Incentives and Trust in Financial Planning: Are We There Yet?

For decades, we’ve seen efforts to improve the governance of the financial advice industry. Standards have been raised, consumer protections have been strengthened, and professional development has taken centre stage. Yet, despite this progress, the financial advice industry remains just that—an industry focused on manufacturing and distributing investment and insurance products. While the improvements are notable, they don’t quite elevate financial advice into the realm of true professional services, like accountancy or law.

This is where Financial Planning steps in. Financial planning as an activity has the potential to stand on its own as a recognised profession, but currently, it often remains intertwined with FCA-regulated financial advice. This overlap, particularly when financial planning is mixed with product sales, introduces incentives that can compromise trustworthiness and the integrity of the profession.

Financial Planning: A Potential Profession

Financial planning sits outside the FCA’s regulatory perimeter—at least until it converges with regulated activities, such as giving advice on specific products. This freedom could allow it to develop into a respected profession in its own right, similar to accountancy and law. But there’s a catch. As long as financial planning is closely tied to financial advice, and by extension, product sales, the waters remain muddied. To put it simply: If it looks like a duck, walks like a duck, and sounds like a duck, it’s probably a duck. A profession tied to an industry, particularly one driven by financial incentives, doesn’t entirely escape the perception of being a sales function.

Consider how human capital—the development of skills, earning potential, and overall well-being—forms a significant part of total wealth. Accountants, for example, would readily acknowledge earnings development as a crucial part of their services. Yet, in financial advice, it’s often neglected. The focus tends to remain on financial capital—investments, pensions, insurance—rather than the human element, leaving financial planning in a precarious position where product sales are often prioritised over genuine long-term wealth development.

University Degrees and the Treadmill of Sales

We’re starting to see financial advice firms partnering with universities to offer financial planning courses. On the surface, this seems like a positive step. But when we dig deeper, we must ask: Is this really the direction we want to take? Should we be encouraging young people to rack up £50,000 in student debt to enter an industry where they’re measured by sales targets for the next 40 years, all in the hope of finding happiness in later life?

Or is there another way? Could we instead build academies that train, title, and accredit future professionals in holistic financial planning without the looming pressure of product sales? By focusing on human capital development and client-centred financial planning, we could pave the way for a profession truly based on trust, skill, and client well-being—rather than the sale of products.

Moving Forward: A Call for Holistic Financial Planning

The public’s perception of financial advice hasn’t yet shifted to seeing it as a profession. As Barry Horner of Paradigm Norton pointed out, despite the strides we’ve made, financial planning still doesn’t enjoy the same recognition as other established professions like law or accountancy. This lack of awareness is a critical hurdle. Without dedicated university courses and wider public understanding, financial planning will struggle to reach its potential.

However, there is a solution: holistic financial planning. By shifting the focus away from financial capital-based incentives and product sales, and towards human capital and life-centred planning, we can help financial planning gain the trust and recognition it deserves.

The next generation of professionals doesn’t have to be lured onto the sales treadmill. Instead, we can create pathways where they can develop genuine expertise in financial well-being, helping clients achieve their life goals in a sustainable, transparent, and trustworthy manner.

Let’s build a future where financial planning stands proudly alongside other respected professions, free from the weight of sales targets and driven by the holistic needs of individuals.

This approach will allow for true progress, where the financial planning profession can thrive, fostering trust and focusing on the well-being of both clients and practitioners. The future of financial planning could be bright, but only if we allow it to develop free from the constraints of industry incentives.

Q&A: The Path to Professionalising Financial Planning

Q: What’s the main difference between financial advice and financial planning?

A: Financial advice often focuses on specific products like investments, pensions, or insurance. The goal is to help you choose the best financial instruments for your situation. Financial planning, on the other hand, is broader and more holistic. It looks at your entire life—your goals, your earning potential (human capital), and your financial resources (financial capital)—to create a plan that supports your overall wellbeing. While financial advice is often product-driven, financial planning is people-driven, with a focus on long-term life goals rather than quick solutions.

Q: Why is it important for financial planning to be recognised as a profession?

A: Recognition as a profession brings trust and credibility. Just like we trust accountants and lawyers to act in our best interests, we need financial planners to be seen in the same light. Right now, many people view financial planning as a subset of product sales because it’s often tied to financial advice. By separating it from sales incentives and focusing on client wellbeing, financial planning can stand on its own, helping people achieve their life goals with clarity, trust, and integrity.

Q: What’s wrong with tying financial planning to product sales?

A: The issue lies in incentives. When financial planning is tied to selling products, there’s always the risk that the planner’s focus shifts from what’s best for the client to what’s best for their commissions (sometimes called initial and ongoing adviser charges expressed as a percentage of assets under management). True financial planning should be about building a life plan tailored to you, not pushing products. When planners are incentivised to sell, trust can erode. By shifting to a model where financial planners are paid for their expertise and advice, rather than product sales, we create a profession that’s truly about serving clients’ best interests.

Q: Is human capital really as important as financial capital in financial planning?

A: Absolutely. Human capital—your ability to earn, learn, and grow—is a crucial part of your overall wealth. It’s not just about how much money you have in the bank, but how you can build a fulfilling and sustainable life over time. Accountants understand this well; they focus on earnings development. Yet, financial planning has traditionally put more emphasis on financial capital—your investments and savings. A true financial planner helps you balance both, ensuring that you’re not only financially secure but also growing and developing as a person.

Q: Shouldn’t we be encouraging university degrees in financial planning?

A: Yes, but with caution. University degrees can bring legitimacy to financial planning as a profession, but we need to ensure these degrees don’t simply funnel students into product sales roles. The real value of financial planning education lies in teaching the skills to help people build comprehensive life plans, not just sell financial products. Ideally, we want to create pathways for students that focus on human capital development and holistic planning modules, without the pressure to hit post-graduate sales targets.

Q: How does holistic financial planning benefit clients compared to traditional financial advice?

A: Holistic financial planning looks at the bigger picture. Instead of just recommending a pension or investment product, it starts by understanding your life goals, your values, and your potential. This kind of planning is about creating a roadmap for your entire life, balancing both financial security and personal fulfilment. It’s not just about building financial wealth, but about making sure your plan supports the life you truly want to live—whether that’s pursuing a new career, planning for a comfortable retirement, or supporting your family’s future.

Q: What steps can we take to help financial planning become a recognised profession?

A: The first step is separating financial planning from product sales and focusing on the development of human capital as much as financial capital. We also need to raise awareness about financial planning as a trusted profession, with dedicated training and accreditation that emphasises client wellbeing over sales. Encouraging educational institutions to offer courses that teach holistic planning, rather than just financial advice, is key. The more we can show the public—and young professionals—that financial planning is about guiding people towards their life goals, the more we’ll build trust and recognition.

Q: How can the Academy of Life Planning help someone interested in holistic financial planning?

A: At the Academy of Life Planning, we offer an alternative path to becoming a financial planner that focuses on human capital and life-centred planning. Our training and accreditation programmes are designed to develop professionals who want to create lasting, meaningful change for their clients—without the pressure to sell products. Whether you’re new to the field or transitioning from financial advice, we can help you build a rewarding career that’s truly focused on client wellbeing. By joining our academy, you’ll learn how to develop comprehensive life plans that balance financial security with personal growth.

These Q&As provide a clearer understanding of the differences between financial advice and financial planning, and why it’s essential to build a profession centred on trust, integrity, and client wellbeing.