What is a Financial Planner? All you need to know

What is a Financial Planner? All you need to know

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In this article, we will delve deep into how financial planners can help you work towards your financial goals, what they do, how to avail the services of one, and everything in between.

If you have a mind about your finances, then you might be thinking about how financial planners can help when it comes to achieving your goals.

What is a financial planner?

Quite simply, a financial planner is a professional who helps people manage their money.

A financial planner helps clients create a plan around their goals and objectives. When you set out to achieve something, it’s important that you know where you’re going and how far along the path.

For example, if you want to invest money or pay off debt, then a financial planner will be able to help you achieve your goals through the use of different tools and strategies.

They are also able to refer clients to other specialists in areas where they require expert advice. A good financial planner has the resources to connect you to tax experts, wealth managers, and retirement planners should you require them, and the best ones can even provide you those services themselves.

Financial planners will help clients set goals and objectives for themselves, including asking them questions pertinent to their goals such as:

  • How much money do I need?
  • How long does this goal take?
  • What resources do I need in order to accomplish this goal?
  • How much risk am I willing to take with my wealth?
  • What happens to my wealth when I die?

Using your answers to such questions, a financial planner can build a plan best suited to your goals and circumstances.

Personal financial planners then help you maintain to this plan by setting a budget, create a budgeting system around your expenses, track your discretionary spending and income, understand how to make smart decisions about investments, and manage taxes.

They can also help you manage your debt and pay off loans faster, or make plans to reduce the amount of interest you have to pay on them.

Financial planners are invaluable assets towards reaching your financial goals.
Financial planners are invaluable assets that help towards reaching your financial goals. | Photo: Pexels

Are financial planners the same as specialists?

Financial planners are not necessarily specialists themselves. They will help find specialists for specific needs such as setting up an individualized plan or teaching clients about investing strategies based on their risk tolerance levels or investment goals.

Similar to a doctor or a lawyer that is a general practitioner, a financial planner can refer you to specialists in other areas.

For example, if you want to learn about how to save for your children’s college education or your own retirement, then a financial planner can connect you with services available at the school of your choice or retirement options you might want and recommend the best course of action for your needs.

To demonstrate their expertise, some financial planners may obtain professional credentials like the Certified Financial Planner ® (CFP®) certification in the United States.

Certified Financial Planners have the standard of excellence in financial planning given by the Certified Financial Planner Board of Standards Inc.

CFP experts adhere to strict educational, training, and ethical standards, and are only awarded to individuals who successfully complete the CFP Board’s initial exams. These professionals are then required to continue ongoing annual education programs to sustain their skills and certification.

The CFP Board of Standards establishes and enforces the requirements for such certification to protect standards of competence and ethics for financial planners for the benefit of the general public.

The initial CFP certification consists of four components: education, exam, experience, and ethics. Up to 1,000 hours will be needed by a CFP applicant to finish the necessary courses and pass the test.

A bachelor’s degree and financial planning curriculum are the minimal requirements for becoming a Certified Financial Planner. The candidate must adhere to the Rules of Conduct, which place the interests of the clients first, and meet the Fitness Standards for Candidates and Registrants in order to pass the ethical component.

What about in the UK?

In the United Kingdom, there is the Chartered Financial Planner certification, awarded by the Chartered Insurance Institute (CII).

Holders of the Chartered Financial Planner designation, which is often regarded as the “gold standard” in the industry in the United Kingdom, are by definition among the most knowledgeable and experienced advisers in the field.

Individuals who want to become Chartered Financial Planners must prepare for and pass about 14 tests covering diverse financial services topics. In the Chartered Insurance Institute’s qualification program, each exam has a specific number of “credits.”

Credits may also be provided for completing tests offered by different awarding organisations that are comparable. Before applying for Chartered status, 290 credits must be completed, ensuring that anyone who achieves this milestone has several years of experience in the field.

Aside from passing exams, a CII chartered financial planner must also be a Personal Finance Society member, maintain ongoing education through a specified amount of Continuing Professional Development each year, and have a minimum of five years of relevant industry experience.

Because of the rigorous requirements, chartered financial planners have a public badge of commitment with the CII to deliver the highest standards of professionalism.

What does a financial planner do?

The CFB Board describes financial planning as a “collaborative process that helps maximize a client’s potential for meeting life goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances”.

In other words, financial planning is something you work together with a professional to increase your chances of achieving your personal financial goals. These professionals provide financial guidance that takes into account the most pertinent aspects of your financial and personal situation.

Based on their priorities and core beliefs, personal financial planners collaborate with people and families to help them make wise financial and investment decisions that will increase their chances of attaining important life goals.

