed objectives with generally less risk and less cost than if the
client undertook it themselves.
There is a clear distinction between the provider of financial service products and a
financial planner.
The provider of a financial service is product orientated and sells financial products.
A financial planner is client orientated and sells advice. There are many providers of
financial advice/products, but relatively few financial planners by comparison.
Independence and Impartiality
The discipline of financial planning is growing fast and will be a new UK profession of
immense value in the 21st Century. Many financial service organisations encompass the
objectives, but few are fully qualified or truly independent or impartial of the product chosen.
- tied advisers (most Banks, Building Societies, Assurers) are absolved in law from
best advice, recommending only their own products
- independent advisers rewarded by product commission often lack objectivity in their
judgement as to which product to recommend.
Fees and Commissions
To remain truly independent and impartial financial planners charge fees for the
valuable planning services (+ VAT). We prefer to enhance the value of investments, or
reduce the cost of financial products, rather than take commissions to which we are
entitled as introducers. Where this is not possible, or the client instructs, commissions
are taken, with full disclosure, to fully offset our fees.
Comprehensive Financial Planner Services
Financial planners are concerned to make a comprehensive and strategic review of a
client's circumstances and will start by identifying the objectives of the client and
reviewing current strengths and weaknesses. This will not be confined to a single area
of personal finance, but cover;
- individuals within families and their businesses
- personal protection/risk management
- cash and loan management
- investments and savings
- taxation of income/capital, compliance and mitigation
- pension/retirement planning
- wills, trusts and estates
- university/education planning
Financial planners recognise the inter-dependencies that connect all areas of personal
finances and seek to provide the total picture or overview.
Qualifications and Expert assistance
Financial planners are professional and well qualified, having a broad depth of
knowledge across several disciplines in order to provide the holistic solution.
Financial planners are happy to call upon, or work with other expert professionals.
Financial planners are not in competition with other professionals and are therefore
happy to work with clients existing professional advisers.
Taxation Knowledge
Tax is the driver which affects many a decision recommended by financial planners.
Our depth of knowledge is far greater in taxation than other disciplines for this reason.
Financial planners provide tax compliance (returns) and tax planning services, alongside
the financial planning service to individuals (UK and overseas) and their businesses (UK).
The synergies of taxation (income, corporate, gains, inheritance, VAT, payroll, benefits, NI)
and financial planning services ensures tax savings are captured and completeness of
planning information.
Financial Planning Process
There are seven stages to the financial planning service. These are revealed by
moving and holding your mouse over the financial planning wheel.
At the centre of the process, the client and financial planner share the decision
burden. The wheel is an over simplification of the actual process, as the stages often
do not follow in the sequence shown. Reporting and recommending a strategic plan may
require a review of objectives. Objectives in the form of wishes/goals objectives,
are sought at the time information is assembled.
Financial Planning is a continuous process, for time brings change to personal,
family and business circumstances, financial markets and legislation. The financial planner's
initial plan is often the beginning of a very long personal relationship with the client.
Annual reviews (stage 7) are essential to ensure the plan is updated in line with objectives.
The path through life is never easy or free of financial catastrophe. |
