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There is an ongoing debate about the differences between a financial adviser and a financial planner.

It was hoped when the retail distribution review discussion paper was brought out that great progress was being made in this area, although the interim statement would suggest that further work needs to be done. Differentiating between advice and sales might seem straightforward enough, but the reality is that there is too much greyness in this supposedly simple definition and there are quite rightly potential problems around those who work for multi-tied or tied organisations at the moment which are actually providing advice to their clients before selling them a product or two.

Another problem that comes from the interim statement is the level of qualifications and their interaction with the overall competency of an individual. If QCA Level 4 is accepted as a new benchmark, it is important that this is not seen as a new ceiling for qualifications and equally important that a future landscape is also scoped out to provide a future for new entrants into the market that aspire to the professional recognition enjoyed by other allied professions.

Perhaps then the FSA needs to think again of three tiers and this will allow those who cannot or will not attempt the advanced qualifications an opportunity to carry on in business but within a more controlled environment.

There are of course three parts to any advice process and each can be done independently. There is the strategic aspect where the planning takes place and a financial plan is drawn up dealing with all appropriate aspects of the client's personal and financial situation.

This strategy is likely to be wide-reaching and will contain short-term, medium and long-term goals and will have highlighted actions and review points along the journey. This piece of strategic planning can then be taken anywhere potentially by the client.

Normally, however, the client will ask the planner to deal with whatever implementation actions arise and the purchase of products, for example, to meet the needs identified. This will involve research of the market, strong technical understanding of the various structures to be able to make appropriate recommendations to suit the needs.

Finally there is the service element, to satisfy the ongoing delivery of the overall planning service.

Financial advisers are usually picking up the second and sometimes the third aspect of the above. They will review the client's situation and generally pick up on specific solutions, such as pensions, and ensure that the market is researched so that a product recommendation is made which matches the client's needs. The relationship is typically more transactional and short term, although often much longer term relationships are established as repeat business is done.

Financial planning is: "A professional service for clients who need objective assistance in organising their personal or corporate financial affairs to more readily achieve their personal or corporate lifestyle and financial goals."

One look at a fully prepared financial plan will tell you all you need to know about how financial planning differs from financial advice. The detail in the financial plan is extreme and it is all about the client: his life; his assets; his dreams; his deadlines and how he prioritises his time and resources. It is not about his Isas, pensions and share portfolio.

Looking at it more technically, financial planning is a six-stage process which works through the following:

•Collect and assess all relevant and personal data;

•Identify financial and lifestyle goals and objectives;

•Process and analyse information;

•Produce a financial plan;

•Implement the plan;

•Review progress and modify the plan as necessary to take account of changing circumstances.

Financial planning looks at the following basic areas with other areas of concern to the client. The basic areas are

•Financial statement analysis

•Investment planning

•Tax planning

•Risk management and insurance

•Retirement planning

•Estate planning

A financial planner provides clients with an analysis of pertinent factors relating to the client incorporating the six components mentioned above and a plan of action, which helps the client, achieve their objectives. Order and style of presentation will vary depending upon the client's individual circumstances and needs.

The plan will include, but not be limited to, the following 13 elements:

•Client data, including a schedule of investments;

•Client goals;

•Assumptions;

•Balance Sheet/net worth statement;

•Current cashflow statement, incorporating an income tax assessment;

•Statement of financial position in the event of death and disability

•Retirement planning analysis

•Investment analysis

•Analysis of other specific future monetary goals

•Estate planning

•Recommendations

•Implementation programme

•Periodic review and plan update strategy

It is helpful to set out these in a little more detail because absolute clarity of service needs to evolve.

Client Data The client data collection forms should include relevant personal and family data for parties covered under the plan, including investment assets and liabilities and a statement of the clients’ attitude to investment risk.

Client Goals The specific goals of the client will form the basic framework for the development of the financial plan. These goals and objectives should be expressed in specific and precise language, indicating priorities and including a time frame where applicable.

Assumptions Assumptions should include, but not be limited to, inflation, investment growth rate, mortality etc.

Balance sheet/net worth A schedule listing assets and liabilities with a calculation of net worth.

Current cashflow statement Sources of income would include earned income, investment income, sale proceeds and gifts before tax. A tax assessment relating to the current tax year should be included. Uses of income would include living expenses, debt service, acquisition of assets and taxes paid. The ability to use cashflow statements is probably one of the most powerful tools for financial planning.

Statement of financial position in the event of death or disability An analysis of the client's financial exposure relative to mortality - survivor income and capital needs analysis - and morbidity - impact of poor health - as appropriate, and a listing and analysis of current life and disability insurance policies.

Retirement planning and other specific future goals An analysis of capital needed at some future time to provide for financial independence, retirement education or other specific needs, to include a projection of resources expected to be available to meet those needs at that time. Inflation, growth of assets and State and company benefits should be considered where applicable.

Investment Analysis A breakdown of existing asset allocation and discussion of the suitability of the investments in relationship to the client’s needs, goals and objectives, including liquidity, diversification and investment risk exposure of the portfolio.

Estate Planning This explains the relevance of wills, trusts and powers of attorney, and may include a statement of exposure to inheritance taxes.

Recommendations Clearly identified and stated written recommendations relating to the client’s goals as well as a determination of the actions necessary to compensate for any shortfalls. Recommendations may be generic or specific.

Implementation programme A list of action points required to implement the recommendations, indicating who does what, how and when.

Review and plan update strategy A statement of the planner’s policy on frequency, method of initiation and structure of reviews and updates.

Money is not of course an end in itself, but is a very useful resource in funding the life that we really want to live. It is, therefore, critical to plan things properly if people are to have as enjoyable and fulfilled a life as possible. The clients should walk away with a sound strategy for the future and peace of mind. While financial advice helps people make appropriate decisions on specific issues, the financial planning process ensures that by having their finances properly organised and their future lifestyle costs projected and forecasted, planners can help clients to live every minute of the rest of their lives to the full.

The inaugural Financial Planning Week takes place on 8-14 September and for more information on what this is and why the IFP is undertaking such a project have a look at the website www.financialplanningweek.org.uk