The financial services landscape in the UK has seen significant shifts over the last few decades, but one critical mistake has caused lasting damage: the failure to recognise the difference between financial planning and financial advice. It’s a mistake that has led to a significant “planning gap” – a void in the services offered to the UK public. At the heart of this issue is the fact that senior decision-makers, many of whom were not qualified to make these calls, misunderstood the vital role of financial planning.
Financial advice and financial planning may sound similar, but they’re worlds apart in practice. Financial advice is about recommending specific financial products, such as investments or insurance policies. Financial planning, on the other hand, is far more holistic. It’s about looking at the bigger picture, taking into account an individual’s goals, aspirations, and overall financial wellbeing. It is a strategy, a blueprint for long-term financial success.
The devastating consequence of not understanding this distinction? A huge part of the UK population is now underserved by the financial services industry. While financial advisers focus on products for those with substantial wealth, the majority—95%—are left behind, without a solid plan for their financial future.
The Exodus of Financial Advisers
At the turn of the century, insurance companies exited the financial advice market. The banks followed in 2012, during the UK Retail Distribution Review. Finance Directors deemed financial advice a “zero-sum game” – and they were right, in part. However, this decision was based on a lack of understanding of what true financial planning entails. The result was catastrophic: hundreds of thousands of financial planners lost their jobs, leaving only a fraction remaining in the industry. A planner gap, not an advice gap, emerged, and millions were left without professional guidance.
You see, it’s not just about the products being sold. Financial planning creates trust and leads to more long-term wealth under management. It encourages people to save, invest, and plan for the future. Without this, the financial wellbeing of UK citizens has suffered dramatically.
Mismanagement at the Top
During my time as Head of Investments at the banks, I witnessed first-hand the lack of understanding from senior management. Decisions that should have been made by qualified financial experts were instead made by those without the necessary knowledge. Take one of my bosses, for example – previously the marketing director at Pampers, a well-known nappy brand. When critical decisions about investment products were being made, they did not consult professionals like myself, who held the highest industry qualifications. The result? Short-sighted decisions that put the financial wellbeing of millions at risk.
Inequality Continues to Grow
The impact of these poor decisions is still being felt today. Income inequality in the UK has risen steadily since the 1980s, and wealth inequality is even more pronounced. While the wealthiest continue to grow richer, the bottom half of the population struggles to accumulate assets. Housing market trends and rising property values have disproportionately benefited older generations, leaving young people at a disadvantage. It’s clear: proper financial planning could have helped bridge this divide.
But all is not lost. With a better understanding of the distinction between planning and advice, there is an opportunity to turn things around.
The Solution: Proper Financial Planning
What we need now is a return to genuine financial planning. The evidence is clear, as demonstrated in the Vanguard Adviser Alpha study, which suggests that advisers can add as much as 3% in annual returns to a client’s portfolio—not by choosing superior investments, but through comprehensive planning and behavioural coaching.
Here’s how planners can add value:
- Behavioural Coaching (1.5%): Helping clients avoid emotional decisions, such as panic-selling during market downturns, has the most significant impact on long-term returns.
- Asset Allocation (0 to 1%): Matching a client’s investments to their financial goals and risk tolerance ensures sustainable growth.
- Cost-effective Implementation (up to 0.40%): Advisers who focus on reducing costs, such as using low-cost funds, can save clients money that compounds over time.
- Rebalancing (up to 0.26%): Periodically adjusting the portfolio ensures that risk levels remain appropriate for the client’s evolving goals.
- Spending Strategy (0 to 1.10%): In retirement, strategic withdrawal of funds can significantly reduce tax liabilities, helping assets last longer.
- Tax-efficient Investing (up to 0.75%): Placing investments in the right accounts can lower the tax burden on a client’s portfolio.
Each of these components is a part of financial planning—not advice. By offering holistic financial plans that focus on long-term goals and human capital, financial planners can guide their clients to a more secure financial future.
