In this article, I’ll be looking at the differences between Financial Advisers, Financial Planners, and Wealth Managers, outlining the key distinctions in their typical skillsets, the scope and range of services they provide, and the markets their service propositions are best positioned to serve.
Additionally, I’ll review the hybrid propositions on offer and sharing the results of my research into the availability of (and demand for) each type of service.
Finally, I’ll explain why I believe a hybrid client service proposition based on a collaborative and coaching-based Wealth Management Programme could be the best path forward for Financial Advisers and Financial Planners with a more relationship-driven personality. Such a programme could help them add more value in their market niche and enjoy a more rewarding and fulfilling career in the process.
By the end of this blog, you will understand the range of specialist and hybrid service propositions you could choose to offer, thereby helping you determine which service proposition best matches your target market and ambitions, empowering you to make a more informed decision about the direction in which you plan to develop your financial services career and business.
About Me
Hi, I’m Mark Pritchard-Jeffs, a Wealth Management Coach with 35 years experience as an IFA and St. James’s Place Partner. Together with my business partner, Andrew Dodson, we founded the Wealth Manager Academy.
Our Mission
We are dedicated to the training and development of Financial Advisers and Financial Planners who want to become Wealth Managers. We’re seeking ambitious and forward-thinking financial services professionals with the basic skills, personality traits and values needed to market and deliver a comprehensive coaching-based and relationship-driven wealth management process that attracts and retains higher-net-worth clients, delivers more client satisfaction, promotes more advocacy and creates more enduring value and job satisfaction in the process. If that sounds like it could be you, read on!
Our Vision
The Wealth Manager Academy runs Business Development Programmes designed to embed our value-adding wealth management skills, tools, processes and systems into the service propositions of the people and businesses we work with. Participants attend a foundation day to obtain a provisional licence to market themselves as Wealth Management Programme Directors and Hereditas® Legacy Planning Practitioners, then follow a structured course of formal coaching, training, personal development and self-study to move them from “where they are now” into competent Wealth Managers, confident in their ability to market and deliver a fee-based wealth management service that attracts and retains higher-quality clients, generates stronger demand for their FCA-regulated financial services and creates more enduring value and fulfilment for themselves and their business in the process.
Financial Advisers
Anyone can style themselves as a “financial adviser,” but the term Financial Adviser (with capital F and A) has a regulatory definition in the UK, referring to someone who is authorised and regulated by the Financial Conduct Authority (FCA) to advise upon and arrange transactions in regulated financial products (basically a specified range of investment accounts, pension plans, insurance policies, and mortgages). To become an FCA-regulated Financial Adviser, you must have gained appropriate professional qualifications and regulatory approvals.
I see Financial Advisers as specialists in advising on and arranging FCA-regulated transactions into FCA-regulated financial products in order to address a particular financial challenge or opportunity for a client. Their services are aimed at people who lack the time, inclination, and/or expertise to identify, arrange and manage suitable products and related transactions themselves.
Financial Advisers are generally compensated through pre-agreed fees (or commissions in the case of certain insurances) that are typically proportional to the value of the contributions and/or benefits provided by the financial products they advise on and arrange. If a potential client does not require a regulated financial product, they have little to offer, and the adviser is usually not paid for any preliminary work done.
Status & Qualifications
Some FCA-regulated financial advice businesses are Independent of all product providers from a legal perspective and are directly responsible to the end client for their advice and related services in the event of a complaint, dispute, or claim. Others are Tied to representing one or more FCA-regulated product providers, limiting their advice to the specific product offerings from those providers. In these cases, the product providers are obliged to take legal responsibility for the advice and related services provided to clients. In my view, neither legal status is inherently “better” or “worse” than the other. The best status for an adviser to adopt will depend on the scope and nature of the services they wish to provide to their clients, the niche they wish to serve and the systems, processes, resources and backing they want/need to have available to them and their clients. Irrespective of status, all FCA-regulated financial advice firms are required to maintain minimum levels of Professional Indemnity Insurance to protect their clients’ interests. The status, qualifications and authorisations of FCA-regulated Financial Advisers can be readily checked and corroborated on the FCA’s website.
Service Propositions
The services provided by a Financial Adviser are transactional in nature and include:
- Initial Advice and Service: Assisting clients in choosing and setting up new FCA-regulated products and arranging new FCA-regulated transactions.
- Ongoing Advice and Service: Managing and administering FCA-regulated products, held under their servicing agency. This includes the reviewing and updating of regular contribution rates, investment mandates, and making adjustments to policy-defined premiums, benefits, and loan terms. They also assist with claims, further advances, one-off contributions, income distributions, and capital withdrawals.
All Financial Advisers have a legal obligation to “Treat their Customers Fairly” by being open and honest about their regulatory status and authorisations, the range of products and services they offer, and the likely costs and benefits of the regulated financial products and services they advise on and arrange. They also have a statutory duty to “Know Their Client” sufficiently well enough to prevent financial crime and ensure that any financial products and related transactions they advise on are “Suitable” for the needs and goals of the person or entity being advised and that any transactions are arranged effectively, efficiently and in a timely manner under a “Best Execution” policy.
Niche Markets
Some Financial Advisers specialise in particular types of regulated products, such as Pensions Consultants, Investment Advisers, Insurance Brokers and Mortgage Advisers. Others are more akin to General Practitioners in the medical profession, providing basic advice and services across multiple product categories and referring clients to specialists whenever the needs and solutions fall outside their areas of expertise. Additionally, some Financial Advisers develop specific expertise in niche target markets, typically based on understanding the needs of specific demographic groups, occupations, or life circumstances.
In Summary
An FCA-regulated Financial Adviser is a financial services professional providing personalised advice and related transactional services in respect of a predefined range of FCA-regulated financial products within a strict regulatory framework. Financial Advisers typically provide Initial and On-Going advice and services. There are currently around 36,000 FCA-regulated Financial Advisers working within approximately 5,000 FCA-regulated advice firms within the UK.
