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Financial adviser vs financial planner: what's the difference?

The UK’s definition of a financial adviser versus a financial planner differs from most countries, which is why learning how to distinguish between the two is crucial. 

Summary

  • A financial adviser offers advice on all areas of finance, whereas a financial planner creates plans to help clients achieve their goals.

  • Financial planners and advisers have different fees, and these may be fixed or commission-based.

  • Both financial planners and advisers must be qualified and adhere to strict regulations.

  • Knowing which financial professional is right for you ensures your financial future is in good hands.

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What is a financial adviser?

Every year, the number of people in the UK who hire financial professionals grows.

But knowing which type of professional to hire is key to reaching your goals and securing your financial future

Do you need a financial planner or a financial adviser, and why do they differ? Let’s find out.

In the UK, financial advisers are professionals who offer advice on investments, savings, estate management, and other areas of personal finance.

A financial adviser can help you strategise how to approach a particular situation or problem and provide guidance and resources to help you achieve specific money goals. 

How much does a financial adviser cost?

Fees within the financial services industry vary from person to person and may depend on whether a financial adviser works independently or for a firm.

With hourly rates, you can expect to pay anywhere between £75 and £350 per hour according to the Money Advice Service, depending on the financial adviser and what services a client requires of them.

However, there are other fee structures to consider:

  • Fixed fee: Some financial advisers require a set rate for their services, which is determined upfront.

  • Percentage of assets: You pay the adviser a percentage of your managed assets each month whether it’s your investments or pension. 

  • Commission: This is an assets-under-management fee with a pre-agreed commission percentage.

What is a financial planner?

Financial planners typically specialise in compiling personalised long-term financial plans for individual clients

But while the title of “financial planner” comes with strict regulations in other countries, the UK has a slightly different approach. 

UK financial planners don’t need to specialise in planning – they just need to offer accredited financial services. 

That being said, it is still worth noting that financial planners typically focus on providing long-term financial plans that serve as roadmaps for those seeking more control over their general financial health. 

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How much does a financial planner cost?

As financial planners tend to focus more on long-term working relationships than financial advisers, their costs are typically percentage-based or set by commission.

A 1% commission on the value of the investment is a relatively standard fee, but other planners may charge set fees that range between £1,000 and £2,500 or higher, depending on the planning undertaken and the duration.

What is the difference between a financial adviser and a financial planner?

A financial adviser is someone you would go to with a specific financial challenge, such as preparing for retirement or optimising your investment portfolio.

A financial planner typically focuses on providing people with roadmaps for maintaining long-term financial health and growth. 

Both financial advisers and financial planners share many overlapping areas of expertise and hold similar qualifications despite their differences in occupation. 

To ensure that there is no room for unscrupulous activity, financial advisers and planners are strictly regulated.

If you have any issues with a financial professional, you can get help by filing a complaint with the Financial Conduct Authority (FCA) or complaining to the Financial Services Ombudsman.

Which finance professional best suits your needs?

If you need help with a particular financial situation, such as setting up an investment portfolio or a retirement plan, a financial adviser is likely to be more beneficial to you. 

If you’re seeking general financial advice from a professional who will establish a long-term plan and relationship with you, a certified financial planner may be a better choice for your circumstances.

Neither is strictly more expensive than the other as cost comparisons hugely depend on the firm or fee structure of individual financial advisers and planners. 

Seek expert financial advice

Hiring a financial professional is one of the best ways to successfully manage your financial health and grow your money long-term. 

If you’d like to learn more about finances or are in need of expert advice, let Unbiased match you with the right financial professional for your needs. 

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About the author
Our team of writers, who have decades of experience writing about personal finance, including investing, retirement and pensions, are here to help you find out what you must know about life’s biggest financial decisions.