The Financial Conduct Authority (FCA) plays a crucial role in overseeing the conduct of financial advisers in the UK, but it does not directly regulate financial planners. According to PERG 8.26.2, the legal liability for bad advice rests with advisers who sell financial products, which is where many of the UK’s mis-selling scandals have occurred. Over the years, cases like the British Steel Pension Scheme (see M-POWER: The Money Empowerment Movement for the full list of scandals under the FCA’s watch) have shown that despite the FCA’s presence, poor practices in the financial advice sector persist. This has led many Finance Directors to view financial advice as a zero-sum game—one where legal liabilities outweigh the benefits.
The solution for creating true integrity and trust in the market is simple: a clear separation between financial planning and product sales. Financial planners should not be compensated through commissions or sales of financial products. This would eliminate the conflicts of interest that lead to mis-selling and poor conduct. By ensuring that planners are only paid for their advice, and not for pushing products, the industry could shift towards genuine client-first planning, fostering trust and delivering real long-term value for consumers.
The Future of Financial Planning
As the financial advice industry continues to focus on high-net-worth clients to such an extent that they might no longer be classed as retail investors, there’s a growing opportunity for financial planners to step into the “retail planning gap.” With the right approach, planners can offer affordable, project-based or hourly fee services that appeal to the majority of the population.
Financial planning is about more than just selling products. It’s about providing the tools and guidance necessary for individuals to achieve financial security and peace of mind. And that’s the future we must aim for—one where financial planning is available to everyone, not just the wealthy few.
Appendices:
Appendix A: The Vanguard Adviser Alpha Study
The Vanguard Adviser Alpha study is a foundational piece of research that quantifies the value that financial advisers can bring to their clients, beyond the mere selection of investments. While some might assume an adviser’s primary role is to pick the “right” investments, the study reveals that the real value lies in the holistic guidance advisers offer, which Vanguard estimates can add as much as 3% in additional annual returns for clients.
This value is not derived from chasing market returns, but rather from structured, disciplined financial planning and behaviour management that helps clients stay the course.
The Key Components of Adviser Alpha:
- Behavioural Coaching (1.5%)
One of the largest contributions an adviser makes is helping clients manage their emotions during market volatility. Markets can be unpredictable, and it’s human nature to panic during downturns or get overly excited during booms. This emotional response can lead to poor decisions, such as selling investments when markets dip or buying at peak prices. Advisers help clients avoid these mistakes by focusing on long-term goals and sticking to a solid plan, preserving and growing wealth over time. - Asset Allocation (0 to 1%)
Crafting a well-balanced portfolio that aligns with a client’s risk tolerance, financial goals, and time horizon is key to long-term success. By properly diversifying a portfolio across various asset classes, advisers can reduce risk and enhance potential returns. Asset allocation is a fundamental strategy that ensures clients are prepared for different market conditions, without taking unnecessary risks. - Cost-effective Implementation (up to 0.40%)
Every penny saved on investment fees is a penny that stays in the client’s pocket. By selecting low-cost investment products such as exchange-traded funds (ETFs) or index funds, advisers can help clients avoid the drag of high management fees. Over time, these savings compound, making a significant difference to overall returns. - Rebalancing (up to 0.26%)
Over time, the performance of different investments will cause a portfolio’s balance to shift away from the original asset allocation. Regular rebalancing ensures that the portfolio remains aligned with the client’s risk tolerance and investment objectives. It involves selling overperforming assets and reinvesting in underperforming ones, which helps maintain a disciplined approach and avoids unnecessary risk. - Spending Strategy for Retirees (0 to 1.10%)
Retirement income planning can be complex, and advisers add value by optimising withdrawal strategies that minimise tax liabilities. Drawing income in the most tax-efficient manner, for example, from taxable, tax-deferred, or tax-free accounts in the correct order, can extend the life of a client’s retirement portfolio. Advisers also help clients avoid outliving their assets by setting sustainable spending levels. - Tax-efficient Investing (up to 0.75%)
Effective tax management is a critical part of maximising returns. Advisers add value by ensuring tax-inefficient investments (like bonds) are held in tax-advantaged accounts, while tax-efficient investments (like equities) can be held in taxable accounts. This strategy reduces the overall tax burden on the client’s portfolio, ensuring more of their returns stay with them rather than going to the taxman.
