When it comes to financial planning, it’s important to understand that not all advice is the same—especially when it comes to regulation. Financial planning that doesn’t involve specific financial advice is not considered a regulated activity. This can be reassuring for those looking to seek or provide guidance on broader financial strategies without the complexity of compliance with regulations around specific investment advice.
According to PERG 8.26, advice must relate to a particular investment to be regulated. This means that general or generic advice—like financial planning or broader advice about different regions, investment types, or asset classes—doesn’t fall under the category of regulated financial advice. So, if you’re helping someone develop a holistic financial plan or discussing the pros and cons of investing in one market versus another, you are not entering into regulated activity as long as you’re not recommending a specific product or investment.
Let’s explore this a little further.
Financial Planning: A Non-Regulated Activity
If you’re offering advice that falls into broader categories—like financial planning—it remains outside of regulation, provided it doesn’t focus on specific investments. Some examples of non-regulated advice include:
- General financial planning: Creating a plan that outlines someone’s life goals, such as saving for retirement or managing future expenses.
- Investment regions: Discussing the merits of investing in different regions, such as comparing Japan and Europe.
- Investment types: Weighing the benefits of investing in types of funds like investment trusts versus unit trusts.
- Asset classes: Offering insights into broad categories, such as whether fixed income investments might be a better fit than floating rate bonds.
In all these cases, the focus is on helping someone understand their options, rather than making a specific recommendation.
When Advice Becomes Regulated
However, it’s crucial to note that generic advice can become regulated if it transitions into a recommendation about a particular investment. For instance, if you start by discussing the benefits of investing in Japan but then go on to recommend a specific Japanese stock, this would cross into the realm of regulated advice.
Similarly, if you’re helping someone arrange a deal or make a purchase and offer specific investment recommendations in the process, this advice then becomes part of a regulated activity.
How This Affects You
For those seeking guidance, it’s comforting to know that general financial planning is not regulated. This allows you to explore your financial goals freely, without feeling the pressure to buy a product or follow a specific recommendation. And if you’re providing financial planning services, understanding this distinction allows you to help clients without stepping into the complex world of regulated advice.
At the Academy of Life Planning, we believe in empowering you with the knowledge and tools to make informed decisions about your financial future. We’re here to guide you through the process, ensuring that your financial plan is holistic, personalised, and flexible, all without the pressure of sales or product recommendations.
Taking the Next Step
Whether you’re just starting out or already on your financial journey, financial planning offers a roadmap to help you achieve your goals. And since it doesn’t involve regulated advice, you can feel confident that the guidance you receive is focused on what’s best for you, not on selling you a particular product.
Let’s work together to build a financial plan that’s tailored to your unique circumstances, one that grows and adapts with you over time. We’re here to support you, offering clear, unbiased guidance that helps you take control of your financial future.
Learn more about Financial Planning vs Financial Advice: What’s the Difference?
References:
FCA Handbook: PERG 8.26 The investment must be a particular investment
FCA Handbook: PERG 8 Annex, Examples of what is and is not a personal recommendation and advice.
CISI: The difference between financial planning and financial advice.
Financial Life Coach: A rulebook for UK financial planners who are not financial advisers.
Q&As:
Q1: What is financial planning and how is it different from financial advice?
A: Financial planning focuses on helping you understand your life goals and creating a strategy to achieve them. Unlike financial advice, it doesn’t involve recommending specific products or investments. Instead, it looks at the bigger picture—your overall financial health, aspirations, and future plans.
Q2: Is financial planning a regulated activity?
A: No, financial planning is not considered a regulated activity when it doesn’t involve advice on specific investments. As long as the guidance you receive is general and doesn’t recommend particular financial products, it remains outside the scope of regulation.
Q3: Can I receive financial planning advice without being sold financial products?
A: Absolutely! Financial planning is all about creating a strategy that fits your unique circumstances. It doesn’t involve product sales or pushing specific investments. Instead, it empowers you to make informed decisions that align with your life goals.
Q4: What types of financial advice are not regulated?
