What is the difference between an Investment Adviser and a Financial Planner?
When you are looking at building your wealth for your future you will be told of ways and means of investing your money for growth. You will be given advice on how and where to invest your money, Growth investments, Defensive investments, and so much more. Does this mean you’re speaking with an Investment Adviser or a Financial Planner? And which is the better option for you to speak to regarding your financial future?
I have been a Financial Planner for over 14 years. I have a clear understanding in my mind what makes me a Financial Planner. But like a lot of things, you think people know who and what you are, however that is often not the case.
I recently met with a wonderful new client. As per the usual process when getting to know my clients, during the first meeting I learned about her income and her expenses, her assets and liabilities, what insurance she had and if she had her estate in order or not. I then spent a good deal of time with her unpacking what is important to her, both from a lifestyle perspective and an investment perspective.
This lady had money invested with another financial planner. During our discovery meeting it became abundantly clear to both of us that she really wanted to buy a house. I believed it was a real possibility for her.
Over the course of the next few weeks she did more research and she ended up selling down all of her investments. She then bought herself a home. During this time she left me with the Advice Document that her previous adviser had written for her.
I was astonished, gob-smacked, shaken to my core. Her previous adviser had listed 2 goals for her:
Minimise tax.
Achieve a rate of return greater than CPI +2%.
That was it.
My list for her included this:
Own my own home.
Invest in ethical investments.
Can you see the difference? Can you feel the difference? How is it that 2 people could be so radically different?
In America they split their Financial Advisers into 2 categories:
Financial Planners
Investment Advisers.
I feel this is something we need to do here in Australia. While I won’t say that my client’s previous adviser was wrong with their advice, I will say they were heavily focused on investments and ROI, whereas I focus my advice on the planning, the working towards a lifestyle which the client feels is achievable and happy with.
CPI + 2% may sound like a good ‘number’, but what does it mean? How can you connect to that, understand that?
Owning your own home, this sounds more real, more achievable, more tangible, yes?
Not everyone wants, nor can afford, a Financial Planner, I get that. But everyone needs a Financial Plan. I run free workshops in my local area all the time to help people understand this. I also enjoy chatting to people about planning for their future, with no obligation to sign up and hop on board.
If you’re curious and want to know more, if you know you need a plan, some guidance and advice on how to achieve financial freedom, book your free introductory call today.
