Guides

Who’s who in personal finance: A complete guide to financial planning and wealth management

As an investor, your accessibility to financial professionals is potentially unlimited. But which services and financial professionals are best suited for your specific needs? In this guide, you’ll find the answers you need to key questions, such as:

  • what is the difference between financial planning and wealth management
  • should I use a robo-advisor
  • what do stockbrokers and private bankers do

Regardless of your stage in life, or your investible assets – whether you are saving to put down a deposit on your first home, or whether you are retired and need help with pension consolidation – professional investment advice is available. The Wealth Consultant aims to introduce you to the right investment professional so you can invest your wealth in the best way possible.

Against the backdrop of increased political and economic uncertainty, and ‘lower for longer’ investment returns, the need for professional wealth management is greater than ever before.

Throughout this article, we aim to clear up the confusion associated with the different types of investment professionals operating within wealth management. We believe that taking ownership of your financial wellbeing should be a rewarding and fulfilling experience that will protect your wealth throughout life’s milestones.

Read on to find out who’s who in wealth management and investment services.

How wealth management works

What does a wealth manager do

A wealth manager is a high-level investment professional who manages a client’s wealth holistically – whether their assets amount to £100,000 or £1m. The wealth manager provides their client with sound financial and investment advice, legal and/or estate planning, accounting and tax services, and even retirement planning. Typically, all this is done for a set fee and under one roof.

A wealth manager can manage a client’s investment on a discretionary basis or advisory basis. Christopher Barrett, investment director at wealth manager JM Finn, explains the difference between the two: “Discretionary and advisory are terms that apply specifically to the portfolio management arrangements. Discretionary portfolio management is when a client gives the investment manager full discretion to manage the portfolio as he or she sees fit, in accordance with the client’s chosen investment mandate.

“Advisory portfolio management is a more traditional service whereby, prior to any action on the portfolio, the investment manager is required to gain approval from the client.”

What does a financial advisor do

A financial adviser is a professional who provides financial guidance to clients based on their needs or goals. They are able to recommend financial products, services, planning or advice related to investments, retirement, insurance, mortgages, estate planning and tax-efficient investing.

Some financial advisers belong to a network and are accordingly restricted in what they can offer clients, meaning they might only be able to recommend certain products or product providers. The financial services regulator, the Financial Conduct Authority (FCA), states: “The adviser or firm has to clearly explain the nature of the restriction.” All financial advisers must be approved or authorised by the FCA.

What does independent financial advisor mean

An independent financial adviser (IFA) offers independent advice from the whole market. They work independently for clients and do not work for a specific bank, insurance company or network.

Financial adviser vs wealth manager

There is a difference between the services and skills offered by a wealth manager, and those of a financial adviser. A financial adviser can provide advice across a broad range of financial products and areas, helping their clients to plan their finances more generally. In contrast, a wealth manager provides a comprehensive solution to investing their clients’ wealth, managing their portfolio of investments for them. For that
reason, a wealth manager usually manages larger sums of wealth. 

It is increasingly common for financial advisers to outsource discretionary investment management to wealth managers. Both jobs require those who do them to have gained certain qualifications.

What is a stockbroker

A stockbroker is a professional who buys and sells orders for stocks and other securities on behalf of clients. Stockbrokers are most often associated with brokerage firms and handle transactions for individuals, retail and institutional customers alike. Stockbrokers receive a commission for their services – the amount varies greatly on the clients they represent and the firm they work for.

Stockbroker vs wealth manager

Today, with individuals having easy access to online trades, the need for a stockbroker has declined. As a result, stockbrokers have expanded their offerings to include investment advice. Many will also call themselves wealth managers. However, there is a difference between the two. A stockbroker ‘trades’, and a wealth manager ‘invests’, meaning they possess very different skills.

What is the role of a private banker

A private banker is an individual who works in a private banking division of a large retail or investment bank, or a wealth management firm. They specialise in personalised financial services to high-net-worth individuals, or HNWIs. Private bankers handle every aspect of a client’s finances – overseeing deposits and cash management services, credit and lending services, retirement products, tax planning services, trust
services, insurance products and annuities.

Private banker vs wealth manager

While the roles of private banker and wealth manager might seem alike, there is a distinction to be made between these two specialisms. A private banker provides advice on an array of financial circumstances, while a wealth manager has the capabilities to provide financial advice and also conduct the execution of a client’s investments as per the client’s wishes.

What is a robo-adviser

A robo-adviser is a digital platform that provides automated, algorithm-driven financial planning services. A robo-adviser collects information on a client’s financial situation and their future goals. The robo-adviser can then offer advice on the best investment plan and even automatically invest the client’s assets.

Robo-advisers, as a result, can offer investment management solutions for a fraction of the price comparedto a discretionary wealth manager. For this reason, they can be more suited to clients with less wealth, or those who have more straightforward financial planning needs or individuals who have not sought out financial advice before. According to the BlackRock Investor Pulse survey, 64% of the 4,163 UK respondents said technology would help them to be more involved in investments.

What is an execution-only investment service

This is an online platform that is a trading service. This trading service is restricted to only the execution of trades. So, a client/investor does not receive any advice about the merits or risks of the investments or their suitability. However, the platform may provide access to research and analysis reports.

This type of platform is likely to be more suited to those who have experience of buying and selling shares,
and individuals who keep a close eye on market movements. Trading via an execution-only ‘DIY’ platform can be a cheaper option, but if you are trading regularly then costs can soon add up and will impact on investment returns.

Wealth management fees and charges

Typically, wealth managers and financial advisers will charge a fee for their services. The structure of the fee – whether it is a percentage charge or a fixed fee – will vary. Investment platforms, stockbroking services and robo-advisers will also apply a charge. This can take the form of a flat rate or a fee per trade.

More information about the different levels of fees and charges, and how much you should pay for investment advice will be discussed in an upcoming entry on The Wealth Consultant’s Wealth Planning Insights section.

Summary

Most investors, once they have a wealth manager they trust, will continue to build that relationship throughout their lifetime. So finding the right wealth manager is vital to help you invest your wealth and will give you the confidence to make long-term financial planning decisions. But doing the research and making initial contact can be overwhelming.

Do you feel you have peace of mind over your financial wellbeing? If you need help in managing your wealth, make an enquiry today! Or, let us know how we can help you out by filling up this questionnaire. Let’s make your finances thrive!

Find the best wealth manager for you

Regardless of your wealth, we believe that everyone should have access to professional investment advice. Giving you peace of mind that your financial wellbeing is in good hands. The Wealth Consultant makes it personal to you.