There is a very active discussion taking place on Linked In within one of the “financial life planning” groups regarding what we call ourselves. I can’t tell you how many people advise me to call myself something other than a financial planner (I.e. financial coach, financial guide). Why? Because there are those individuals that call themselves financial planners that don’t do a lot of financial planning.
Wait, what is financial planning?
Well, according to the Financial Planning Association, “Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Remember, financial planning is a process, not a product.”
This process can be applied to one area of your finances (such as retirement planning) or to a comprehensive analysis, and it includes 6 distinct steps:
1. establish the relationship & the scope of engagement/goals
2. gather data
3. analyze the data
4. create recommendations
5. implement the recommendations and
6. monitor the progress
Unfortunately, these steps may not be followed by all individuals in the financial services arena. Instead, some may jump to step 4 (create recommendations) long before they’ve really covered step 1 (establish the relationship).
There are a number of people in this industry that call themselves financial planners, financial advisors, investment advisors and the like, but our industry hasn’t done a very good job of defining what it is we financial planners do, what we do not do, and what makes us different from the next guy or gal. This makes it difficult for the consumer to know when they may need our help and which one of us to select.
I’m actually struggling with this issue now since starting my practice because, with my unique business model (purely financial planning), if I determine that a client may need an investment or insurance product, I must refer it out to another licensed professional. I know many financial professionals in my area and some around the country. The problem is, most of them say pretty much the same thing “We help people with their money.” We all do that. I need to know HOW you help people with their money. The individuals who have truly stood out among the crowd are those that define their specialty, their niche market, and their target client. They can differentiate themselves. That way, I know who to refer to them, when, and why.
To help you in your search for a qualified, experienced financial planner, I suggest first determining what it is you need help with (I.e. cash flow, debt reduction, retirement planning, insurance needs) and seek out those professionals that clearly list the services you need among their “services offered” section on their website and/or in their brochure. The Financial Planning association’s website (www.fpanet.org) also has many resources (articles, checklists, tips) and a search engine called “Planner Search”; a great tool to help you find someone who is right for you.
One of the responses in the discussion group resonated with me; when asked what I do I shall respond “I spend most of my time talking to people about what they want out of life, and then I use my financial expertise to help them make it happen.”