Some financial planners concentrate on a specific area, such as retirement savings, while others adopt a holistic approach that considers the client’s overall well-being. The financial effects of family, work, education, and physical health may be covered as well.

They may offer guidance and support to clients on a wide range of matters, including retirement planning, investing for a home or business, paying for the education of children or other loved ones, and safeguarding family wealth so that it can be handed on to future generations.

Additionally, even corporations can use the assistance of financial planners to create and administer retirement plans and other employee financial welfare programs.

Any of these professionals, from a personal financial planner to a corporate one, is taught to lead clients toward wise financial decisions via a disciplined financial planning approach.

As such, financial planners are able to use their knowledge of personal finance, budgeting, taxes, financial products, investments, and investment markets as well as their ability to use robust analytical tools and data with the power to illustrate various outcomes to guide a client to their goals.

However, these are only recommendations. Financial planners often leave the actual decision-making to their clients. Their job only reaches as far as ensuring their clients are as educated as possible about their options and the various courses of action they can take towards their desired financial futures.

When you work with a financial planner, you should expect a structure of a long-term, ongoing relationship. The nature of the work requires sharing with them your personal status, needs, goals, and beliefs for them to not only respond to the current situation and make the necessary decisions right away, but also to foresee needs and conditions in the future.

Imagine personal financial planners to be like doctors for your finances. Financial planners are valuable because they monitor your financial circumstances to offer or provide you with full financial guidance, much like how doctors who know your medical history are able to treat you.

You should be aware of the services you require, the services the financial planner can provide, and any restrictions on the recommendations they can make before engaging one.

You should also be aware of the services you are purchasing, their associated costs, and the manner in which the planner is compensated.

How do financial planners charge you for their services?

Financial planners receive payment for their services in a variety of ways. Some charge a fixed fee or an hourly rate for the time it takes to develop a financial plan, but they don’t sell investment products.

Others receive payment in the form of commissions on the products they sell. Still others use a mix of fees and commissions.

Financial planning is a process that can take time. It’s not something you can do in just one meeting or over the phone. You need to have a financial planner who understands your unique needs, goals and situation.

This is why it’s important to find a financial planner who you trust and whose advice you can rely on.

While you can find independent financial planners, many also choose to collaborate with one another or work together in a team.

When you work with a financial planner organization, you may be assigned to a team of financial planning specialists, with specialized financial planners focusing on analysis and others on areas like customer communication.

In order to create comprehensive strategies to help the client maximize their potential for achieving their financial goals, financial planners may also work with allied professionals who are members of a client’s team outside of the organization, such as tax experts, lawyers, and risk management specialists.

You can find active financial planners that work for a wide range of companies, including accountancy firms, insurance companies, independent financial planning firms, and investment firms, in addition to financial services companies like banks and broker-dealers.

Despite the fact that these businesses differ in many ways, they all employ the financial planning process in their daily operations and commit to assisting clients in making wise financial decisions.

There's a difference between a financial planner and a financial advisor.
There’s a difference between a financial planner and a financial advisor. | Photo: Pexels

Financial planner vs financial advisor

Financial planning is a holistic, long-term endeavor. Meanwhile, a financial advisor is one that is suited to more specific, often short-term, concerns.

The broad definition of “financial advisor” includes a wide range of specialists, including stockbrokers, insurance brokers, money managers, estate planners, bankers, and more. Financial advisors with a focus on securities are called investment advisors.

A financial advisor is someone who provides advice to clients about their investments and other financial matters. The questions they usually deal with are along the lines of, “Is this fund or stock going to be profitable in this time period?” or “what do I need to do to diversify my portfolio?”

A financial advisor must offer direction and counsel. This is the difference between a financial advisor and an execution stockbroker, who merely executes deals on behalf of clients, or a tax accountant, who merely files tax returns without offering guidance on how to optimize tax benefits.

Additionally, a stockbroker or a life insurance agent, for example, may merely be a product salesperson in some situations when they pose as financial advisors.

Instead of serving the interests of a financial institution by maximizing the sales of particular products or profiting from commissions from sales, a good financial advisor should be a well-educated, credentialed, experienced financial expert who works on behalf of their clients.

The most typical scenario in which you can find a financial advisor is at a bank when you ask about their different products and accounts. Financial advisors do not need a comprehensive view of your finances to offer you financial guidance or investment recommendations.

Financial planners, meanwhile, take a macro view of your overall financial health and goals, to tailor their strategies and guidance around it. A financial advisor who takes this view into their strategy may be called a financial planner as well.

In short, a financial planner is an expert that specializes in helping you create and take a long-term financial strategy. A financial advisor is a broader term that can mean anything regarding financial guidance.

