How Can I Find A Qualified Financial Planner?

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As mentioned earlier, the birth of the financial planning industry started with salesmen of financial products including specific investments, life insurance, and annuities. Sales professionals performed some planning on behalf of their customers in order to determine their needs and select suitable products. This planning was usually performed at no additional cost because the sales professional hoped to receive payment for their efforts from the commissions on their products.

The significant reduction in corporate pensions in the late 1970s caused many people to begin taking more responsibility for their own financial future. As people became more proactive in investing, and as the Internet provided ready access to information and products, people started to seek objective financial planning advice that was independent of the sales process. Many became less comfortable taking advice from someone who was compensated by a commission for the sale of a product. They wanted professionals who could help them coordinate planning in all of the major financial areas of their lives.

In the 1970s a new designation was created called the CERTIFIED FINANCIAL PLANNER™, or CFP®. Today there are over 120,000 CFP®s worldwide. To become a CFP® an individual must have three years of financial planning experience and have passed a challenging 2½-day exam covering multiple planning topics. In addition, CFP®s agree to adhere to a Code of Ethics including the principles of client first, integrity, objectivity, fairness, professionalism, competence, confidentiality, and diligence. Continuing education is also required.

The majority of financial planners have not yet completed all the requirements for the CFP® designation, but many follow the same ethical principles and have strong experience and expertise in their discipline. Some just haven’t had time to pursue the rigorous training required for the designation. At any rate, the right financial planner for you is someone that demonstrates his or her expertise and professionalism, and is someone you trust and with whom you can relate. If you don’t have this type of relationship, your planner will be of little help to you.

Other educational designations in the financial planning field include the ChFC (Chartered Financial Consultant), and in the insurance industry, the CLU (Chartered Life Underwriter). In addition, there are numerous other designations. The key to understanding designations is to find out what an advisor must do to qualify. A designation based on education and experience, and requiring some sort of testing, is considered stronger than those granted for simply belonging to a professional association.

In the end, the best place to find a qualified financial planner is often by asking your other professional advisors: your attorney, CPA, insurance advisor, and others. Then interview the recommended professional thoroughly to find out:

• how they earn their compensation,
• how long they have been in business,
• what special focus or expertise they might have,
• the planning process that they employ for their clients,
• how they keep up with new developments in their field,
• their methods of communication, and
• anything else you deem important.
In the process of interviewing, you should be able to determine if this is a person with whom you are comfortable from a personality standpoint, and who seems trustworthy and competent. You can also determine if the planner’s processes and systems for working with clients meets your expectations.