What’s the difference between an IFA and a Financial Planner?
There are a number of terms used in the financial services industry to describe advisers. A few of the more common ones are Wealth Manager, Independent Financial Adviser (IFA), and Financial Planner.
Do all these terms mean the same thing or are you likely to get different services dependant on who you approach?
Probably the most well know term is IFA.
Used correctly it means an adviser who is not restricted by the type of advice they give either in relation to specific products or in relation to the providers they can recommend.
Therefore an IFA will give advice that is appropriate for the client from all the myriad of product options and providers that are available to choose from.
This of course is not the case if you seek financial advice from your bank. A bank adviser can only advise on the financial products available from their own bank. In effect they are salesmen/women for the bank. They will not advise you that they don’t have a product that is entirely suitable and suggest you go elsewhere.
Their job is to “sell” you a product from their own range of products which is the most suitable for your needs. This doesn’t mean it will be the most suitable product available if you looked at other options. It simply means that from the options available it meets your needs the closest.
The “I” in IFA means that an IFA does not have this restriction and will look at all products available to find the one which does meet your needs and priorities.
Many people though use the term IFA referring to a financial adviser who is not independent.
Be wary of advisers who call themselves wealth managers. This is often because they are not independent. Advisers who are not independent should advise you they are “restricted”. If an adviser refers to themselves as a “wealth manager” do make sure you ask them whether they are independent or restricted.
So, what’s a financial planner?
An IFA will typically provide advice on a product. For example, which pension or investment is most suitable for you?
What they won’t answer is “Are your savings and investment plans going to provide the amount of money you need to do all the things you plan to do?”
This is the question a Financial Planner answers. A Financial Planner will discuss your aims and priorities; when you plan to retire and what you plan to do during retirement.
Based on this they will produce a lifetime cashflow to show whether your pensions and investments will provide the necessary income to allow you to do all these things.
In effect they will answer the question “Will I run out of money?”
For more information please see my Life Wealth Design service and the case study.
If you would like to discuss your financial planning needs please call me for a confidential chat on 01932 698150.
photo credit: Flickr/Don Johnson 395
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