It should also be noted that financial advisors can be classified into two distinct categories: those who are bound to a fiduciary duty, and those who are bound to a reasonableness standard.

What is fiduciary duty?

Acting in a beneficiary’s best interest, the fiduciary financial advisor accepts legal liability for obligations of the care, loyalty, good faith, and confidentiality they offer for their clients. They must ensure that there are no conflicts of interest that could undermine such interests.

A fiduciary must hold their clients’ best interests above all else. They are bound to duties such as:

  • Duty of Care, or the obligation to arm oneself with as much knowledge as feasible in order to make wise decisions that safeguard a beneficiary’s interests. It entails carefully weighing all available options and making informed decisions after carefully going over the material at hand.
  • Duty of Loyalty, or putting the beneficiary’s needs first at all times and acting in their best interest. It also entails the fiduciary’s obligation to abstain from acting whenever there is a conflict of interest with the beneficiary’s welfare.
  • Duty of Good Faith, or the acting within the law to further the beneficiary’s interests The fiduciary should never behave in a way that is not compliant with the law or puts their clients at legal risk.
  • Duty of Confidentiality, or the preservation of the privacy of all beneficiary-related information. They must not misuse it in any way, whether it be said or written, for their own benefit.
  • Duty of Prudence, or the obligation of fiduciaries to act with the utmost care, prudence, and risk-awareness when handling matters and making decisions that affect beneficiaries’ interests.
  • Duty to Disclose, or the requirement that fiduciaries act in a completely honest and open manner, disclosing any material facts that may affect their capacity to perform their fiduciary obligations and/or the protection of a beneficiary’s interests.

What about the reasonableness standard?

Meanwhile, there are financial advisors who adhere to a reasonableness standard. This simply means that they are not bound to any fiduciary duties listed above, as long as they still offer their financial guidance to their clients in a reasonable manner.

This means that an investment manager at a bank acting as a financial advisor can still reasonably offer their company’s own products as financial recommendations as long as they are suited to what their clients want, even if they are not the best possible choice.

The fiduciary financial advisor is bound to actual laws that impose the greatest ethical standards, as opposed to their counterpart.

Financial advisors that are based on reasonableness can act out their services on the idea of “caveat emptor”, or letting their clients buy products at their own risk. These financial advisors are directed by self-governed norms of “suitability” and “reasonability” in suggesting an investment product or plan.

Fiduciary relationships are fundamentally based on the requirement that financial advisors act on behalf of clients in a manner consistent with how those clients would act for themselves if they possessed the necessary information and abilities.

Depending on where you live, those who hold titles of “financial planner” and “financial advisor” may be regulated by the government.

Before you enlist the help of either and entrust your financial information away, be sure to perform your due diligence regarding their credentials and if they have any certifications from regulatory bodies.

Such agencies include the CPF Board of Standards and the Securities and Exchange Commission in the United States, the CII in the United Kingdom, and the Australian Securities and Exchange Commission, among others.

Should you hire a financial planner?

The right financial planner can help you get the most out of the resources you have available. A good planner will help you manage your finances, achieve those goals and build a plan that works for both you and your family.

Financial planners can help you get your finances in order, which means that you won’t have to worry about the future. You may feel like this is something that only rich people do, but it’s actually not. There are many ways to access the financial planning help that you need and deserve without breaking the bank.

If you do not have the expertise to handle your finances, hiring a financial planner may be a smart option.

It can be time consuming and requires discipline to develop your own financial plan. You’ll need to track expenses, set goals and make changes when necessary.

In addition, you will need to educate yourself on various investments and different types of financial accounts, how the stock market works, what currency fluctuations can do to your wealth, and a lot more.

If this sounds like too much work for you, consider hiring a personal financial planner instead.

You should also remember that financial planners can help in ways that go way beyond managing investments. Financial planners can help you with many different aspects of your financial life. They can help you with:

Estate planning, which is the process of preparing for the future after you die by setting out how your assets will be distributed or managed.

Tax planning, which is how much tax you should pay based on your income and other factors (like where you live or what you do). If this isn’t done properly, it may cost you a massive fortune and legal headaches later on.

Retirement planning, which involves deciding whether or not to take Social Security benefits when retiring; what kind of retirement plan best suits one’s needs; whether or not employer-sponsored plans are right for one’s situation.

