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What is professional financial planning?

And in fact what is the difference between a run of the mill IFA and a Financial Planner? Don’t worry if you don’t really know, I’m discovering much of the industry seems to struggle with this too! They are, however, worlds apart!

A professional financial planner sits down and really listens to you. The service extends beyond just paying into a pension and making an ISA contribution. It encompasses your life’s goals and what’s important to you. Your current personal and financial situation is examined to see how efficient everything is? This will tend to include looking at protection, pensions, investments, tax planning, wills, lasting powers of attorney, debt, estate planning and anything else that has an impact on the achievement of your goals.

Your financial planner will then provide you with a strategy that gives you the best chance of achieving your life goals. The strategy may result in new pension or investment contracts, it may not. The important point is that the process ONLY results in a new product if that is the right thing to do within your strategy framework. Products are tools, not necessities. It is at this point that the professional financial planner finds the best tool in the marketplace to fulfil your requirements.

The last part of the jigsaw, is often forgotten, the ongoing reviews! The original strategy is a snapshot for a moment in time. One year later, the assumptions will likely be different, as will the actual growth rates. Tax rates will also change, as will your situation and there will inevitably be complications. The strategy should to be reviewed annually to ensure that it remains on track and relevant.

This is the major difference between a professional financial planner and the rest of the industry. When you are next looking for a financial planner (or thinking about getting a second opinion) make sure you find someone who has their processes, remuneration and business set up to deliver professional financial planning and NOT product sales.

If you are going to pay for financial advice, make sure you are receiving good value in return. The advice should add value to the things that are important to you, not just pay for the latest ‘go faster’ pension.