What is Generic Financial Guidance?
When it comes to terms such as information, guidance and advice, for most people in their day to day lives these terms are pretty much interchangeable. In the world of financial services these words have very definite and distinct meanings, especially the words ‘guidance’ and ‘advice’.
Forces MoneyPlan offers generic financial guidance defined as impartial, unregulated guidance that helps individuals identify and understand their financial needs and priorities based on their circumstances. It seeks to provide financial information, rules of thumb and general guidance in respect of possible options a person may wish to consider (i.e. what a person ‘could’ do), based on a general understanding of his/her current circumstances, needs and priorities, so that individuals are supported and better able to make their own informed decisions about what actions they wish to take in respect of their finances.
In contrast, financial advice is an activity regulated by the Financial Conduct Authority that involves both detailed understanding of a person’s finances, circumstances, preferences, needs and wants, resulting in a personal recommendation about the suitability of specific products or services and a specific and agreed course of action (i.e. what a person ‘should’ do). Such recommendations come with the protection offered by the Financial Ombudsman Service (FOS) ( https://www.financial-ombudsman.org.uk/) and the Financial Services Compensation Scheme (FSCS) (https://www.fscs.org.uk/).
So, what does this mean in practice?
Generic financial guidance doesn’t offer the following:
- A personal recommendation as to the suitability of a specific financial product (investment, pension, savings or protection) or service
- A personal recommendation as to the best course of action to take in respect of a person’s financial position or specific issue
- A lengthy intervention into a complex financial situation
Generic financial guidance does attempt to offer the following (by way of examples):
- A single time bound intervention into a matter that can be grasped and discussed within a one-off session
- An overview of options in respect of any financial issues needing to be addressed
- Guidance about debt or help with budgeting
- How to better organise your finances
- Creating and Implementing a financial plan
- Understanding your entitlement to state benefits
- Understanding your pension entitlement and retirement options
- How to go about getting a mortgage (including your options if you have been declined a mortgage in the past)
- Raising money from residential property to pay off debt/provide capital and/or income
- Talking through options and ways of savings
- Help understanding the advantages and disadvantages of various types of investments
- Understanding life and health insurance (including your options if you have been declined cover in the past)
- Increasing your awareness of financial scams and how to recognise and avoid them*
- Understanding the content and value of regulated financial advice, how much it costs and how to access it**
*one of the first generic guidance sessions delivered via Forces MoneyPlan uncovered a potential ongoing pensions scam whereby a veteran’s pension funds may have been transferred to a QROPs scheme based in Cyprus. At the time of the guidance session, the veteran was struggling to track down his pension funds! It’s a shame he hadn’t been aware of Forces MoneyPlan earlier.
**All volunteer financial advisers participating in Forces Money Plan offer their professional services free of charge in respect of the generic financial guidance session. They are fully aware and 100% compliant with all the requirement of the scheme. These include that at no time will a person receiving a guidance session be placed under any pressure to subsequently take chargeable regulated financial advice. Indeed, the delivery of the service is structured in such a way that it involves a natural break point in discussions, leaving control in the hands of the recipient as to any further steps they might subsequently want to take.
What do those who have taken advantage of Forces MoneyPlan say?
- “It went beyond our expectations. XXXX (the adviser) essentially sat down with us and talked us through how we could achieve our aim of buying a house. It set our mind at ease in many areas and gave us confidence to move forward with our plan. “
- “XXXX (the adviser) helped us also understand pensions with regards to my partner’s position and it is likely we will return to him for further advice”.
- “I found the consultation exceptional”
- “Excellent service provides by xxxx (the adviser)- very helpful, thank you”
- “The knowledge, experience and professional approach from the financial guidance adviser was very much appreciated”