What does an independent financial planner do?

Unless you’re an expert in financial services, the chances are you won’t know the answer to the question: what does an independent financial planner do? This is perfectly understandable, but finding out what they do can really be to your benefit both now and in the future.

In this piece, we’ll outline precisely what hiring an independent financial planner will provide you with.

Financial planner or financial advisor: what’s the difference?

It’s very easy to assume that there is no difference between independent financial advisors and planners – or that if there is, any difference is negligible. However, there are clear variances between them that you should grasp if you want to ensure that you hire the right individual or company for the job.

A financial advisor will focus on asking how you wish to invest any money you have and then on finding the right investment opportunity. That could be an individual savings account (ISA) or a pension, to cite a couple of examples.

The relationship you have with a financial advisor should be a fairly brief one, and it will be restricted to finding a suitable investment opportunity as soon as possible.

By contrast, a financial planner will provide a more long-term, overarching service. The primary question they should ask you at the outset is: what are you hoping to achieve?

The essential difference between the two is that an advisor is interested solely in identifying potential investments right now to maximise your money, while a planner finds out what your hopes are and helps you to find a way of affording them. That will still involve investing your savings to increase their value, but over a much longer period of time.

What should you expect from an independent financial planner?

Hopefully, you now have some idea of whether it is an advisor or a planner that you need. If you want to draw up a map for fulfilling your ambitions at each stage of your life, you need a planner, but what exactly should you expect from them?

Clarification of your goals

The first action any independent financial planner should take is to sit down with you and discuss precisely what your goals are. Some people dream of retiring early and settling down abroad, while others want to leave a sizeable legacy for their loved ones.

By the end of this stage, you should not only know where you want to get to, but also the sort of financial targets you need to reach to make that possible.

A strategy for achieving them

After you have established what you want to be able to do in the future, an independent planner will help you to put together a roadmap for getting there. This is the financial plan that you will follow together.

A good financial planner should be an expert in investments, tax law, pensions and budgeting. This will enable them to suggest ways of investing any money you have at the beginning to increase it.

Their knowledge of the laws governing taxation should be used to identify ways in which you can limit the amount you have to pay out in tax. There are pension schemes and investment options that can help to reduce your tax liabilities, which is why any independent company or individual you hire should have a firm grasp of all of these.

The initial financial plan that is laid out will not be set in stone, as it is something that can be revised in future meetings. Investing is not an exact science, and some investments may yield higher or lower returns than originally expected.

Should that situation arise, you will meet with your financial planner to re-work your plan so that it stays on track for each of your goals.

A relationship that lasts for a lifetime

As a financial planner will help you strategise for both shorter-term and long-term ambitions, the relationship will typically be one that lasts for decades. Many people start working with a planner in their 30s and collaborate on a roadmap that will take them up to their retirement.

These plans are designed to cover most of a lifespan, so they will have to be adapted sometimes as unforeseen events occur along the way. This is the key difference between financial planners and advisors, as the latter provides a one-off investment strategy for the immediate future.

Thus, it is important to choose an independent financial planner that you can forge a comfortable and relaxed relationship with, as well as one whose advice and guidance you trust.

This should answer the question ‘what does an independent financial planner do’? A specialist in financial planning in Chester or wherever you live will find out what you wish to do at each stage of your life and help create a plan to make those dreams possible.


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