What is Financial Planning? The Unividual Guide

Independent Vs Restricted Advice

One of the common themes we see is people are worried about the type of advice they will get, how it is paid for and what the qualifications are of the adviser.

Financial advice comes from one of two main types:

1. Independent: Independent advice means the adviser may offer financial products or services from any provider.
2. Restricted: Also known as quality-assured, offers products or services from an audited panel of product providers

A financial adviser should always make it clear what type of financial advice they offer.

Independent is a positive word in the English language, where as the word “restricted” sounds negative itself. However, this causes a common misconception, restricted advice is a good choice for a client looking for more of a holistic financial planning service or an adviser that coaches more.

This is to do with how the adviser spends their time behind the scenes. Having identified a need, an independent adviser spends most of their time looking at all the products on the market, of which there are hundreds of thousands.  Meanwhile, a restricted adviser can spend more time coaching and educating, actively matching the specific needs of the client with a group of well-performing products and services that are regularly vetted by a panel of professionals. Depending on the firm you choose this can offer better value for money as the costs of advice don’t drastically vary much between firms. This is a bit like walking in to a supermarket and instead of a shelf with thousands of different types of jam from different brands, a supermarket would assess the best range of jams through a quality assured process.

This ability to focus on our clients’ specific situations and needs, building relationships along the way, is why Unividual have taken the restricted advice route and can provide a 5 star financial advice service.

Things that put people off financial advice

Don’t worry about your age:

Our clients come to us at all stages of their life and for all sorts of reasons. We always say: it’s never too early or late for financial advice, but the sooner you start the more reward you will reap. We have clients that have just turned 18 and others that have never had an adviser and need to organise their pension. Don’t worry about what has happened and why you haven’t sought out advice, just pick up the phone and get started.

You don’t have to be rich

While it’s usually the big changes in people’s lives, like partnership or marriage, getting a mortgage or retirement planning that spur people to come and see us, often the smaller things can be the straw that breaks the camel’s back. Sometimes people are just feeling a little worried about money and need an expert to talk it over with. One of the biggest reasons people don’t seek advice is because they think “I haven’t got enough money“. We are not like other firms, we don’t stipulate that you have to have a certain amount of money before we work with you.

Don’t worry about not knowing anything

Our advisers will start by getting a good understanding of where you are right now. No questions are silly and we don’t judge people for what they do or don’t know about themselves or their finances. Then, we’ll look at what your priorities are and what plans you’ve got for the future. If you don’t know what those are either, don’t worry, part of our service is to have the coaching skills to help you realise this.  Once we’ve got to grips with that, we’ll start to look at the various ways you can improve and manage your money so that you can focus on your goals.

You don’t need “all your paperwork”

Part of the benefit of financial advice is to take the administrative worries out of managing your finances. Many things make up your ‘financial foundations’. We will get from you a rough idea of your income, expenses, assets, savings and investments, among other things, which will help us build a good picture of where you stand. We will then be able to write off to your product providers to gain permission to get all your information so that you don’t need to get any of that to us.

I don’t want to be told what to do

We work with a lot of people who hold senior positions and are used to feeling in charge, are mature clients that don’t appreciate being patronised or people who have managed their own finances for years. We have always taken the approach that we don’t tell you what to do with your money. We educate you on all the options, yes this might cost us more in time, but the result is you feel empowered and in control of your own decision making.

We also help you with the “unknown unknowns”. These are areas of advice like tax legislation, retirement law, estate planning and other technical areas where a real expert can see the wood for the trees, but to you, it just looks like tangled undergrowth!

Steering you through cognitive biases

As humans our brains are faced with natural cognitive biases that affect the financial decisions we make. It is important to be aware of them because they impact on how we spend and save money. Part of the coaching we give clients is to listen out for these issues so we can steer them away from these biased decisions when it’s not in their best interest.

Decoy Effect

There is bias surrounding how we choose between a group of options. When people have a choice between a small or large coffee they will often pick the one that most closely meets their needs. The decoy comes in if a third choice is added, like a medium coffee. Their choice leans towards the more expensive option. This impacts on how we spend our money and our disposable income, which some people see as their savings pot, often depleted due to buying more than they need.

Time Discounting

It is human tendency to value something more in the present than in the future. People are more likely to take £100 upfront than £50 a month for 3 months, even though the latter offers someone an extra £50. This has a massive impact on people’s approach to savings, especially for things like retirement in the future.

Endowment Effect

We tend to put a higher value on things we own, over and above the value of that item if we didn’t own it.  This means people tend to pay to retain things even if they wouldn’t necessarily pay to have it if they didn’t own it. This is the main reason why investors stick with certain unprofitable assets, like property for example or something they inherited, the prospect of divesting at the prevailing market value does not meet their perceptions of its value.

Fear of Missing Out

There’s even an acronym for it: FOMO. When faced with the prospect that someone else is getting a better deal, or the use of a service or product made them successful, we feel like we are missing out. This creates in imbalance in our psychological safety.  Be aware of social influencers and the impact social media and advertising has on what you buy. Always wait before purchasing something to see if the novelty has warn off and really think about whether you need it before you make that purchase. Don’t forget an influencer may have got that item for free so the return on investment or value will be calculated differently for them as you might calculate it for yourself.

The Less-Is-Better Effect

We tend to place value on goods at the upper end of their value scale. For example most people would value a high quality £45 scarf, over a low quality coat that cost £60. Or an overfilled ice cream serving in a small 200ml cup is valued more highly than an underfilled serving in a 250ml cup. The amount is the same, but we value it disproportionately. We can use these biases to reframe some of our thinking.

Mental Accounting

We tend to divide money into separate “mental accounts” based on very subjective reasons instead of using sensible, objective sections like amount, risk or interest costs. An example of this could be saving for a holiday in your current account, while carrying some excess debt on a credit card? Even though the interest rate on the credit card is far more than on the current account, our instinct is to ignore that because we are emotionally connected to the idea of going on holiday.

Imagine a future where every financial decision you make is backed by expert advice and where your wealth grows confidently under professional guidance. That future could actually begin today? Don’t let uncertainty or unanswered questions hold you back. Dive into our case studies to discover real-life transformations achieved through tailored financial advice. Ready to take the first step towards financial empowerment? Let’s start with a conversation. Join us for a complimentary, no-obligation consultation where your dreams and goals take center stage. We’re here to listen, to understand your unique journey, and to help you create a path to better financial wellbeing. Whether your questions are big or small, your financial future matters so reach out now and together we can explore how our expertise can unlock your potential.

Author & Editor: Cherie-Anne Baxter

Date updated: 27/03/2024

Date of publication: 17/09/2021

Risk Warning: Tax planning, Estate planning & Business Exit Strategies are not regulated by the Financial Conduct Authority.