Our mission at Hatch is to make great financial advice more affordable and accessible. By using powerful software and building a team of financial coaches, we’re able to keep the cost of Hatch low without compromising on the quality of the guidance and advice we provide.
However, giving financial advice is a regulated business, and so it’s important to make sure that we only provide regulated advice in the right ways. We’ve put together a brief guide below explaining how we provide regulated financial advice to our clients.
What Is Regulated Advice?
Decisions you make about how to manage your finances can have a huge impact on your future, and so to protect consumers there are some areas of finance that are regulated by the Financial Conduct Authority (FCA).
The key differences between regulated financial advice and non-regulated financial guidance are:
Recommends specific products for you given your circumstances and financial goals (e.g. which mortgage is the best for you, or which investments you should make).
Must be provided by a qualified and authorised individual (or authorised system).
Will tell you what to do, and may (or may not) do the execution for you.
Helps clients to identify and narrow down their options, but will not recommend specific products (e.g. a specific mortgage, investment fund or life insurance product).
Provides clients with options for what they could do and explains how that might impact their finances, but leaves decisions ultimately in the hands of the client.
Individuals who provide financial guidance do not have to be authorised by the FCA (although they may be regulated, and only provide guidance instead of advice).
When you receive regulated financial advice through Hatch, it’s our responsibility to make sure that we comply with all the FCA’s rules and regulations to ensure that the advice you receive is suitable. It also means you have greater protections in the event that something goes wrong. For instance, you’d be covered by the Financial Services Compensation Scheme (FSCS).
Financial Advisers vs Financial Coaches
One major difference between Hatch and traditional financial advice companies is that we use financial coaches as well as financial advisers to provide the full planning service. Given how strictly regulated things are, it’s important to understand the difference between advisers and coaches.
Essentially, financial advisers are more highly qualified than financial coaches, and they are authorised by the Financial Conduct Authority to recommend specific financial products (e.g. an investment fund or mortgage) to clients. By contrast, our financial coaches are often still working towards completing their financial adviser qualifications, but are not yet fully qualified. As a result, financial coaches are not authorised to give advice and are not allowed to recommend specific products.
As a Hatch client, your coach will be your main point of contact, help you plan your finances and work with you in non regulated areas of your finances. When you need regulated financial advice such as which mortgage to get, or which investment portfolio is suitable for you, your coach will either put you in touch with one of the fully qualified financial advisers we work with to provide that advice, or give you access to our automated investment advice service which will recommend a suitable investment portfolio for you.
Working this way allows us to keep the cost of Hatch affordable, while still ensuring that you get the best advice when you need it.
How We Provide Regulated Advice
Given the way we work, it’s important to be clear about which parts of the Hatch service involve regulated advice and which are not regulated. Here’s a summary of all the services offered through Hatch, and how we offer regulated advice when needed:
Building a financial plan and discussing the results is not, by itself, a regulated activity. Our powerful financial planning software ensures that your financial plan is accurate, and the financial coaches go through extensive training on how to build and present financial plans properly.
Once you’ve received your financial plan, if you go on to receive regulated advice, the regulated individual is responsible for ensuring that the customer was not improperly influenced to invest or purchase a particular financial product.
How Your Coach Can Help: Your financial coach can explain how investing works and the different ways you can invest. They can’t comment on whether a specific investment is suitable for you or not, and they won’t recommend any specific investment products.
How We Provide Regulated Advice: When you’re ready to invest, we’ll send you a link to our online investment service. You’ll be taken through a risk questionnaire to gauge your attitude to risk, and you’ll be asked about your current finances. Through this process you’ll receive regulated financial advice and the system will recommend a portfolio of investments that’s suitable for you.
How Your Coach Can Help: Your coach can explain how mortgages work, different types of mortgages you might want to consider, and show how your mortgage payments will impact your financial plan. They can’t tell you which mortgage is the best one for you, or recommend a specific mortgage.
How We Provide Regulated Advice: When you need advice on getting a mortgage, or remortgaging an existing property we will refer you to a regulated mortgage adviser (which may be a third party adviser we work with). They will search to find the best deal for you, and help you through the application process.
Insurance & Protection
How Your Coach Can Help: Your coach can explain the different types of insurance and protection that might be relevant for you, and use the financial planning software to estimate how much cover you might need.
How We Provide Regulated Advice: When you need advice on getting insurance & protection we will refer you to a fully qualified financial adviser (which may be a third party adviser we work with) who can help you identify the right types of insurance you need, find the best deal available and help you through the application process.
How Your Coach Can Help: Your coach will help you understand how pensions work and can use our financial planning software to show how much you might have in retirement. Similarly to investments, your coach cannot recommend a specific pension product, and won’t be able to discuss whether specific investments are suitable for you.
How We Provide Regulated Advice: If you need advice on your pensions such as whether to transfer an existing pension, or set up a new pension we’ll put you in touch with a regulated financial adviser, or otherwise direct you to a regulated pensions service as needed.
Help with budgeting is not a regulated area of your finances, and so here your coach can give you the full support you need to improve your day to day spending habits.
Your financial coach is able to discuss the pros and cons of different savings accounts and help you identify the best accounts for your needs.
Wills are not regulated by the FCA, but it is nevertheless essential to make sure your Will is properly written and legally binding so that it ensures your wishes are carried out after you die. We have partnered with Farewill, one of the UK’s largest online Will Writers to offer their service as part of the Hatch subscription. All of their Wills are reviewed by a legal expert before being completed.
If you have any questions about how Hatch provides financial advice, or anything else, please let us know! You can email us at firstname.lastname@example.org, or give us a call on 0203 111 0589.