When you’re facing a significant life event—whether it’s losing a loved one, navigating a serious illness, or dealing with a divorce—it’s natural to seek help. The public’s instinct is often to contact someone labelled as a “financial planner” or “financial adviser.” They believe they’ll receive guidance on how to handle these emotional, life-altering changes. Instead, they’re frequently met with disappointment, as many of these so-called advisers are, in fact, product sellers in disguise.
SJP’s Real Life Advice report clearly shows that there’s still a lot of work to be done in supporting vulnerable clients. According to the findings, 18 per cent of respondents felt they were offered little to no additional help when they needed it most. Even more concerning, 15 per cent said they were simply referred to charities or similar organisations, often without any real attempt to understand their personal needs. This highlights a troubling pattern where clients reach out for meaningful guidance, only to be met with a lack of support and a quick redirection, rather than receiving the holistic help they were expecting. It’s a clear sign that transparency and genuine care are urgently needed in financial services.
The problem lies in how financial intermediaries describe themselves. They use titles like “financial planner” or “financial adviser,” giving the impression that their main role is to offer comprehensive, empathetic support. But in reality, many are focused on selling financial products. This becomes glaringly apparent when a vulnerable client, already overwhelmed by their situation, receives a sales pitch rather than the holistic advice they desperately need. If there’s no product to sell, the client may be swiftly referred to a charity or a service they already know about—a far cry from the support they were expecting.
Clear Labelling for Transparency
This mismatch between expectation and reality can be deeply distressing, especially for vulnerable clients. Imagine seeking advice during a difficult time only to feel like just another sales prospect. The situation highlights an urgent need for clearer labelling of financial services. In India, for example, the Securities and Exchange Board (SEBI) does not allow mutual fund distributors to call themselves financial planners or advisers. If such a distinction is possible in one market, why not here in the UK?
Some might argue that stricter labelling rules could conflict with the Government’s growth agenda, but I would counter that long-term growth relies on trust and transparency. By clearly labelling product sales companies as such, we can set the right expectations from the start. Clients would know if they’re about to receive holistic advice or simply be sold a product. This shift would protect the public, particularly vulnerable clients, and rebuild trust in financial services.
The Way Forward
For too long, the financial services industry has relied on vague titles and misleading marketing. It’s time for a change. We need services that say what they do on the tin. If you’re a product sales company, own it. Be transparent. This isn’t about stifling business—it’s about aligning with the needs of the people we serve.
When clients know what to expect, they’re empowered to make informed decisions. This is especially crucial for those facing vulnerable circumstances, who need more than a quick product sale—they need genuine support. By embracing transparency and clearly labelling our services, we can build a financial industry that prioritises people over products. That’s a future worth aiming for, isn’t it?
Q&A: Clearing Up Confusion About Financial Advice and Product Sales
Q: What’s the difference between a financial adviser and a financial planner?
A: The titles can be misleading, and that’s part of the problem. A true financial planner focuses on helping you navigate significant life changes and make holistic plans based on your personal goals. A financial adviser, however, is often focused on recommending specific financial products, like investments or insurance. If the adviser is employed by a firm that sells these products, their advice may be more about selling than truly planning. It’s important to ask whether the adviser will be selling products or providing fee-based planning.
Q: How can I tell if I’m talking to a genuine financial planner or just a product salesperson?
A: Great question! Transparency is key here. Start by asking if they earn commissions or fees from selling specific products. Be cautious if someone claims that commissions no longer exist since the Retail Distribution Review, yet quotes an initial and ongoing fee as a percentage of your assets under management. This is essentially the same thing, just dressed up differently. If they do, it’s likely their main focus is product sales. A genuine financial planner will prioritise your needs and may charge an hourly fee or project fee instead of relying on product sales. Look for someone who talks about creating a comprehensive plan for your goals rather than pushing investments right away.
Q: Why does this matter, especially for vulnerable clients?
A: Vulnerable clients—those experiencing major life changes like bereavement, illness, or divorce—need advice that’s focused on their unique circumstances, not just selling financial products. When someone seeks help during a tough time, they’re often looking for guidance on how to cope and move forward, not a sales pitch. Misleading titles can leave people feeling even more stressed and unsupported. Clear labelling of services helps ensure that vulnerable clients get the appropriate help they need, reducing the risk of exploitation.
Q: Isn’t there any regulation to prevent this kind of confusion in the UK?
A: Unfortunately, the UK hasn’t implemented clear labelling rules like some other countries, such as India, where mutual fund distributors can’t call themselves financial planners or advisers. This lack of regulation means that many firms use the terms interchangeably, even if they’re mainly selling products. While there’s growing awareness of the issue, stronger guidelines would make it easier for clients to know what they’re getting. Until then, it’s up to us to ask the right questions and make informed choices.
Q: What should I look for when choosing a financial service provider?
A: Look for transparency and clarity. Ask how they get paid and whether they’re tied to specific products or providers. A genuine financial planner will typically have a more holistic approach, focusing on your entire financial situation, your goals, and your well-being. They should be able to explain their process clearly and offer references or case studies that show how they’ve helped people in situations like yours.
Q: If I feel pressured to buy something, what should I do?
A: Trust your instincts—if you feel pressured, it’s okay to step back and take your time. A genuine adviser will respect your need to think things through and won’t push you into making quick decisions. If you’re unsure, seek a second opinion or consult an independent financial planner who isn’t tied to product sales. Remember, this is about your financial well-being, and you deserve advice that prioritises your needs, not a company’s sales targets.
Q: What’s the benefit of clearly labelling financial services?
A: Clear labelling helps set the right expectations from the start. It makes it easier for you to understand whether a service is focused on holistic planning or simply selling financial products. This transparency is especially helpful for vulnerable clients who might be seeking guidance during a difficult time. When services are clearly labelled, you’re better equipped to make informed decisions and find the right kind of support.
Q: How can the industry improve transparency and better serve clients?
A: The industry needs to adopt clearer definitions and labelling of services. Companies should be upfront about their business model—whether they’re offering independent advice, selling products, or providing a mix of both. This kind of transparency builds trust and helps clients, especially those in vulnerable circumstances, get the support they truly need. As more clients demand clarity, we’ll see positive changes in the way financial services are offered.
These Q&As are designed to guide readers, build trust, and educate them on navigating the complexities of financial services.
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