Words matter. Like when you and I speak different languages, we struggle to communicate. For a meaningful discussion, we must speak the same language and agree on the definition of the words we are using. The precision of language is essential, especially in finance.

Take the etymology of "financial planning."

Finance – From the French "fin," "ending" (by satisfying) something due. To end, settle a dispute or debt by making a payment.

Plan – From French, a drawing on a flat surface, a scheme of action, formulated a scheme for accomplishing some object or attaining an end.

Therefore, financial planning is the process of taking a comprehensive look at your life objects and end goals and building a specific scheme of action to settle obligations arising from them.

Components are:

• The life object or end goal.
• The scheme of action.
• The matter is to be settled between two parties.
• The settlement.

For decades the financial product industry has described the services of its distributors as financial planners. The Chartered Institute of Securities and Investments (CISI) and the Chartered Insurance Institute (CII) coined the phrase "financial planners" for sellers of securities and investments and sellers of insurance, respectively.

Indeed, these products can form a scheme of action to settle a matter. But they are far from the only scheme of action. They are in the minority of arrangements that can settle such matters. And few people meet the requirements for settlements to take place. As can be evidenced by the fact that the vast majority of the population have little or no savings.

Financial products do have a place in financial planning. Investors need to begin early in life, exercise a level of frugality, earn far more than they spend, and form a habit of regular saving over many years for the miracle of compound interest to work its magic. Few people fit this description.

The product provider's schemes fail most households as financial plans. Because

• These securities, investments, and insurance arrangements represent less than five percent of household wealth (Source: Office for National Statistics).
• The scheme of action covers how to save money already made, but omits the scheme for making money in the first place.
• Schemes for making money are terminated too soon for personal health and wellbeing, the economy, and the interests of future generations of tax payers (people retire too soon).
• And the sellers give little attention to life objects and end goals.

The payment must be sufficient to end the debt for the settlement to occur. Today, seventy percent of the population has little or no securities, investments, or insurance arrangements. Certainly insufficient to satisfy financial obligations in later life. For most people, different schemes of action are required.

That's where we come in. That's what we show you.

Our initial reaction when product sellers describe themselves as financial planners is to laugh because they tend to talk to those who have already made it, those with wealth later in life.

But we laughed too soon. It seems that advocates of financial planning have hijacked "financial planning." They have taken what was once an exact term in law and have perverted it to serve their commercial agenda. To tap into assets for fees.

Today it has an additional definition to include product sellers and the products they sell:

"Financial planning is a professional service for individuals, their families, and businesses who need objective assistance in organising their financial affairs to achieve their financial and lifestyle objectives more readily." – CISI.

Note that financial planning definitions are not precise, since ithey vary from one organisation to the next, country to country, and over time as the world changes. No two definitions are the same.

The public is confused about the meaning of financial planning. When talking to financial planners, the public now expect to be sold products.

We see changes ahead.

Firstly, we see a wall between financial planning and product distribution.

"Show me the incentive, and I will show you the outcome." - said Charlie Munger, vice chairman of Berkshire Hathaway.

According to Which? 90% of financial intermediaries derive their fees from the product as a percentage of assets under advice. The more financial assets they advise on, the more they get paid.

How impartial can advice be when incentives relate to what the adviser manages?

What about assets such as those you run directly on platforms, your property, your business, your workplace pension, or that other managers run for you? How can a financial intermediary advise on these assets and get paid?

Regulators worldwide continue to challenge the conflicted payments of asset-based fee advisers. It's only a matter of time for the valuation of asset-based fee firms to fall. It's a matter of timing and knowing when to switch to the fee for service.

In the meantime, financial planners can ready themselves for changes ahead.

In a few years, the advising on and selling regulated investments will be entirely automated.

Leaving a very human conversation to be had between planners and individuals.

Good financial planning also includes end goals that money can't buy.

Respect, well-adjusted kids, work-life balance, life purpose, good friends, close-knit family, good health, peace of mind, happy memories, true love, a happy home, good karma, time to relax, and a suitable epitaph. The list goes on.

Here, planners help individuals navigate life objects and end goals through multiple schemes of action through multiple stages of a long life.

We help progressive individuals and planners transition to the new paradigm.

We mentor individuals and planners online on a one-to-one basis to tailor our coaching, mentoring, and support to specific circumstances. In addition, we provide access to the Academy for quality group training and distance learning.

We are highly experienced and qualified financial planning professionals. We provide down-to-earth, practical guidance and support.

There is no other network quite like us.

We show you how to plan to unleash full human potential.