A Flexible Approach
It’s important to remember that this 3% “alpha” is not guaranteed each year. Instead, it represents an average annualised value over the long term. Certain components, like behavioural coaching, can have a significant impact in times of market volatility, while tax-efficient strategies may add more value during periods of higher taxation or changes in legislation. Advisers continuously adjust their approach based on changing client needs and market conditions.
Beyond Investments: The Power of Planning
At its core, the Vanguard Adviser Alpha study underscores the importance of financial planning over financial advice. It’s not just about which stocks or funds to pick; it’s about creating a comprehensive strategy that aligns with the client’s life goals, managing risk effectively, and helping clients make better long-term decisions.
By working with a financial planner, clients gain access to personalised advice that extends beyond investment choices. It’s about having a trusted partner who helps you navigate the complexities of your financial life, ensuring your future is secure, your investments are aligned with your goals, and your peace of mind is intact.
This study highlights that, in a world where market returns are uncertain, the real value lies in proper financial planning, a service that can help protect and grow your wealth no matter what the market throws your way.
The investment market in the UK has become highly commoditised, meaning that we no longer need intermediaries to select products on our behalf. The majority of retail investors are best served by readily understood, well-diversified, and low-cost investments, which are already available from a range of providers. Yet, despite these accessible and straightforward options, many retail investors still don’t choose them. As Christopher Woolard, former interim CEO of the FCA, highlighted in the Consumer Duty consultation, the best course of action for most retail investors is to invest in simple, diversified, and low-cost products. However, people are often steered toward complex products they don’t need or fully understand, often at a higher cost.
“The overwhelming majority of retail investors are best served by readily understood, well-diversified and low-cost investments, which are already available from a range of providers, but many retail investors don’t choose these.”
The solution is clear: for those with enough assets to invest, outcomes should be simple, transparent, and cost-effective. There’s no need to overcomplicate the process. With commoditised investment platforms, individuals can access the right products directly, avoiding unnecessary fees and complexity, and focusing on long-term wealth growth. Financial planners should focus on strategic planning rather than selling products, ensuring clients get the straightforward, effective guidance they deserve.
Appendix B: Qualifications of a Financial Planner
Becoming a qualified financial planner in the UK involves rigorous training, ongoing professional development, and earning recognised credentials that demonstrate both knowledge and ethical standards. These qualifications are designed to set financial planners apart from traditional financial advisers, ensuring they have a holistic understanding of not just financial products, but also the broader aspects of long-term financial planning.
Here’s a breakdown of the key qualifications that are highly respected in the field of financial planning in the UK:
1. Chartered Financial Planner (CII)
The Chartered Financial Planner designation, awarded by the Chartered Insurance Institute (CII), is one of the highest professional standards in financial planning. Earning this title requires completing the Advanced Diploma in Financial Planning, which covers a broad range of topics, including investments, pensions, tax planning, and retirement strategies.
The Chartered designation is not just a mark of technical competence but also of professionalism, ethics, and client-centred service. Planners who hold this qualification have demonstrated a commitment to the highest standards in the industry, and they must also undertake continued professional development to maintain their status. This sets them apart as trusted, expert professionals who focus on creating comprehensive financial strategies.
2. Certified Financial Planner (CISI)
The Certified Financial Planner (CFP) qualification is globally recognised and awarded by the Chartered Institute for Securities & Investment (CISI) in the UK. To earn this prestigious certification, candidates must complete the CISI Financial Planning Diploma, which emphasises the importance of a holistic approach to financial planning. The CFP designation focuses on helping clients achieve their life goals through effective management of their financial resources, rather than simply offering product-based advice.
