Do you know the difference between financial guidance and advice?

The right for people to receive free and impartial guidance on how to make the most of their pension choices was granted by the Government when it made radical changes to how people could access their pensions in 2015. Access to web, phone and face-to-face guidance were all made available, funded by a levy on regulated financial services firms. This was aimed at improving people’s knowledge on how the retirement market works so that they could make informed decisions about their future retirement.

In a financial services context, there is a critical difference between the terms ‘Guidance’ and ‘Advice’, yet a poll conducted amongst people aged 55+ in August 2020 concluded that many can’t distinguish between the two.

For example, nearly a fifth of those questioned said they had received ‘advice’ from the Government’s Pension Wise service, even though the service clearly states on its website that it offers guidance only.

Perhaps more worrying is that about ten per cent of respondents considered chats with friends and family to be advice.

We all want to make the best decisions about our retirement and it’s natural to search the internet and to ask friends for their opinions. However, in a financial services context, the only ones who can offer advice are regulated individuals or firms, such as Brunsdon Financial Services Ltd.

In 2016, the Financial Advice Market Review, jointly led by HM Treasury and the Financial Conduct Authority, conducted some research to look into the confusion consumers face when understanding the terms ‘Guidance’ and ‘Advice’. Although ultimately it concluded that no new terms explained the two services better, the recommendation was that the market should provide a single consistent set of consumer-friendly explanations. These were suggested as follows:

 Financial GuidanceFinancial Advice 
  • An impartial service to help you to identify your options and narrow down your choices
  • It WILL NOT tell you what to do or which product to buy
  • Providers of guidance are responsible for the accuracy and quality of the information they provide, but NOT for any decision you make based on it
  • Provided by a wide range of individuals and organisations who may or may not be regulated
  • Free of charge, unless your provider clearly tells you otherwise
  • It will SUGGEST what you COULD do
  • Will recommend a specific product or course of action, given your particular circumstances and financial goals
  • Personal to you, based on the information you provide
  • Provided by a qualified and regulated individual or organisation
  • Providers are responsible and liable for the accuracy, quality and suitability of the recommendation they make and you are protected by law
  • Fee usually payable. Fees will be disclosed before you are asked to commit
  • It will RECOMMEND what you SHOULD do

Brunsdon Financial Services are regulated by the Financial Conduct Authority to offer financial advice. All of our financial advisers are experts in their field, totally trustworthy and committed to providing excellent customer service. So please do contact us if you’d like expert advice on your retirement options.

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Do you know the difference between financial guidance and advice?

The right for people to receive free and impartial guidance on how to make the most of their pension choices was granted by the Government when it made radical changes to how people could access their pensions in 2015. Access to web, phone and face-to-face guidance were all made available, funded by a levy on regulated financial services firms. This was aimed at improving people’s knowledge on how the retirement market works so that they could make informed decisions about their future retirement.

In a financial services context, there is a critical difference between the terms ‘Guidance’ and ‘Advice’, yet a poll conducted amongst people aged 55+ in August 2020 concluded that many can’t distinguish between the two.

For example, nearly a fifth of those questioned said they had received ‘advice’ from the Government’s Pension Wise service, even though the service clearly states on its website that it offers guidance only.

Perhaps more worrying is that about ten per cent of respondents considered chats with friends and family to be advice.

We all want to make the best decisions about our retirement and it’s natural to search the internet and to ask friends for their opinions. However, in a financial services context, the only ones who can offer advice are regulated individuals or firms, such as Brunsdon Financial Services Ltd.

In 2016, the Financial Advice Market Review, jointly led by HM Treasury and the Financial Conduct Authority, conducted some research to look into the confusion consumers face when understanding the terms ‘Guidance’ and ‘Advice’. Although ultimately it concluded that no new terms explained the two services better, the recommendation was that the market should provide a single consistent set of consumer-friendly explanations. These were suggested as follows:

 Financial GuidanceFinancial Advice 
  • An impartial service to help you to identify your options and narrow down your choices
  • It WILL NOT tell you what to do or which product to buy
  • Providers of guidance are responsible for the accuracy and quality of the information they provide, but NOT for any decision you make based on it
  • Provided by a wide range of individuals and organisations who may or may not be regulated
  • Free of charge, unless your provider clearly tells you otherwise
  • It will SUGGEST what you COULD do
  • Will recommend a specific product or course of action, given your particular circumstances and financial goals
  • Personal to you, based on the information you provide
  • Provided by a qualified and regulated individual or organisation
  • Providers are responsible and liable for the accuracy, quality and suitability of the recommendation they make and you are protected by law
  • Fee usually payable. Fees will be disclosed before you are asked to commit
  • It will RECOMMEND what you SHOULD do

Brunsdon Financial Services are regulated by the Financial Conduct Authority to offer financial advice. All of our financial advisers are experts in their field, totally trustworthy and committed to providing excellent customer service. So please do contact us if you’d like expert advice on your retirement options.

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