Financial Planning

What is financial planning? 

Financial planning is a professional service for individuals, families, and businesses, who need assistance in organising their money. It involves looking at someone’s financial affairs with the aim of achieving their financial and lifestyle goals more effectively. 

Financial planning is authorised and regulated by the Financial Conduct Authority (FCA) and covered by the Financial Services Compensation Scheme.

The importance of financial planning 

There are several life events that could result in a need for financial planning services:

  • Starting a family 
  • Marriage/Divorce
  • A change of career
  • Approaching retirement
  • Receiving an unexpected lump sum, such as an inheritance.

A financial planner also sometimes referred to as a financial adviser, is someone who looks at a client’s entire situation. They help identify objectives and help ensure the client is best positioned to help achieve their objectives. The financial adviser will then present a detailed recommendation which will likely include certain products and solutions. 

In most cases, a client will seek financial advice for a particular reason often linked to a life event. The value of speaking to a trusted financial planner comes from looking at the bigger picture. A skilled financial adviser can build a financial plan for clients that helps them achieve their life goals sometimes even achieve a lifestyle they didn’t know they could afford.

Take retirement for example, a good financial planner will take a look at all of the assets, liabilities and goals throughout retirement, to work out how much money they will have and if they can fund the type of retirement they want. If there is a shortfall, the financial planner will work on ways to ensure the shortfall is mitigated, for example, by advising the client makes more pension contributions before retirement, or looking under the bonnet of their current pension to check that the underlying investments are suited to their needs.

Some clients will enter an ongoing agreement with their financial planner. This means their plan is regularly reviewed and revised if circumstances or goals change. This helps clients stay on track. Of course, financial planning is not free, so there has to be a value for the client.

Clients need to ask themselves if they have the skills, experience and time to research and make their own financial planning decisions, as well as wanting the responsibility of taking onboard their family’s wealth and future security.

Planning your financial future 

The Private Office (TPO) uses a tool called cashflow forecasting, a piece of software that visually shows what your financial future might look like. We use it to help clients answer questions such as: when can you retire? How much do you need to save to achieve certain goals? Cashflow forecasting also allows you to look at different financial scenarios, which can help you determine the right path to take. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning, tax or trust advice.

Financial planning vs wealth management 

We have explained what a financial planner is, so what makes them different to wealth managers?

Well, wealth managers manage client portfolios under risk remits in isolation, whereas financial planners offer a more holistic approach to managing money which takes into account broader financial planning structures and objectives. Wealth management is the broad term given to a service that focuses on investing and managing client’s ‘wealth’. Ordinarily this is not focused on financial planning, but on the firm offering the service, and can range from investment only to more broad services including tax, estate and retirement services being offered too.  

Wealth management can be provided by in-house solutions, such as ‘model portfolios’ which form the core of many companies’ business propositions to clients or external providers who may specialise in certain fields, such as 'impact’ investing.  

Many ‘wealth managers’ now partner with financial planning firms, and it is becoming increasingly popular to see wealth management firms establishing their own financial planning arms, which for the investment management service provided, is only made available through their in-house investment management services.

The line between financial planners and wealth managers is becoming blurred however, as now financial planning firms, such as The Private Office can also offer discretionary model portfolios and on the flipside wealth management firms are increasingly offering financial planning advice to complement their investment management services. This is why the terms are often used interchangeably.

You can find out more about the wealth management services that TPO provide here.

How much does financial planning cost?  

The cost can differ between firms all around the UK. It is important to work out what type of firm you are talking to by identifying the following:

For example, The Private Office is an independent, chartered firm that works on a fixed-fee basis.

Our approach to fees is simple – we aim to ensure that clients are clear about the services being provided, and the fees they are required to pay for those services. We aim to agree fees that represent fair value, both to ourselves and our clients. This provides a solid foundation for a successful long-term relationship.

Before we provide you with our advice, we will add together all of the costs and charges payable, so that you can clearly see and understand the overall costs of our services and recommendations.

Transparency is key, particularly where fees are concerned. Fees will be detailed in monetary terms, and agreed by you in advance.

Some financial planning companies base their fees on a ‘contingent charging’ model. This refers to fees that relate to you following their advice or course of action such as investing capital. A typical implementation fee will range from 1-5% of assets invested. For example, £1 million invested would cost between £10,000-£50,000 contingent fees. 

For more information about TPO’s fixed fees, please click here.

Our financial planning services

We describe ourselves as holistic financial planners at The Private Office. Holistic financial planning considers all aspects of a client’s personal circumstances and financial position in order to identify the actions that need to be taken to meet their individual financial goals. As financial planners, we aim to avoid the potential pitfall of looking at financial decisions in isolation. If consideration is not given to the wider picture, a domino effect can begin and one course of action could affect another aspect of a client’s finances.

We offer a number of financial planning services including:

We conduct a full investigation of your distinct investment and planning needs. This investigation allows us to help you better understand your future goals and provide a tax-efficient, tailored plan based on market research and financial modelling.

Our advice is centred on fully informed analysis, providing advice that is right for you.

Working closely together does not need to end after our plan is actioned, we offer an ongoing review service for clients who want their plan monitored on an annual basis.

If you believe any of our services would suit your needs, please get in touch.

Arrange a free consultation

Please note: Past performance is no guarantee of future returns. The value of investments and the income from them can fall as well as rise, you may not get back what you originally invested. Tax, estate and cash flow planning are not regulated by the Financial Conduct Authority.