A CFP professional is trained to develop integrated financial plans that take into account all aspects of a client’s financial situation, including savings, investments, insurance, tax, and estate planning. This qualification is highly respected internationally and assures clients that they are receiving advice from a professional who adheres to rigorous ethical standards.
3. Chartered Wealth Manager (CISI)
Also awarded by the CISI, the Chartered Wealth Manager qualification is aimed at those specialising in wealth management and investment advice. This designation, supported by the Level 7 Diploma in Wealth Management, focuses on investment strategies, portfolio management, and financial markets. It’s a qualification that not only demonstrates technical expertise but also a strong understanding of the client’s broader financial picture.
While this qualification leans more towards the investment side, it still underscores the importance of a client-centred approach, ensuring that wealth management decisions align with the client’s long-term goals.
4. Diploma in Investment Advice (CISI)
The Diploma in Investment Advice, also from the CISI, is a qualification specifically designed to meet the regulatory requirements set by the Financial Conduct Authority (FCA). This diploma ensures that advisers understand core areas such as portfolio management, regulatory frameworks, and investment products, providing them with a strong foundation to offer advice that meets compliance standards.
5. Chartered Financial Analyst (CFA)
The CFA (Chartered Financial Analyst) designation, awarded by the CFA Institute, is another internationally recognised credential, focusing heavily on investment analysis, portfolio management, and financial markets. While not specific to financial planning, many financial planners pursue the CFA qualification to enhance their expertise in investment-related matters, allowing them to better serve clients with complex portfolios.
What Sets Financial Planners Apart?
The qualifications listed above represent a commitment to professional development, ethical standards, and a client-first approach. Unlike traditional financial advisers, who may focus solely on recommending specific products or managing investments, financial planners with these qualifications take a holistic view. They aim to understand the full scope of a client’s life—financial, personal, and even emotional—and craft strategies that support long-term wellbeing.
Financial planners are not just product intermediaries; they are strategic partners in a client’s financial journey, helping them navigate major life events, plan for retirement, and achieve financial independence. These qualifications give planners the tools to ensure that clients receive thoughtful, tailored advice that serves their unique needs.
I’m currently in discussions with key professional bodies to establish a clear pathway to membership, accreditation, titles, and registration specifically for financial planners who are not financial advisers. This is a significant step forward in recognising the unique skills and roles of financial planners who focus on holistic, client-centred planning rather than product sales. The aim is to give these professionals the same level of recognition and legitimacy within the industry, ensuring they have a defined professional route to follow. Watch this space for upcoming announcements as we continue working to open up new opportunities for financial planners and create a trusted and transparent framework for the future.
By working with a qualified financial planner, clients can feel confident that their finances are being managed with care, skill, and integrity, ensuring that their financial goals are aligned with a comprehensive, well-structured plan.
Appendix C: The Impact of Wealth Inequality in the UK
Wealth inequality in the UK has been growing steadily for decades, creating a stark divide between the wealthy and the rest of the population. Over the past 40 years, this gap has widened significantly, with the richest 10% now holding a disproportionate share of the nation’s wealth, while the bottom 50% own only a small fraction. The causes are multifaceted, including rising property values, stagnant wages for middle- and lower-income earners, and uneven access to financial advice and planning.
A Growing Divide
In the 1980s, market-driven economic reforms and rising asset prices began to drive wealth accumulation for the richest, while the wages of working-class and middle-class households stagnated. This trend continued through the 1990s and 2000s, and even the financial crisis of 2008 failed to reverse it. While the wealthiest have seen their assets increase, particularly through property and financial markets, younger generations and those with fewer assets have been left behind. Today, the top 1% continue to grow richer, while the bottom half of the population struggles to keep up.
