A financial planner is a professional who compiles and analyzes personal financial data and prepares a a proposed program to meet the financial needs and objectives of his client. The purpose of this post is to provide the reader with a general description of the type of individuals that may provide financial planning and how they are compensated. This information is being provided for educational purposes only and is not designed to be complete in all material respects. Thus, it should not be relied upon as providing legal or investment advice. If you have any questions concerning this post, you should contacted a qualified professional.
Conceptually, a financial planner can be an accountant, banker, lawyer, insurance agent, real estate agent or securities broker. They should have knowledge and experience in various areas such as estate planning, retirement planning, taxes, insurance, family budgeting, debt management and investments. However, in evaluating the the background of the professional that you are considering, don’t lose site of your goal. Don’t seek or take advice from someone that is not qualified or experienced in the area that you are seeking advice. For example, what does a banker know about a will or trust? What does a lawyer know about investments?
Fee-only planners charge on the basis of service and time and have nothing to sell. Commission-only planners offer their services for free but sell commission producing products such as mutual funds, insurance products, limited partnerships, bonds or stocks. Fee plus commission planners charge an upfront fee for consultation and their written plan, then charge a commission on the financial products they sell.
It is not necessary to be licensed to provide “financial planning.” However the Certified Financial Planner Board of Standards, Inc., in Denver, Colorado, issues the Certified Financial Planner (CFP) license and the Financial Planning Association, also in Denver, maintains a referral list. For more information, please follow the highlighted links:
We strongly urge you to review the information contained on these sites for additional information that you may want to consider before making a final decision concerning retaining any financial planner.