Most people are familiar with the term “Financial Advisor” or “IFA” but at Magenta we are Financial Planners and people regularly ask us what the difference between the two is.
In many countries, the use of the title “financial planner” is tightly controlled and regulated. However, that’s not the case here in the UK.
In the UK any regulated adviser can call themselves a financial planner, even if they don’t deliver a financial planning service.
In short, financial advice is centred primarily around selling a product, usually for a specific need. Financial Advisors tend to focus on a single problem, and they don’t take into account the big picture. Instead, they look at the question narrowly, only advising you on what you have asked for. So, you could argue that if you don’t know the right questions to ask, you may get the wrong answer.
By contrast, a financial planner will help you work out what you want from life and then create a financial plan with you to make it happen.
Genuine financial planning is about relationships; finding out what is important to you and then creating a strategy – a plan for life – and helping you stick to that plan.
The key difference between a financial planner and a financial advisor is that a financial planner focuses on you and your goals, working with you about what you want to achieve, whereas a financial advisor focuses on your money and your investments.
Financial planners use their expertise and high-level qualifications to aid with your budgeting, tax planning, pensions and investments, to create an all-encompassing strategy for your finances.
A good financial planner will help you to address questions like:
- do I have enough money?
- when can I retire?
- can I afford to pay for my care when I am older?
- am I going to pay too much tax?
- Will my family be secure?
These are questions that we at Magenta can help you to answer, with the help of our lifetime cashflow forecasts and specialist planning skills.
We will discuss your hopes and dreams for the future and show you whether your current savings, investments and pensions will provide the necessary resources to allow you to reach your goals and live the life you want.
We can take away your worries about running out of money and encourage you to enjoy your life – rather than just advising on financial products.
A top tip when considering a financial planner is to look for the right ‘fit’ of company/planner for you and check out their qualifications. A Certified and Chartered Financial Planner will hold the highest qualifications in financial planning in the UK.
We previously wrote about some key questions you should also consider when researching hiring a financial planner or advisor and this can be found here: https://magentafp.com/looking-for-a-financial-planner/
If you’re about to hire a financial planner, or know someone who needs some guidance with finances, please get in touch and book a meeting.
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