How Financial Planning Could Help
Proper financial planning has the potential to mitigate the effects of wealth inequality by empowering individuals and families to make informed decisions about their financial futures. Here’s how:
- Building a Solid Financial Foundation
Many people in the UK are not equipped with the knowledge or resources to build long-term wealth. Financial planning provides the guidance needed to create a strategy for earning, saving, investing, and growing wealth over time. By starting early and using a personalised plan, individuals can better navigate economic uncertainty and avoid falling behind. - Managing Income and Expenses
Wealth inequality is often exacerbated by poor financial management. Financial planners help clients assess their current financial situation, create budgets, improve income and manage expenses efficiently. This helps individuals avoid debt traps and develop habits that support financial stability. - Access to Investment Opportunities
While the wealthy have easy access to investment opportunities, those with less wealth are often excluded. Financial planners can help bridge this gap by introducing clients to publicly available survets, such as those from Which? Money, and educate clients on low-cost investment options, such as index funds and diversified portfolios. This creates opportunities for wealth growth, even for those with modest starting amounts. - Tax Efficiency and Wealth Preservation
One of the biggest advantages of financial planning is the ability to make tax-efficient decisions. Planners help clients structure their investments, savings, and withdrawals in ways that minimise tax burdens, preserving more wealth for the future. This is particularly important for middle-income earners, who may not be aware of the tax advantages available to them. - Wealth Transfer and Legacy Planning
Without a plan for wealth transfer, many families lose a significant portion of their wealth in the form of taxes or inefficient estate planning. A financial planner can help ensure that wealth is passed down efficiently, helping to reduce the impact of wealth inequality across generations.
Closing the Gap
Wealth inequality will not be solved overnight, but financial planning is a powerful tool for levelling the playing field. By providing access to professional planning advice and creating tailored strategies for wealth building, financial planners can help individuals take control of their financial futures, regardless of where they start.
Through careful planning, the financial gap between the wealthy and the rest of the population can be narrowed. The key is education, access to resources, and a long-term approach that focuses on stability and growth. Ultimately, financial planning is not just about managing money—it’s about empowering people to live better, more secure lives.
By addressing these inequalities through financial planning, we can create a fairer, more equitable society, where everyone has the opportunity to build a brighter financial future.
Appendix D: How Financial Planning and Human Capital Development Benefit Retirees
Retirement is no longer just about stopping work and living off savings—it can be a chance to reinvent yourself, find new passions, or even build new income streams. Proper financial planning, combined with human capital development strategies, ensures that retirees make the most of both their financial and personal potential. With thoughtful planning, retirees can extend the longevity of their earnings, reduce risks, and continue to find fulfilling work that feels more like a passion than a job.
1. Tax-efficient Investing
One of the fundamental pillars of traditional financial planning for retirees is tax-efficient investing. By strategically placing assets in tax-advantaged accounts, retirees can minimise their tax burden and preserve more of their income. For example, investments held in ISAs grow tax-free, while pension withdrawals can be structured in a way that minimises tax. A financial planner ensures that each pound works harder for you, helping extend your savings throughout retirement.
2. Smart Withdrawal Plans
The way you draw down your retirement funds can have a significant impact on their longevity. A smart withdrawal strategy can extend the lifespan of your retirement savings, ensuring you have enough income to last through your retirement. This may include withdrawing from taxable accounts first, leaving your tax-deferred pensions or ISAs to grow for longer. It’s about creating a sustainable income stream that supports your lifestyle without depleting your resources too soon, whilst remaining mindful of inheritance tax implications.
3. Human Capital Development: Finding Work That Doesn’t Feel Like Work
Increasingly, retirees are viewing retirement not as an end, but as a new beginning. One of the most exciting aspects of human capital development in retirement is finding work that doesn’t feel like work. By turning passions into income-generating activities, many people continue to work, not out of necessity, but because they enjoy it. Whether it’s consultancy, writing, teaching, or even learning new skills, finding fulfilling work can be so rewarding that you may never want to fully retire.
