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Do You Need Financial Guidance Or Financial Advice – Or Possibly Both? Find Out Here

Do You Need Financial Guidance Or Financial Advice - Or Possibly Both? Find Out Here

If the answer to this question isn’t immediately apparent, you should read on to find out. That’s because understanding the difference between financial advice and financial guidance could help you maximise your retirement fund.

As you approach your retirement, you can get free and impartial financial guidance. This facility is available thanks to the government’s introduction of the Guidance Guarantee in 2015. You can receive this guidance through the Citizens Advice Bureau or The Pensions Advisory Service.

The main thing you must know from the outset is that free financial guidance is not the same as professional financial advice. So, what’s the difference?


Financial Guidance

  • Financial guidance provides you with a general overview of the market. It is not necessarily applicable to your situation.
  • Guidance provides you with the initial information you’ll need to base specific questions for a financial advisor.
  • Having received financial guidance, you have no guarantee on the decisions you subsequently make.
  • Financial guidance is free under the Guidance Guarantee.

Professional Financial Advice 

  • Financial advice gives you information about options specific to your situation.
  • Advice is not generic but tailored to individual clients.
  • Financial advice considers your whole financial situation – income, goals, investments, etc.
  • Advice explains the risks and benefits of the various options presented.
  • Some professional financial advice involves paying a fee before advice is provided, while some advice is non-obligatory where a fee is only payable if you decide to act on the advice.
  • If your advisor is regulated by the FCA (Financial Conduct Authority), you can receive compensation from the Financial Services Compensation Scheme or Financial Ombudsman in the event of suffering a loss due to wrong advice.
  • You can find a regulated financial advisor on the FCA website.
  • ILC UK research data from 2019 shows that receiving advice from a regulated financial advisor can result, on average, in an additional £30,991 in your pension pot by the time you retire.

Financial Guidance or Financial Advice

Financial guidance could prove particularly useful if you need an introduction to pensions and the various options available. If you already know the various options available and need some help in deciding on the best option to go for, you’ll benefit from financial advice.

When You Must Seek Financial Advice

There are certain situations when you are legally required to obtain regulated financial advice. These occasions are as follows:

  • If you have a career average (defined benefit) pension or final salary pension valued over £30,000, and you intend to transfer to a defined contribution scheme.
  • If you have a defined contribution pension valued above £30,000 with a guaranteed payment rate on retirement, and you want to change it to another type of investment.

In either of the above cases, if your pension is worth less than £30,000, you should still consider speaking with a regulated financial advisor before making a change to your pensions.

Use an Independent or Restricted Financial Advisor?

One question you should always ask a financial advisor before engaging their services is whether they are independent or restricted. Independent financial advisors can provide advice on the whole market. Restricted advisors are limited to specific products.


Hopefully, you now understand the difference between financial guidance and financial advice and which one you need.

If you’re thinking about your pension, speak to a regulated adviser like Portafina or, view the guides at The Pension Advisory Service.


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