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An introduction to financial planners

Guidance on a number of different areas which those looking for a financial planner should consider.

A financial planner can add value as well as provide reassurance to those who are entering a new phase in their life, notably retirement.

The following provides some guidance on a number of different areas which those looking for a financial planner should consider.

What is a financial planner?

A financial planner is the equivalent of a GP.

They should be capable of dealing with the majority of financial issues and provide guidance and reassurance to their clients.

The matters that they will cover include investments, pensions, protection and borrowing and their advice should take into account the tax issues associated with financial planning.

As with a GP, a good financial planner will recognise when a specialist needs to be called in. For example a private client lawyer to draft Wills and execute Trusts. Trusts might need executing in a variety of different situations, for example during Inheritance Tax planning, pension planning and when establishing life policies.

Tax accountants will be able to assist when tax returns need completing and tax specialists should also be called in when complex tax issues arise.

A financial planner should also have access to discretionary fund managers who might be the preferred choice for the investor.

The financial planner should always be available to help with their clients’ questions and should remain in contact on a regular basis providing financial information as well as up-to-date valuations of investments etc.

Most of all, the financial planner must be a trusted adviser that clients can turn to, certain that they will not be sold financial products for the sake of it and that their affairs will be dealt with in an objective and professional manner and on agreed terms.

Why is a financial planner different?

A financial planner is a professional adviser who is objective to the individual needs and is not influenced by product sales.

Objectivity should not in any way be driven by product sales. For example if a client has a lump sum to invest the adviser must make it clear that reducing debt can, in certain circumstances, be a much better option than investing in financial products.

What is a financial plan?

A financial plan for an individual is no different from a business plan. It should contain all of the elements of a good business plan identifying inflows and outflows of cash at different times. Unlike a business plan however cash inflows are being generated by a known source of capital.

A financial plan is, effectively, a cash flow statement and should enable sensitivity analysis to be carried out on it. It is there to help individuals understand their financial position and give them guidance as to how their spending in retirement can be met from existing and future sources of capital and income. However, as with any business plan, it does need to be updated from time-to-time, depending upon financial circumstances and financial markets, so it should have sufficient inbuilt flexibility to enable changes to be made quickly.

Simple financial plans can now be prepared on software such as Excel and most accountants should be able to produce their own versions.

What is life planning?

When an individual enters retirement they are, in most cases, entering the unknown. It is only after a year or two that people actually start to establish a pattern in their life. Having said this you should not enter into retirement without any idea as to what you might do during your retirement.

In these times of longevity retirement may be a period of 30 years or more in which case many individuals will need to keep themselves fit and active both mentally and physically. Finances will form a key part of life planning as they will of course help retirees to enjoy an active life.

How might a financial planner add value?

As previously stated a financial planner should act as a guide on most financial matters, reassuring and pointing their clients in the right direction. They should be trusted and objective and be able to add financial value by selecting an appropriate mix of investments.

I am a chartered accountant, why can’t I do this myself?

Whilst a financial professional with accountancy training will have an understanding of investment markets and products, they should not underestimate the underlying complexities of both. A chartered accountant should be able to produce a financial plan in the form of cash flow statements. This is always a very good starting point and again a financial planner can assist with this process using their own experience of producing similar plans for individuals.

Chartered accountants should also be able to budget and ensure that their resources are used in the most efficient manner. However, as far as investing is concerned, understanding financial markets needs a lot of experience. Markets do follow trends and understanding those trends and using them to one’s advantage requires a feel and understanding that only an experienced adviser will have.

Secondly, there is an enormous number of financial products available to investors. Whilst they might all have the same objective of producing investment returns in the form of income, capital or both they meet their objectives in different ways. Ensuring that you select investments which suit your needs tax efficiently requires the experience of someone who understands the profile and mechanics of these investments and who can explain them in a simple and clear fashion.

Selecting how to extract income from your pension schemes is now a complex process as there are so many ways it can be done. A financial planner will be able to explain these and help you find the most appropriate option for you.


A financial planner can add value although it is important to ensure that the person you choose has wide enough experience, can be trusted and is not remunerated solely on product sales. When looking for an adviser it is suggested that individuals always speak to at least three so that you can get a comparison of style, charging structure and compatibility.

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