4. Starting a Business in Retirement
For some, retirement offers the perfect opportunity to start a business, tapping into years of experience and creativity. Starting a business can increase income exponentially, offering financial rewards while providing personal satisfaction. It’s also a strategy that extends the longevity of earnings and reduces the risk to income by diversifying revenue streams. With a carefully crafted business plan, retirees can enjoy financial growth while building something meaningful for the future.
5. Transforming Active Income into Passive Income
Another key human capital strategy is turning active income into passive income. This can be achieved by employing others to run the day-to-day operations of your business or investing in assets that generate ongoing revenue, such as rental properties. Passive income allows retirees to enjoy the benefits of their hard work without the need for constant involvement, creating a steady and reliable income stream that works for them even when they aren’t working.
6. Passing on Businesses and Perpetual Revenues to the Next Generation
For those who have built successful businesses, passing on the business to the next generation ensures that the wealth continues to grow. By creating a legacy that includes perpetual revenue streams, retirees can ensure that their family benefits from their hard work long after they’ve stepped away from active involvement. This not only provides financial security for future generations but also builds something lasting that reflects their values and efforts.
7. Legacy and Estate Planning
Of course, financial planners also help retirees structure their estate and legacy in a tax-efficient way, ensuring that more of their wealth is passed on to loved ones rather than lost to taxes. Strategies such as gifting, trusts, and well-structured inheritance plans can reduce the tax burden and ensure that your legacy benefits the people and causes you care about.
Incorporating human capital development into financial planning opens up new possibilities for retirees, allowing them to find fulfilment, extend income, and build lasting legacies. With the right strategies, retirement becomes not just a time to slow down, but an opportunity for new beginnings and continued personal growth. Whether through tax-efficient investing, starting a business, or creating passive income, retirees can enjoy financial security and the personal satisfaction that comes from pursuing their passions.
Appendix E: Why Listen to Me?
You might be wondering, why listen to me? What makes my perspective on financial planning and advice worth considering? The answer lies in my journey through the very heart of the UK financial services industry, where I witnessed first-hand the decisions that shaped the landscape we see today.
My career began in pensions development, where I worked with major home service companies such as Refuge Assurance and United Friendly. I successfully improved sales quality whilst growing pension sales by 30% per year through training financial planners, helping clients secure their futures. But when these companies merged and past financial advice scandals shook the industry, I moved into banking—where I took on key leadership roles.
In the 2000s, I was Head of Investments at three of the UK’s largest banks—Santander, RBS Group and HSBC. I was also the Chair of the British Bankers’ Association’s Bancassurance Steering Group, overseeing the implementation of investment and financial planning strategies during the Retail Distribution Review (RDR). These roles gave me a front-row seat to the decision-making processes at the highest levels of finance. And that’s where I noticed something troubling: many senior leaders, despite their positions of power, did not understand the difference between financial planning and financial advice.
This lack of understanding had profound consequences. I saw colleagues, who had no background in finance, make decisions (without me) that led to the dismantling of bancassurance services and the widespread loss of financial planners. Decisions that could have provided long-term benefits to clients were overshadowed by a focus on short-term product sales and legal liabilities, leaving a gap that has yet to be filled.
I didn’t just observe these changes from the sidelines—I was deeply involved. I was responsible for implementing pilot projects that demonstrated the value of financial planning, including the “Trusted Adviser” programme at HSBC, which saw client onboarding rates and share of wallet dramatically increase. Despite these successes, the higher-ranked powers that be chose a different path, leading to the financial adviser exodus we now face.
When the financial advice model began to collapse under regulatory pressure, I left to create the Academy of Life Planning, where I could offer genuine financial planning services—free from the conflicts of interest that plague product-based advice models. Today, I lead a network of hundreds of financial planners, where my mission is to help individuals take control of their financial futures through self-directed planning and education.
So why listen to me? Because I’ve been there. I’ve seen the mistakes, the triumphs, and the lessons learned along the way. I’m not just talking about the need for change in financial planning; I’ve lived it.
Let me use my experience to guide you towards a brighter, more secure financial future.
Academy of Life Planning 