How we see the difference between a financial adviser and a financial planner at DWFP
06/12/2023While they might appear to offer the same service, we see a financial adviser as very different to a financial planner. Find out why
When you start looking for professional help managing your wealth, one of the first decisions you make is whether you want to work with a financial adviser or a financial planner.
Yet, while the terms are often used interchangeably, at Douglas White Financial Planning (DWFP) we believe there is a significant difference between the two.
We’ll have explained how we see the differences between an adviser and a planner when you first started working with us. As our name suggests, you’ll know that we very much see ourselves as financial planners.
Of course, if you aren’t yet a client of ours, you’re trying to explain the difference to a friend or colleague, or you’ve simply forgotten since we had our initial conversations, it might be useful to see our opinion explained in simple terms.
So, read on to find out how we see the difference between a financial adviser and a financial planner.
Our financial planning approach is outcome-focused
A good starting point to understanding our perspective on how advisers and planners differ is in how they might approach an initial meeting.
When we think about a financial adviser, we envisage them beginning discussions by asking you about your wealth. That might include what you have in savings, investments, and pensions, as well as your protection cover. In our experience, an adviser will then show you solutions to help you manage these.
Meanwhile, at DWFP, our financial planner approach is to instead ask you about your life. We’ll want to know what your life is like now, and what your ambitions are for the future.
As financial planners, we’re more outcome-focused, looking to help you define your financial goals and then organising your wealth accordingly. We start with the plan, looking at what you want to do and how you want to do it.
From there, we make recommendations for your money, a stage that’s very similar to advice. It could involve how to invest, or how much risk you should take when you do. We’ll also likely build a cashflow model, offering a visual representation of your income and expenditure over time, and how your wealth might be affected by various scenarios.
Crucially, though, these recommendations will be in line with the plan we’ve created for you. We want to get to know you personally, finding out what’s important to you and what makes you tick. Then, we can provide incisive ways to help you organise your wealth, keeping that plan in mind.
Our planning approach is not necessarily “wealth management”
Another crucial distinction we’ve identified between an adviser and a planner is that planning is not necessarily “wealth management”.
At DWFP, we don’t see ourselves as “wealth managers”, primarily because we think this title implies that we’ll take your wealth and manage it on your behalf.
Instead, what we do is build a personal relationship with you so we can work together and help you manage your wealth in a way that allows you to achieve your goals.
We want to be a partner and sounding board for you, helping you organise your wealth so that it allows you to get what you want out of life.
This way, you’re involved in the process and can be confident that you’re on track to hit your targets, rather than entirely outsourcing it and only seeing an update in an annual statement.
Building financial habits when you don’t know what you need
As you can see, a major difference between the two in our experience is that planning is based on your future targets.
That said, if you don’t know what your desired outcomes are, then you might imagine that financial planning can’t offer any more value than advice.
Yet, there are unique aspects of our financial planning approach that aren’t just about building a cashflow model and preparing for retirement, or investing to grow your wealth.
Indeed, a crucial tenet of what we help you do at DWFP is in building financial habits that will serve you well throughout your lifetime.
This coaching aspect is crucial, as it helps you to make sensible decisions with your wealth for the long term. That might involve the way you set aside a portion of your income every month in savings, or having a healthy, sustainable approach toward investments.
These habits can serve you well whatever stage you’re at in your planning. For example, if you’re in the latter stages of your career and approaching retirement, it might involve reassessing your income and expenditure, crafting a balance between the two so you have the confidence that you’re financially sustainable for the long term.
Read more: What is “lifestyle creep” and how could it affect your finances?
Meanwhile, for young professionals who are starting to build wealth and have different needs, it might revolve around how you manage pay increases and bonuses throughout your career, enjoying some of your wealth while also setting a portion aside for your future.
This is where we believe our financial planning style adds value. No matter where you are in life, you can benefit by forming lifelong habits that encourage sustainable saving and spending.
Fees based on the complexity of the work
A common misconception around financial advice in general is that you aren’t charged anything to receive a service. In reality, you will absolutely pay for the work completed by an adviser or planner. However, the way this works can greatly differ.
We’ve often found that advisers will charge you a percentage-based fee on the total amount you’re looking to invest.
Meanwhile, although it will vary from firm to firm, fees for financial planning do not always revolve around how much you invest.
Indeed, at DWFP, our service is not contingent on how much you have, but rather priced on the complexity of the work we complete for you.
Regardless of what you need, that means you receive a service tailored to you, and you’re charged competitive, fair fees that offer you value for money.
You can find out more about how we charge on our website, where we openly display typical fees for the work we do.
Get in touch
Want to find out more about how you can benefit from financial planning? Speak to us at DWFP.
Email info@douglaswhiteltd.com or call 0151 345 6828 to get in touch today.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate cashflow planning.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
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