What is a financial planner?

By Dan Atkinson


I wonder what you think a financial planner does? Planning your finances feels like an easy answer, but what does that really mean and how can you spot a good one? In this article we will help you answer these questions and understand why you might benefit from working with a financial planner.

What is a financial planner?

A financial planner is a professional who will help you work out how best to use your money to achieve your financial goals. They start by understanding what you want your money to enable you to do – they’ll ask great questions and listen attentively. They’ll make sure that they understand the ins and outs of your finances so that they can help build a picture of whether you are on track. 

Using their expertise and experience they will build a plan which incorporates flexibility to adapt to changes in life, tax, investments, and your goals. A financial plan will give you clarity on the actions you need to take and visibility of your financial blind spots. A financial planner will help you review this on a regular basis to keep you on track.

What does a financial planner actually do?

The most important thing that a financial planner does is to understand you thoroughly. They will ask you about your money and review any provisions you have already made. You can also expect them to ask you about what lifestyle you want, if there are things you want to achieve, who the important people are in your life, and what your experiences have been like with money. This enables them to have a detailed picture of who you are, where you are financially, and what your money needs to fund.

Using cashflow modelling software they will project what your financial future might look like. This takes into account taxes, investment expectations, spending, savings, and the way products like pensions and ISAs work. Along the way a financial planner will use their expertise to identify efficiencies and highlight risks which you might not have considered. They will help you plan for bad times as well as good.

Different types of financial planners

There are two types of financial planner. The difference is how wide a net they can cast when looking for products to help you achieve your financial goals. We are independent financial advisers.

Independent financial advisers: This group of advisers will take into account all of the product providers and solutions which are available. They will work out what is most suitable for you and your situation.

Restricted advisers: This group of advisers will look at a smaller selection of product providers and solutions. It is important to ask what the restrictions are. They will work out which of these is most suitable for you and your situation – or tell you if they cannot help.

What about a financial adviser? Is that the same?

Confusingly the terms financial adviser and financial planner are often used interchangeably. 

  • A financial adviser will be focused on helping you find a suitable product such as an investment, pension, or protection policy. 
  • A financial planner will do this too, but these recommendations will be part of a long term relationship focused on helping you achieve your goals.

Before you get started with a financial planner

It’s helpful to gather together your financial information before you get started. A simple structure is to think about Earn, Spend, Save, Own, and Owe.

Earn: Documents such as a recent payslip, your P60, and any P11d will be helpful. If you have income from businesses, properties, pensions, or other investments it is helpful to gather recent information.

Spend: A great start is to think about four categories – Essential (survival basics), Lifestyle (living comfortably), Special (holidays, treating yourself etc), Giving (charities, family, friends etc).

Save: Are you regularly putting money away for the future? This might be things like cash savings, investments, ISAs, or pensions (personally or via an employer).

Own: Approximate values and details of your assets. This could include property, cash, investments, pensions, cryptocurrency, or businesses for example.

Owe: Recent statements for mortgages, loans, credit cards.

Your financial planner will ask you about your goals. This can be a hard question to answer and might be something you’ve not considered before. One way to approach it is to think about what your ideal week might look like assuming money is not a cause of worry. Who would you spend time with, what would you be doing, what might you need to do it, and how much might this cost?

What should you look for?

Conversations about money and life are very personal. In our experience your financial planner will often be the first person you talk to about them. With this in mind it is important that you trust them deeply.

It is equally important that they have the knowledge to help you. 

  • As a bare minimum they will hold a Level 4 Diploma in Financial Planning (for context A-Levels are Level 3). This provides them with a broad base of knowledge about pensions, investments, protection, and regulation.
  • The next level of qualification is equivalent to an Honours Degree (Level 6) and often comes with a Chartered title. These exams go into much greater detail and demonstrate that they are able to apply this.
  • Those at the peak of the financial planning profession have pursued Certified Financial Planner status. This Honours/Masters Degree level qualification can only be achieved by those with a detailed understanding of the application and interaction of all aspects of a person’s financial decisions.

Whilst not every aspect of your financial planning involves investing, it is often key to achieving long term goals. It is common for charges to be linked to how much you invest and to ensure that you receive value for money, firms will often have a minimum investment amount if they charge this way. Be clear on how much you can afford to invest.

Sometimes the financial planning firm will receive income from other sources such as your investments or the platform which is used to hold them. They should be transparent about what they will receive and any potential conflict of interest this might bring.

How much will a financial planner cost?

It depends on the level of service you require and how complex your planning needs are. A financial planner may be more expensive than a financial adviser because their service will touch more areas at once. There may be an up front cost for building your financial plan and putting it in action. For most people their relationship with their financial planner lasts for many years and there will be an ongoing cost.

The most common way of charging is as a percentage of the amount of money you have invested. Sometimes you will be charged a fixed fee for a piece of work, or a monthly retainer. On occasion a financial planner may offer to work on an hourly cost basis. However they charge, they will explain this up front.

Do you need a financial planner?

If you are unsure of how your financial situation fits into what you want out of life, a financial planner will help you get clarity. If there are lots of moving parts in your money life, such as businesses or complex family dynamics, a financial planner will help you bring these together so you can make better decisions.

If you think that you might need a financial planner and want to know more we’d love to talk to you. The first conversation is ‘on us’. Get in touch with us today and one of our financial planners can talk you through all your options.

What is a financial planner
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This article is distributed for educational purposes and should not be considered investment advice or a recommendation of any particular security, strategy, or investment product.
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