Best-laid plans are good for your wealth

Though there may not be many of them yet, it could benefit you to put your finances in the hands of a planner rather than an independent adviser.
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A service that allows you to hand over all your financial hopes, dreams and nightmares to an expert may sound too good to be true. But this little-known practice is beginning to catch on in the UK.

A service that allows you to hand over all your financial hopes, dreams and nightmares to an expert may sound too good to be true. But this little-known practice is beginning to catch on in the UK.

The service is called financial planning and is carried out by people with an internationally recognised qualification for assessing a client's total circumstances. The planner can suggest a range of remedies - from a new savings or investment product that could be bought to changes that allow you to take full advantage of tax breaks.

While financial planners are still massively outnumbered by traditional independent financial advisers (IFAs), their number is growing - from 75 about 18 months ago to a total of 200 certified financial planners today. Most are IFAs who take an additional test; about 25 per cent are accountants.

Well-established IFAs such as Chase de Vere and Hargreaves Lansdown have set up financial planning divisions and Merrill Lynch is in the process of doing so. Nick Cann, chief executive of the Institute of Financial Planning, said: "IFAs who have traditionally made money from selling products will have to add value in the future - they are not the only way people access the market. The evolution of technology has enabled many more people to do it directly themselves."

Mr Cann emphasises the joined-up service planners will offer. During a consultation they would not only ask typically what your disposable income and your attitude to risk is, but also questions like at what age you would like to retire, your level of pension contributions, other products such as endowments you have signed up to, and how much property you own.

It may seem logical to go to a financial planner rather than a straightforward IFA, but it is not suitable for everyone. Planners' charges start at about £100-an-hour and they recommend 10 consultations.

However this £1,000 would not be a one-off - planners recommend you keep your finances under regular annual review, for which you would pay a fee. Danny Cox, a certified financial planner at Solomon Hare, defends the charges saying: "A couple I have been advising recently have paid the fees but I have already saved them £1,500 of tax liabilities. People are paying for our expertise."

Financial planners admit their service will benefit some much more than others. It equates to a private banking arm of a financial institution, which offers a comprehensive service for wealthy customers who tend to have more complex requirements than average.

Solomon Hare has a policy of giving a free initial consultation to establish whether its financial planning service would benefit a potential customer. Mr Cox said that if planning is unlikely to make a significant difference to a client, the company is reluctant to take them on.

Once you are on the books of a financial planner, you might find a substantial difference in the way you pay your adviser.

The majority of IFAs are paid by commission from the companies whose products they sell, most financial planners take a straightforward fee whatever products they suggest. Mr Cox said: "Financial planning isn't product-driven - sometimes we don't even recommend one."

While Solomon Hare works on a fees and commission basis, so that commission can be used when a product that offers it is recommended, he also pointed out that commission can work out much more expensive than fees, for example when the sum is up to 7 per cent of a substantial investment. "The commission has got to come from somewhere and that is usually from the return that the client is offered," added Mr Cox.

Consumer groups also prefer the fees-based approach because they say customers can feel confident their adviser is recommending a product because it is the most appropriate - rather than one thatpays the most commission.

Should you then go to a financial planner? The general view is that they are a welcome addition to the financial services market place, but not an essential for everyone.

Paul Smee, director-general of the Association of Independent Financial Advisers, the trade body that represents the whole industry, said: "The financial planning qualification is a useful one to have, but you can be a good IFA without it."

For a list of financial planners in the UK go to or call the Institute of Financial Planning on 0117 945 2470

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