The RDR may have narrowed the distinction between ‘adviser' and ‘planner', so what options are there now for those looking to branch into life planning? Nicola Brittain finds out...
To some, the difference between a financial adviser and a financial planner is vast; to others, the distinction is imagined.
Thanks to changes made to the delivery of advice following the Retail Distribution Review (RDR), it may no longer be true (if it ever were) that the former more often results in a product transaction while the latter tends to charge separately for advice and so is not reliant on securing a sale.
But, to some, a clear and identifiable gap remains, particularly relating to profitability, or certainly potential profitability.
So you want to be a planner?
Perceptive Planning operations director Phil Billingham argues that ‘advisers’ often manage less than 50% of clients’ investable wealth, while ‘planners’ tend to run upwards of 90%. “The clients receive more service and are more demanding, but the rewards are far greater,” he says.
So, for those who believe a gap between the two remains, what options are open to financial advisers looking to branch into planning?
Gain financial planning qualifications
You could sit the Certificate of Financial Planning with the Chartered Insurance Institute or the Certified Financial Planner (CFP) exam with the Institute of Financial Planning (IFP), which is affiliated with the Financial Planning Standards Board.
Cosgrove Brown Financial Planning director Ian Brown took his CFP exam with the IFP in December 2012. “The IFP is the professional body that promotes financial planning more than any other," he said.
Incorporate cashflow modelling
Cashflow modelling is considered a differentiator of financial planning. It requires assessing a client’s current and projected inflow against their projected expenditure. These figures are then used to help create goals and objectives. The figures need to be reassessed regularly.
There are several types of software available to help with managing cashflow modelling. Truth and Voyant are two of the most widely used. Other systems include Moneyscope, an entry level system designed by paraplanner Richard Allum, and PlanLab, a system designed in the US.
Get used to ‘listening’
Financial planning is more ‘touchy-feely’ than financial advice, according to its practitioners. First meetings for advisers are fact-finds but a planner, says Wingate Financial Planning director Alistair Cunningham, will use this meeting to get their client’s ‘story’.
This will include their ‘journey’, objectives and concerns. Asking questions around a client’s long-term goals and how they feel about money can be quite a transition from the more matter-of-fact approach of some traditional advisers.
Keep in touch with your peers
Eldon Financial Planning managing director Joss Harwood regularly shares ideas and best practice with her peers at firms across the country. She also scans the trade press for like-minded planners. Similarly, there are a number of financial planning experts on the conference circuit.
Billingham is one but he also cites FortyTwo Wealth Management managing director Alan Dick and Paradigm Norton Financial Planning chief executive Barry Horner. Inspiring Advisers founder Paul Armson has established an online coaching programme to help people communicate their services and change from being product-focused to solutions-focused.
Read the gurus
There are several ‘experts’ in the field of life planning and, although they may be a little evangelical for the tastes of many financial planners, advisers take some elements from all of them. Those with the highest profiles include Bill Bachrach, Dan Sullivan, George Kinder and Maria Nemeth.
Become a member of the IFP
The IFP is described by Brown and others as the body that best promotes the practice of financial planning in the UK. It sends out member newsletters, continuing professional development advice and distributes the Financial Planner magazine to members. A standard membership costs £183.
The six steps of financial planning
Financial planning exams and processes are based on the following six steps. They were developed in the 1960s and are used by Certified financial planners all over the world.
An ambitious objective
'Something completely new'
'Illusion of control'
Reasons to be cheerful
Total investment reaches £9m