Free advice returns for Financial Planning Week

Financial Planning Week returns to the UK in late November. This event is becoming an annual treat to those who cannot afford to pay the customary £400 or more fee charged by most financial planners.

Already sixty firms have agreed to offer free financial advice surgeries to citizens who would like to do more with their savings. They will provide free sessions to those who might otherwise skip this important aspect of planning for their future investment and retirement needs.

The need has never been greater. Rules that were passed down in 2013 by the Financial Services Authority (FSA) prohibited Independent Financial Advisers from receiving commissions from the sale of products. There were two purposes for this change:

1. A more accurate fee structure could be revealed by replacing a commission-based structure with an upfront fee. The customer can get a clear disclosure of what actual fees the adviser is receiving through the relationship.
2. Adviser bias was reduced, since there would no longer be an incentive to push products that are less appropriate for an individual investor simply because they paid higher commissions to the adviser.

While the FSA has been replaced by the Financial Conduct Authority (FCA), the rule remains in place. There has been one unintended outcome from enforcement of the new rule.

Many potential investors have been priced out of an advice surgery. An investor putting less than £100 per month towards their pension would find it difficult to justify the payment of some four month’s worth of saving as a fee to manage the other eight months of saving. The cost is just too high for someone who is just beginning to save for retirement.

This is why Financial Planning Week is such a great opportunity. Smaller and new investors have the chance to receive unbiased and free advice from a knowledgeable and credentialed financial planner. There is no charge for the advice and there are no strings attached.

Firms that offer the service have viewed this as a chance to raise their image. It gives them publicity. Their hope is that some of the investors who benefit from the free advice will contact them again as their balances grow. When they have more money to manage and they see the value of getting expert advice, they may pursue regular or annual meetings with their financial planner to make sure their goals are achieved.

Financial Planning Week began in 2008. Since then the event has grown into a national presence that serves hundreds of participants.

The Institute of Financial Planning recommends that each participant takes 30 minutes to complete an assessment using the Prestwood Financial Planning Tool (external link) prior to their advice surgery. This enables the adviser to have a clear picture of what the current financial status is so that the session may focus more on future steps.

A listing of the firms that have signed on to offer free advice surgeries has been posted by the Institute of Financial Planning. These are the 2014 participants.

Financial planning advice is not reserved for the wealthy. Any person who would like free advice may participate, including those currently earning low income. It helps to determine what steps can be taken to maximise retirement savings, including building wealth through investments and a home.