Financial Planner or …?
When I started working with clients a little more than 25 years ago I was a Financial Planner(FP) working through IDS Financial Services, helping clients understand the steps they could take to accomplish their life goals. Naturally life goals require some amount of money and for most of us money is a scarce resource. The essence of Financial Planning is making wise use of your scarce resource to get the most out of your life.
Shortly after I started, it became popular to describe yourself as a financial planner regardless your role in financial services. That meant insurance agents, stock brokers, registered reps for broker dealers, and others became “FINANCIAL PLANNERS.” Clever marketing targeting a popular niche. Planning had become in vogue and businesses wanted to tap in to the current interest. Using the words financial planner sounded like you did so much more than just insurance agent, et.al.
But Who Actually Does What?
For many of us who are true FPs it was a source of great frustration that our title was being sullied by the likes of a stock broker who we knew rarely helped a client with anything besides investments. And for a good reason. Stock pickers often cared little and knew less about insurances, taxes, estate planning and retirement strategies. Their world was, and still is, “smile and dial,” talk to hundreds about their perfect (investment) product for you, even if they had never talked with you before.The domain of the comprehensive planner is of course all of the topics listed, not just investments.
Financial Planning is . . .
I hear what you say and I see what you do. If you say you are a Financial Planner (FP) here is what you must be able and willing to do:
- Define the client-planner relationship; agree what you will do and how you will be paid
- Gather client data and establish goals, including time frames and risk tolerance
- Analyze and evaluate to assess current status and required steps to achieve goals
- Present recommendations and alternatives for goal achievement
- Implement recommendations agreeing on client’s role and planner’s role
- Monitor the implementation and adjust as necessary
This list is according to the Financial Planning Standards Board. More information can be found at FPSB.org.
Does the list describe the process your stock broker uses? Or your insurance agent? Probably not, unless he happens to approach his clients’ needs holistically. Good for you if they do.
Building Financial Security
Security of any type comes from planning–analyzing, assessing and acting. Most importantly, security relies on vigilance. Frequent review of your situation with change as needed is crucial. The Planner who emphasizes monitoring and adjusting is truly the client’s best friend and most valuable professional.