Choosing a Financial Planner
A financial planner is a professional advisor who can help you set financial goals and who can write and implement an objective and comprehensive plan to manage all aspects of your financial picture, including investing, retirement planning, estate planning and protection planning.
A financial planner can give you information and advice on a wide range of other topics as well. These are too numerous to mention but include managing your cash, obtaining credit, buying a home and paying for a college education. If the planner doesn't have the specialized knowledge required to handle certain areas, such as tax planning or estate laws, he or she can coordinate a team of experts who can help you.
Although he or she can help you with a single issue, a financial planner, unlike other financial advisors, looks at your finances as an interrelated whole and helps you plan accordingly.
What credentials to look for
When choosing a financial planner, you should be aware that some financial professionals who use this title are not truly qualified to give comprehensive financial planning advice. They may be trained in only one area or they may be primarily salespeople who are marketing themselves as planners.
Although some states heavily regulate planners, others do not. Because anyone can call himself or herself a financial planner without being educated or licensed in the area, you should choose a financial planner carefully. Make sure you understand what services the planner will provide you and what his or her qualifications are.
In general, a financial planner will have one or more of the following credentials:
Certified Financial Planner (CFP). CFPs must have a college undergraduate degree, have three years of related experience, and have completed a course of study registered with and approved by the International Board of Standards and Practices of Certified Financial Planners. They must pass a two-day, 10-hour exam that covers all aspects of financial planning. In addition, they must adhere to a professional code of ethics and fulfill 30 hours of continuing education every two years. Many also belong to the Financial Planning Association, a professional organization. If a planner says that he or she is a CFP licensee, ask to see the planner's CFP board license or call (888) CFP-MARK to check.
Chartered Financial Consultant (ChFC) and Chartered Life Underwriter (CLU). Some financial planners are members of the Society of Financial Services Professionals (formerly known as the American Society of CLU & ChFC), a professional association for life insurance agents. To receive either designation, planners must have three years of experience, complete a course of study through the American College in Bryn Mawr, Pennsylvania, and pass 10 two-hour exams. Certification is rigorous and prestigious, and planners earning these designations must adhere to certain ethical standards.
Accredited Personal Financial Specialist (PFS). The PFS designation is granted to CPAs who are members of the American Institute of CPAs, and it requires a certain number of hours of experience annually for three years. In addition, candidates must pass a one-day exam and must complete continuing education requirements.
Registered Financial Planner (RFP). This designation is awarded by the International Association of Registered Financial Planners (IARFP) to planners who have a college degree related to financial services and four years of experience in the financial planning area. They must also have life and health insurance licenses and a securities license, and they must complete continuing education courses and adhere to a code of ethics.
Many financial planners are also specialists in certain fields or can refer you to the type of specialist you need. Although you may need the help of a specialist in their area of expertise, you should not rely on them to provide general financial planning advice unless they are also qualified financial planners.
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