Tony Byrne’s View 18 September 2017

Sep 18, 2017 | Wealth & Tax Blog

Last week I attended a financial planning conference at the International Convention Centre in Birmingham called Back2Y on the subject of lifestyle planning. Back2Y stands for back to why you entered the financial planning profession.

Lifestyle planning is an emerging profession which is increasingly separating itself from financial planning. The concept is more aligned to one of life coaching rather than pure financial planning.

George Kinder is the acknowledged founder of lifestyle planning. He has written several books on the subject and has created the Kinder Institute which runs courses for financial planners who want to either make the transition from financial planning to lifestyle planning or simply to add it as an extra service for clients.

Research compiled by the conference organiser Paul Armason has shown that the majority of the public still has little understanding of the difference between a financial planner and a financial adviser. The majority of the public still has a low opinion of financial advisers and financial planners. The very same research highlighted that the more informed members of the public who understood the difference between financial planners and financial advisers also have a higher opinion of financial planners.

So what is the difference between a financial adviser and a financial planner? Well a financial adviser typically works for a single product provider such as a bank or an insurance company and is paid to sell their products. A financial planner is usually but not necessarily independent and advises clients how to plan their financial futures by following a 6 step financial planning process supported by a financial plan based on lifetime cashflow planning. Independent means that they have to offer access to all financial products in the UK. This is known as whole of market. Such advisers do not work for a product provider.

Lifestyle planners are fee based and are focussed foremost on advising you how to achieve your personal goals. They are not necessarily financial planners. Some are pure coaches who work with financial planners whereas others combine lifestyle planning with financial planning in their own firms. They are able to advise clients who do not necessarily have any money to manage.

Paul Armason made the very perceptive point that financial planning is a profession not an industry and should rightly be described as such. There is a financial services industry which is populated by the product providers i.e. the banks, insurance companies and investment companies.

The financial planning profession on the other hand is made up of highly qualified Chartered and Certified Financial Planners whose duty is to act in the best interests of their clients. Whilst there are good financial planners who are not independent whole of market advisers, in my opinion the best of such advisers cannot be as good as the best independent ones. This is because they are the equivalent of professional one club golfers trying to compete with fellow professionals who have a full set of golf clubs. The one club golfer will inevitably be second best.

Our company is a proud firm of Chartered Financial Planners. All of our advisers are qualified to Chartered Financial Planner status and all of our financial paraplanners have to sit and pass the same qualifications. We are also independent whole of market advisers. We firmly believe that our status offers the best possible level of service for our clients. We have been independent for 31 years and intend to remain so indefinitely.