Advice or Guidance

Christina-Clegg-Financial-Planning
Christina-Clegg-Financial-Planning

Article by Phil

There continues to be confusion amongst the public about the difference between “advice” and “guidance”.

In a recent survey 34% of people said that they had received advice from their pension provider, a further 18% said they had been advised by Pension Wise, 7% said they had taken advice from a financial website and 9% had been advised by family and friends.

The reality is that none of these sources provide actual advice, they only offer levels of guidance, which is not the same. Only a qualified financial advisor can provide “advice” and only then if you’ve entered into a formal agreement and disclosed all your personal and financial details to your advisor. Financial planning advice is regulated by the Financial Conduct Authority and the advice you receive comes with lots of financial protections in case anything goes wrong.

Guidance is not regulated and provides no protections, if things go wrong there is no recourse to anyone. It is vital to make sure therefore that you only deal with a regulated financial adviser, preferably an Independent Financial Adviser as well, who are covered by the Financial Services Compensation Scheme (FSCS), protecting your money.

A good example is Nigel Farage’s recent launch of the “Fortune and Freedom” newsletter. This newsletter offers “suggestions” about a range of investment opportunities, but is careful to say that this is not “advice”  by making it clear that the content of Fortune and Freedom “is general only and should not be relied upon by investors in making (or not making) specific investment decisions”. With one simple disclaimer the newsletter moves out of the regulated environment and into the unregulated wind where there is no protection from the FSCS. This is nothing new though, Martin Lewis has been providing unregulated “guidance and tips” for years through his Money Saving Expert brand reputed to have over 11 million followers – all receiving Martin’s perceived but ultimately unqualified and unregulated wisdom.

So, always check the small print to see if what you’re being “advised” to do comes with a small print disclaimer.

If it does please be careful.

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