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

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 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 MoneyHelper, depending on the adviser and what services are required. 

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 managing 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 '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. 

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

How much does a financial planner cost?

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

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

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

A financial adviser typically provides advice on specific financial products, investments, pensions, or insurance based on your immediate needs or specific financial queries. Their role is often transactional and focuses on particular financial goals.

In contrast, a financial planner takes a more holistic view, helping you develop a comprehensive financial strategy to meet long-term objectives. They consider your entire financial situation, including retirement, estate planning, taxes, savings, and investment goals, aiming for 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. 

Financial advisers and planners are strictly regulated to ensure that there is no room for unscrupulous activity.

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.

While some online investment platforms may offer cheap financial advice for £300 to £600, according to Which?, they can often only recommend their own products and services.

Which finance professional best suits your needs?

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

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. 

However, if you are looking to set up an investment portfolio, you may need a minimum sum to invest. According to the FCA, the average customer using a financial adviser to invest has over £150,000 in their portfolio. 

Seek expert financial advice

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

While financial advice may cost money, the right advice will save you cash in the long run and help you avoid making costly mistakes with your nest egg.

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