A: Non-regulated advice includes broader guidance like general financial planning, comparing investment regions (such as Japan vs Europe), discussing types of investments (like trusts vs unit-linked insurance), or offering insights into different asset classes (fixed income vs floating rate bonds).
Q5: When does advice become regulated?
A: Advice becomes regulated when it shifts from general guidance to specific recommendations about particular investments. For example, if someone advises you to invest in a particular stock or product, that advice falls under regulated activity.
Q6: How does working with a financial planner benefit me?
A: A financial planner helps you create a clear roadmap to achieve your financial goals, without the pressure of being sold a product. We focus on your life, helping you navigate the financial decisions that matter most, from planning for retirement to managing taxes or starting a business.
Q7: How do I know if I’m getting the right kind of advice?
A: The right advice should feel empowering and focused on your needs. If you’re receiving clear, general guidance without any pressure to buy a specific product, that’s a sign you’re getting non-regulated, unbiased advice aimed at helping you make informed decisions.
Q8: What’s my next step if I want to start financial planning?
A: If you’re ready to take control of your financial future, the next step is to reach out to a financial planner. We’ll help you set realistic goals and develop a strategy tailored to your unique situation. It’s about building a plan that grows with you, ensuring that you’re always on track to achieve your ambitions.
Q: Is comparing a Venture Capital Trust (VCT) with an Enterprise Investment Scheme (EIS) a regulated activity if no particular investment is mentioned?
A: No, comparing a VCT with an EIS would not typically be considered a regulated activity if no specific investment is mentioned. This is because the comparison is focused on general categories of investments rather than a particular product. According to the FCA’s guidelines (PERG 8.26), advice is only regulated if it relates to a particular investment. So, when you’re simply comparing the general benefits or features of VCTs versus EISs without recommending a specific product, you’re staying within the realm of non-regulated advice.
This approach allows you to explore different investment types freely, empowering you to make informed choices without crossing into regulated territory. However, it’s important to stay mindful that if the conversation shifts toward specific products or investments, that advice would then fall under regulated activity.
As always, the goal is to provide clarity and guidance, ensuring you feel confident and supported as you navigate your financial decisions. If you’re ever unsure about the boundaries of regulated advice, we’re here to help you understand the distinctions.
Q: Is comparing drawdown with an annuity a regulated activity if no particular product is mentioned?
A: No, comparing drawdown with an annuity is not considered a regulated activity as long as no specific product is mentioned. When you’re discussing the general pros and cons of each option—such as the flexibility of drawdown versus the guaranteed income of an annuity—you are offering non-regulated, generic advice. This type of advice remains outside the scope of regulation because it focuses on broad categories rather than specific products.
However, it’s important to remember that if the conversation moves towards recommending a particular drawdown plan or annuity product, that would enter the realm of regulated advice. Keeping the discussion focused on general principles allows you to explore your retirement options freely, without the complexities of regulation.
We’re here to guide you through these decisions, offering clear and unbiased support, so you can make the choice that best aligns with your retirement goals. Feel empowered knowing that you can access advice designed to help you, without the pressure of being sold a product.
Q: Is there a caveat that if the customer believes they’ve received regulated advice, it is considered regulated advice?
A: Yes, there is a caveat. If a customer reasonably believes that they’ve received regulated advice, it could indeed be treated as such. Even if your intention was to provide general or non-specific guidance, the perception of the customer plays a crucial role. If they feel that the advice was personal, specific, or directed at a particular product, this could blur the lines and potentially make it subject to regulation.
This highlights the importance of being clear and transparent in any discussions, ensuring that customers understand whether the advice is general or specific. By clearly framing your guidance as non-regulated and avoiding recommendations of particular investments or products, you help to set the right expectations and avoid confusion.
Ultimately, it’s about building trust through clarity. We always strive to make sure our customers feel supported, but also that they understand the nature of the advice they’re receiving. If you’re ever unsure about whether your advice could be perceived as regulated, we’re here to help ensure you stay within the appropriate boundaries.
Academy of Life Planning 