You know you need financial advice, but where do you start?
In the first of Russell’s blogs, he talks about where to start when seeking financial advice that is bespoke to you.
A blog from Russell Skinner, APFS CFP™ Chartered FCSI (Financial Planning)
Chartered Financial Planner and Managing Director of Blue Sky Financial Planning
Knowing you need a financial adviser is one thing, finding the right one to suit your unique needs and style is quite another. We understand this decision is fraught with all manner of issues, so much so that, for many, inertia rules.
When a decision is too complicated or difficult, human nature is to do nothing and sometimes, a crisis is the only thing that will spur people into action. Sadly, when it comes to financial security and freedom, this is often too late.
Don’t let inertia rule.
For some, the reasons for putting off the decision to engage a financial adviser is around costs. For others it’s not knowing who to trust and, for many, it’s not thought the help of professionals is required when there is so much ‘free’ advice available from other sources – the internet, friends, the media etc.
Sadly, a legacy of the financial services industry is also that there is a common fear of financial advisers trying to sell you a policy or plan which you may not need, and possibly don’t understand.
We feel your pain!
Despite vastly improved regulations and qualifications, many advisers still rely on a product sale to earn their income. That is not the case at Blue Sky and, therefore, we think it is worth differentiating what types of advisers you, as a potential client, may come across in your initial research so you can determine which will best suit your unique situation.
- Firstly, there are financial advisers who are tied to one company and only able to sell and advise on the said company’s products. An example of this is a bank.
- Then you may come across a restricted financial adviser who may sell and advise on products from a limited number of companies.
- More common these days is an independent financial adviser (IFA) who can sell and advise on products across the whole spectrum of companies.
- And then finally, you will find financial planners who charge a fee to evaluate all your financial arrangements and can find bespoke solutions from across the whole spectrum of companies too.
Increasingly, and to confuse matters, there are hybrid offerings. For example, an independent financial adviser may charge a flat fee for advice and not rely on a product sale. A tied adviser may also be a financial planner.
Understanding the difference between an Adviser and a Planner
Another point to be clear on when you are searching for the right financial advice is terminology.
Financial Adviser: A financial adviser is a professional who provides advice and recommendations on various financial products and services to clients. They typically assess a client’s financial situation, goals and risk tolerance and then make suitable recommendations regarding investments, pensions, insurance and other financial matters. Financial advisers may work independently or as part of financial advisory firms, and they are regulated by the Financial Conduct Authority (FCA).
Financial Planner: Financial planning is a broader concept that encompasses a comprehensive approach to managing an individual’s finances now and into the future. A financial planner often takes a holistic view of a client’s financial life and helps them develop a long-term plan to achieve their financial goals at every stage. This may involve creating a budget, managing debt, planning for retirement, estate planning, tax optimisation, and more. While financial planners also provide advice on financial products, their focus is on creating a comprehensive financial strategy tailored to the client’s specific needs. This is entirely bespoke work. Again, Financial Planners may work independently or as part of financial advisory firms, and they are regulated by the Financial Conduct Authority (FCA).
In the UK, both financial advisers and financial planners must meet specific qualifications and adhere to regulatory requirements set by the FCA. These requirements aim to ensure that individuals providing financial advice are competent and act in the best interests of their clients.
Tied/restricted vs independent
Blue Sky are independent advisers who are directly regulated with the Financial Conduct Authority (FCA). This means we report directly to the FCA and to no third party. We are also a Chartered Firm.
Some excellent firms have opted to become restricted advisers but, in many cases, a restricted adviser is restricted because they belong to a large organisation that wants to limit their advisers’ liability by reducing the number of investment funds and other products they need to consider before giving advice. Some of these organisations will nudge or incentivise their advisers to use in-house investment options (which are generally more expensive for no extra value). In other cases, advisers may have simply narrowed their focus to some high-quality investments and financial products. We think it’s important clients understand the whole spectrum of firms available and make sensible choices based on their own needs.
Where to start, and next steps
Your starting point should always be to arm yourself with knowledge and understanding. The following blogs in this series from our Managing Director, Russell Skinner highlight important areas for you to consider when choosing the right adviser for your circumstances.
If you have questions or would like to know more about Blue Sky’s approach, please give the team a call on 01202 756 560.
More about Blue Sky Financial Planning
Here at Blue Sky, we are an independent financial planning firm with registered IFAs and wealth managers within our employed team. Regulated by the FCA with an impeccable reputation for client services and no upheld complaints, we thrive on making our clients’ hopes and dreams come true. We take a holistic approach wherever possible and only recommend products and services that will serve the end goals of the clients. You can learn more about the Essence of Blue Sky here.