What is the difference between Advice and Guidance

With the introduction of Pension Freedoms in 2015, and the increased amounts of money being passed down through the generations, more and more people have big questions about their money and what they can do with it. 

Whatever financial questions or conundrums you may have, there are plenty of options out there to help you. Some of you may need financial advice, while others may require financial guidance.

The terms ‘advice’ and guidance’ are often used interchangeably, however they have very different meanings and which is appropriate is entirely dependent on your situation. So, let us better explain the difference to help you make an informed choice.

Advice 

Let us start with financial advice. This is the more advanced option out of the two, as the process involves speaking to, and sometimes means going into an ongoing relationship with a qualified financial adviser.

The adviser will deliver a personalised analysis of your current financial situation, as well as looking at all of your goals and objectives. They will then present a detailed recommendation of the best financial plan to help you meet your very own specific needs. Financial advice can include, but not always, tax planning, investing, estate planning and savings.

An example of this is if you in inherit £100,000, a financial adviser will look at your current finances / situation and tell you how best to use that £100,000. If the answer is investing it, they will find you a suitable investment(s) based on your attitude to risk.  If you might need access in the short term, they may suggest the best home for this money is in cash or there could be considerations around tax planning. Each outcome will differ depending on your own personal circumstances.

Due to the personalised aspect, advice is a fee-based service. The cost differs between firms all around the UK but is generally, more cost effective for those with larger sums.

It is important to work out what type of firm you are talking to by identifying:

• Are they independent or restricted on the advice they give and the solutions they can offer? 
• How do they charge? (fixed fee vs percentage of the amount you invest)
• Is the firm chartered – so does it have the best qualifications? 

For example, The Private Office (TPO) is an independent, chartered firm which offers fixed fee charges. For those with complex situations, or who do not have the time to do the research and planning, financial advice is possibly a more appropriate option.

Guidance 

Guidance, on the other hand, is an information-only service which helps you make better informed decisions. Because of this, there is generally no personalised aspect, and ultimately you are making the final decision.

Let us look at the example again. You have just inherited £100,000 and you know this is surplus capital that you can invest. Guidance will explain how to determine your risk profile and what investment options are out there that may be suitable. The key difference when compared to advice is guidance will not recommend what to invest in.

Guidance will tell you the pros and cons of a product/ investment, however it will not tell you what is best for you, or how much you should put into this product/ investment - that will be down to your own knowledge and opinion.

So, guidance could be useful to you if:

• Your situation is not very complex, and guidance will help with your decision. 
• You want to start investing and want to explore different options.
• You are looking for alternatives to low interest rate cash savings. 
• You do not need to pay for financial advice.
• You are not ready to enter an ongoing relationship with an adviser.
• You want to think about retirement, but you are very young.
• Guidance can come from anywhere and anyone, from Government websites, pension providers, even financial advisers themselves. Getting guidance from the right place is the most important thing, and that is where Investment Champion come in.

Investment Champion– Guidance with confidence 

Investment Champion offers you a simple solution to grow your money but making investing simple, giving you all the information and guidance you need to make the right investment decisions and invest with confidence. All at a low cost.

In summary, Investment Champion allows you to:

• Access information and education to build your confidence to invest.
• Access investment plans designed and built by The Private Offices’ expert investment team.
• Access simple, low-cost investment solutions delivered online. 
• Access your own online account, to monitor investments.

To learn more about Investment Champion look at our products today