You might also want a financial planner if you find yourself in any major life event, or if you think about any of the following:

  • I want to make sure I’m on the proper path because I’m getting close to retirement.
  • I recently received a financial inheritance from my parents, and I’m looking for suggestions on where to put it.
  • We require assistance managing our finances as a pair because I just got married.
  • I need help getting my finances in order now that I’m a single person because I recently got divorced or lost a spouse.
  • My parents require assistance managing their entire money because they are getting older.
  • I recently had a child, and I want to ensure that they are taken care of.
  • I detest financial planning and investing, so I need professional assistance to prevent me from ruining my future.
  • I enjoy investing and financial planning, but I’d like a second view to see whether I could do it more effectively.

A financial planner can help you do all these things: save for the future, plan for retirement, create a budget, invest your money wisely, and so on. They also help to protect your assets by utilizing their full knowledge to reduce the taxes you have to pay for your wealth.

The people who can benefit the most from financial planners are those who want to take control of their finances and get the most out of their hard-earned money; people who want to retire comfortably, with enough cash flow to live on in retirement; or even anyone who wants to plan for the future—whether it’s a house, kids or both.

How do I find a good financial planner near me?

There are a few things you should look for when choosing a financial planner.

First, ask the planner if they’re registered as a fiduciary. If they say no, ask them how they deal with clients with your specific needs. Do they have vested interests in selling you particular products, or can they be trusted to give you good faith financial advice?

Second, find out if the person has experience working with clients like yourself. This can be done by asking for references.

If someone has been in business for more than three years but hasn’t seen one client at all yet—or hasn’t seen any clients with similar needs as yours—it may be worth considering another option.

And finally: make sure that you do your research about their credentials, where they have received training or if they have any certifications.

It can be hard to know when you are getting good advice, but there are some things that you should look for in a financial planner. Here are some questions to ask them:

  • What is your educational background and credentials?
  • How long have you been in the financial planning business?
  • What is your expertise?
  • Do you have experience working with clients with my specific circumstances?
  • What services do you offer and what is your fee structure?
  • How do you stay up to date on the latest trends in finance?
  • How often do you meet with clients?
  • How do you settle disputes with your clients?
  • Can you provide references?

It may be worth shopping around to find the right financial planner for you. Seek out local business and investor communities, find relevant government agencies that regulate financial services, or even go online to find reviews on particular financial planner organizations or services you are interested in.

The cost of hiring a financial planner depends on your situation and the level of service you receive. The more complicated the situation, the higher their fees will be.

For example, if you are planning on moving into retirement or have complex investments, it’s likely that they will charge more than those who do not need such services or don’t have as many assets under management.

If this is your first time seeking financial counsel or handling your finances, you may even consider robo-advisors, or digital platforms that offer automated, algorithm-driven financial planning and investment services with little to no human oversight.

What does a robo-advisor do?

A typical robo-advisor will conduct an online survey to inquire about your financial condition and future objectives. The data is then used to provide advice and carry out automatic investing on your behalf.

Easy account setup, thorough goal planning, account services, and portfolio management are all features of the robo-advisors, and you can also find that they provide reasonable prices, informational content, and additional security measures for your investing experience.

Robo-advisors provide you with alternatives to traditional advisors that are less expensive. Online platforms can do this and provide the same services for a lot less money by doing away with any human involvement.

Additionally, robo-advisors are simpler to use. As long as you have an internet connection, you can contact them whenever you want.

Consider seeking the help of a personal financial planner if you are serious about meeting your financial goals.
Consider seeking the help of a personal financial planner if you are serious about meeting your financial goals. | Photo: Pexels


When you feel you are more prepared to handle complex and long-term financial goals, however, a good financial planner can be worth their weight in gold.

Fundamentally, financial planning is about assisting individuals and families, particularly as they prepare for significant life events.

There exists a close communicative and collaborative relationship between a client and a financial planner whom the client has chosen and trusted with their most sensitive financial information, goals, and concerns.

A financial planner can help you save money, plan for retirement and make sure you’re on track with your long-term goals. They’ll also advise you on how best to manage your investments, including making sure they are matched with the right risk tolerance.

Good financial planners understand your personal and financial circumstances, and help you select achievable goals with the resources that you have. With the help of one, you can plan your financial trajectory, and where appropriate, consider alternative courses of action that can help you maximize the potential of your personal and financial circumstances.

Ultimately, the services of a financial planner can empower you in your financial life. They can help steer you towards any financial goal, assess your progress as time goes on, and constantly update you with relevant financial planning recommendations.

A financial planner cannot make your decisions for you unless you tell them to.

So, if you’re looking for someone to help you get your finances in order, there are a lot of options out there. You can go the DIY route and do it yourself, but if you don’t have the time or expertise, hiring a professional financial planner may be worth the investment.

Pained by financial indecision? Want to invest with Adam?

Adam is an internationally recognised author on financial matters, with over 669.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.

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