Financial planning is not just for the wealthy, you know

Written by Lisa Stanley Mann on 15th May 2017

Think financial planning is for the rich? Think again. A financial planner doesn’t cost as much as you think and could save you thousands in the future. Not-for-profit organisation the Chartered Institute of Securities and Investment (CISI)  has come up with 10 questions to ask a financial planner, so you can help them to help you be good with your money.

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But what does a financial planner actually do?

The Chartered Institute of Securities and Investment (CISI) may sound rather lofty but in essence they can help you get the financial advice you need, at the different life stages you need it.

Last week was Financial Planning Week, so the CISI conducted research through YouGov which revealed only 7 per cent of people would trust their bank when it comes to seeking financial advice.

In contrast, 41 per cent of people would trust a financial adviser; 22 per cent would trust a good friend or relative and 26 per cent would trust only themselves.

Jacqueline Lockie, deputy head of financial planning at the CISI, said: “The survey findings show there is still a lot to be done to build trust in financial advice and planning in the minds of consumers. These findings also indicate that consumers are unsure what to do when seeking advice – our ten questions to ask a financial planner will help with this.”

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10 questions to ask your financial planner

Choosing a financial planner is a decision that should not be taken lightly as it will almost certainly affect your financial future. It is important to ask a series of questions to ensure you find the most competent, trustworthy and qualified professional who is best suited to your needs.

Although it will take you more time, before you meet up with any adviser or planner it’s a good idea to contact at least three different firms so you can get a much better idea of the differences between them as a result. It’s also important to be clear on exactly what service you are looking for the adviser or planner to provide for you. In some ways interviewing a potential planner is similar to interviewing a person who is applying for a job you’ve posted.

1. What are your qualifications?

This should be a straightforward task but the myriad of different professional qualifications that exist for financial advisers and planners in the UK can make it a little more complex. Financial planning is a detailed, comprehensive process and requires an individual who has proven experience and skill in the planning process itself.

Make sure you have a good understanding of the planner’s qualifications and if they are a qualified planner. Check if they hold any advanced level professional credentials.

2. What experience do you have?

Experience is an important consideration in choosing any professional so don’t hesitate to ask how long the planner has been in practice, the firms they have been associated with and how this experience relates to their current practice.

3. What services do you offer?

The services a financial planner offers will vary and depend on their credentials, areas of expertise and the firm for which they work.  Some planners offer financial planning advice on a range of topics but do not sell financial products, while others provide advice in specific areas such as taxation.

Those who sell financial products, or who give investment advice, must be authorised and registered with the Financial Conduct Authority (FCA).

4. What is your approach to financial planning?

The types of services a financial planner will provide will vary. Some planners prefer to develop detailed financial plans encompassing all of a client’s financial goals. Others choose to work in specific areas such as taxation, estate planning, insurance and investments. Ask whether the individual deals only with clients with specific net worth and income levels, and whether the planner will help you implement the plan they develop or refer you to others who will do so.

5. Will you be the only person working with me?

It is quite common for a financial planner to work with their team to provide the full Financial Planning service to you. You may want to meet everyone who will be working with you and this will often involve Paraplanners. These are professionals who work to support the Financial Planner, providing  technical research and backup as well as report writing and analysis.

6. How will I pay for your services?

There is not, and never has been, such a thing as free financial advice. Your planner should disclose the cost of their services in writing in advance of them starting to work with you, so you are clear on this as well as how they will charge you for the services they will provide.

7. How much do you typically charge?

Although the amount you pay the planner depends on your particular needs, even at an early stage in the process the financial planner should be able to provide you with an estimate of costs based on the work they will be carrying out for you.

8. How are you regulated?

Financial planners who sell financial products such as investments must be regulated by the FCA. Since January 2013 all retail investment advisers must have a Statement of Professional Standing(SPS) from an FCA accredited body such as CISI. You should check that both the firm and the individual adviser or planner are authorised by the FCA. You should also ask whether the advice they give when it comes to recommending financial products is independent or restricted. Independent advisers have a duty to research products across the whole of the market.

9. How often do you review my situation? 

Good financial planners will make sure that they review your situation at least annually. Many will do so more frequently, but a thorough review once a year is sufficient to ensure that your plan keeps up to date with your changing circumstances.

10.Can I have it in writing?

And finally, be sure to ask the planner to provide you with a written agreement that details the services that will be provided.