The way financial advice professionals describe themselves was the topic for an excellent article in Money Marketing recently.
It includes a comprehensive overview of all the various titles and descriptors currently being used within financial advice and asks if the profession is at risk of confusing the people it most wants to attract: clients.
Looking specifically at the terms ‘financial adviser’ versus ‘financial planner’, how important is it for clients to use the correct terminology?
The doctor will see you now
I’m sure financial planners would say it is very important, as would anyone who has invested the time to achieve additional qualifications for their chosen career. However, let’s look at this another way.
If I needed to get some help with a medical problem (I don’t, thankfully), I’d see a qualified medical practitioner. That could be a GP, a hospital doctor or a specialist consultant, depending on what was most appropriate. If the topic of my hypothetical ailment came up with friends or family, I would tell them that I had seen a doctor about it. Unless we entered into a detailed discussion, I’d be unlikely to specify what sort of doctor I was seeing. In fact, at the outset, I probably wouldn’t know what sort of doctor I needed to see, I’d just know that I needed some help.
Could this analogy be helpful in relation to the financial advice profession? Most people who seek the help of a professional for their finances would assume they were seeking financial advice. They also probably don’t know exactly what sort of help they need.
The nature of their needs may well involve far more than using their ISA allowance or purchasing protection. This may make a financial planner the most appropriate expert to engage with…but I bet they would still tell their friends and family they were seeing a financial adviser.
Integral, not separate
Financial planning is an integral and valuable part of financial advice. It deserves to be highlighted as an area that requires skills that can transform the financial fortunes of clients, matching strategies and activities that enable clients to align hopes and dreams with financial capability.
But the risk is that if too much emphasis is put on the importance of planning over general advice, some people could miss the point, thinking they only need a bit of advice so a planner doesn’t fit with their needs. This could see some potential clients ignore a financial planning firm in favour of one that only offers financial advice.
It may annoy some financial planners to be referred to under generic ‘financial adviser’ terminology, but perhaps it could act as a door opener to a wider set of clients, with the filtering going on once they are through the door, much as happens when you go to see a GP. And, as with a GP, can now easily be done without meeting in person.
Medical consultants no doubt hate being referred to as doctors – they know how much more work has gone into them achieving consultant status. However, they also know they need doctors to screen out those who really don’t need their level of expertise. Maybe it’s similar for financial planners.