Since the modern financial planner is seldom required to recommend a long-term investment product to build a specific scheme of action to settle obligations arising from ends and goals, choose a more straightforward and, with care, more profitable career down the advice-only financial planner route.

Fee for service and fiduciary financial planners

If you always wish to act in the best interest of your clients without conflict of interest, then you might consider becoming a fee-for-service, or fiduciary, financial planner. That is, you are fee-only, regardless of where the asset sits, and there is no conflict of interest.

An advice-only financial planner is a fee-only, fiduciary, financial planner. That is, they act as an agent of the client and do not hold any agency agreements whatsoever with any product providers. They are guaranteed by client contract to place client best interest first, without muddying the relationship with conflicted payments. They are asset-neutral and asset-friendly.

Financial intermediaries are selling agents for the firms they hold agencies with, and find it difficult to sign up to fiduciary codes because, in the absence of a wall between advice and product, they find it difficult to undertake to always act in the client's best interests. Regulators around the world are consulting on a Consumer Duty that would set clearer and higher expectations for firms’ standards of care towards consumers. Until these are implemented such standards do not exist.

In the UK, Consumer Duty of Care is due to be proposed in July 2022, to be implemented in the Autumn 2023. The impact on firm valuations could come much sooner.

The advice-only financial planner on the other hand is the client's personal financial regulator. AoFP models are resilient and future-proofed.

Costs of regulation

Financial planning itself is not a regulated activity in all major markets globally. It is classed as general or generic advice, where it is not delivered in preparation for a regulated activity.

A financial intermediary may deliver financial planning in preparation for financial intermediation, and in the UK is required to be registered and regulated by the Financial Conduct Authority (FCA). An advice-only financial planner is not.

When planners realise that the greatest value is added by the non-regulated activity, they may begin to question the rationale for, and additional cost of, being regulated.

Life has been increasingly difficult, and (if it was not for recurring revenues) less profitable, for the financial intermediary; because of increasing regulation, its associated cost, levies paid to the lifeboat fund, and a hardening of the professional indemnity insurance market; forcing the market to contract as many regulated advisers quit.

Also, there is a consolidation of planning firms to larger asset raking firms seeking simply to tap into client assets for fees to bolster shareholder valuations. Those advisers with vision, passion, conscience, and discipline to set up a future-ready business of their own are choosing the advice-only financial planning route.

Regulated activity adds considerably to the time and cost of the financial planning process. It also makes it difficult to maintain client relationships remotely, with all the proof of identity, signing of documentation and agency agreements, and trust measures required to handle client money. It is difficult to apply social distancing measures when you are regulated and seeking wet signatures.

Certain transactions can only be undertaken by a regulated financial intermediary, such as a pension transfer from a Defined Benefit scheme. Although advisers holding the relevant permissions are becoming increasingly hard to find. Advice-only financial planners may therefore need to refer consumers to regulated financial planners with the relevant permissions from time to time. 

The advice gap and the underserved public

Today, ninety-five percent of the population is underserved by the financial intermediary population on account of their limited wealth. Financial intermediaries often operate with advice thresholds based on investable assets held by consumers, below which they will not operate. A typical threshold might be £100,000 in the UK.

Due to being able to advise groups of people, non-intermediating financial planners can profitably serve the underserved at prices they can afford. The larger the group the lower the price!

For more information

Advice-only financial planning is financial planning without intermediation. If you are considering becoming an advice-only financial planner, please contact us to discuss our support, membership, mentorship, and accreditation services.

Founder Steve Conley as head of pensions development for Refuge Assurance in the 1990's. Here at Hanley Branch, Staffordshire

As a financial practitioner, you will know that mastering financial planning requires years of training and professional development in the art of soft skills, as much as it does the science or hard skills.

We have trained tens of thousands of advisers on soft and hard skills - insurance company representatives, restricted bank advisers, and independent financial advisers - continuously since the 1980s.

We know how to run a support network. We bring years of experience in running networks to the advice-only financial planning market. Our experience was gained from running one of the UK’s largest independent financial adviser networks with 750 regulated individuals.

We have coached countless people, transforming their personal and professional lives through one-to-one coaching, mentorship, directorship, educational newsletters, seminars, private sessions, public appearances, videos, podcasts, articles, products, and books.

We have headed up the wealth divisions of some of the world’s biggest financial institutions. We created multiple market-first, market leaders, award-winners, and more. We have created many multi-million-pound businesses. We still do. We are leading proposition architects. 

We have been practicing master life planners and non-intermediating financial planners since 2012.

We are one of the founders of the advice-only financial planning movement.