Need money help? How to call in the experts
As the old proverb says, most people never plan to fail, they simply fail to plan.
However, when it comes to getting professional help, most people seem to lack the confidence to approach financial planners.
We at the Institute of Financial Planning want to stop finances floundering for want of a good plan of action: in this guide we look at when and how to call in the experts for help.
When to call the experts
Almost anyone unsure about what to do with their money can benefit from financial planning but those interested in long term savings and investments such as pension schemes, which are often complex, may have the most to gain.
Note that those with debt problems would benefit more from specialist help, find more information here.
Why financial planners?
So what do financial planners actually do?
Perhaps the common perception is that they help people to decide which investments, savings schemes or insurance policies are most suitable for their needs.
This is, of course, a part of what they will do but there's much more to it. All advisers are not the same.
Financial Planners work with their clients to build a proper financial plan.
Typically, that means they spend quite a bit of time helping individuals to work out their goals and aspirations in life, the likely cost of those goals and also prioritising what you want to happen and when.
This is a really powerful exercise. Usually for the first time in that person's life, they can see on paper or on screen what the rest of their life is meant to look like.
This plan then forms the basis for any financial advice that results, which may or may not involve products like ISAs or pensions or a host of other alternatives.
Are there fees?
Financial Planners charge a fee for the work they do.
You can clearly see what service you get for your money as it's all about you but the fact remains that you have to pay so the important thing is that when you work with an adviser or a planner, you have peace of mind and can be confident that the advice you receive is right for you.
You need to be able to trust the individual adviser and the firm they work for, to put your needs and interests first and come up with appropriate solutions that will suit those needs.
Who can you trust?
According to a survey that we carried out for Financial Planning Week, most people consider trust the most important quality in an adviser.
The cost of the advice and qualifications of the adviser are important but rank a long way behind trust.
That's why we at the IFP welcome a number of upcoming changes to advice in the UK.
The Financial Services Authority, the financial services regulator in the UK, is introducing perhaps the biggest shake up in regulation for decades which will apply to financial advisers from January 2013.
The good news is that advisers will no longer be able to claim commission payments from selling investment products, as they have in the past.
Understanding advice fees
The potential downside of this new transparency around charging means you will need to agree a fee for any financial advice you receive and in advance of that service being provided.
There is a popular misconception that financial advice has been free which can no longer be the case.
It does cost money to get advice but you'll know exactly what you're paying and the services you can expect in return.
However, it will still be possible for advice to be paid for from the amount invested into a product such as an ISA so it won't always be a case of writing a cheque out.
Who can you trust?
Advisers will also have to be better qualified, and will have to reveal to you whether the advice they provide on products you may ultimately buy as a result of their advice is independent or restricted to the products of one company.
Even so, it's difficult to know who will offer sound advice. Anybody can call themselves a Financial Planner and so it is important to know what you are looking for.
There are two signs to look out for. The first is the Certified Financial Planner mark.
This is a globally recognised qualification which shows that the individual holding it has the advanced skills and technical knowledge to help you to plan your finances in a way that has the best chance of you achieving your goals in life.
Accredited Financial Planning Firms represent the leading firms in the Financial Planning profession. Checked by IFP, you can be confident that in approaching them you will be offered a full financial planning service which puts your needs first.
You can find registers for both on our site here.
There are plenty of other things that you can do to find out more about whether the adviser you speak to is one you can trust.
A good start, for example, might be to ask for recommendations from your trusted friends or family members.
When it comes to the stage of actually speaking to an adviser or a Financial Planner, we've developed a list of ten questions that we recommend you ask to help you find out more about the kind of service they will provide.
You can find that information in a free downloadable guide here [pdf].
You can find many other useful resources on our site. For example, we have a summary of your rights as a Financial Planning client available, which is particularly useful if you've already got an adviser but you aren't sure whether the service they provide is a real Financial Planning service or not.