What is the most important thing a financial planner can do for you? I would submit that it would be to relieve a person or family of the burden of managing and planning for their financial well-being on a month-to-month or year-to-year basis. That might involve taking care of a portfolio of investments, analyzing a business or personal financial decision such as a sale or other transfer of business or other valuable asset or offering alternatives to saving income, gift, or estate taxes.
I don't know the statistics but having read several threads regarding posts asking financial questions on Facebook or LinkedIn, it appears that do-it-yourself or impersonal (firm to client vs. planner to client) planning, tax and investment advice is still the predominant method being utilized in family financial planning. It is ironic that mega financial firms such as Fidelity or Schwab call their impersonal financial planning employees “Personal Wealth Advisors”. There is nothing personal about them. They are like a doc-in-the-box medical clinic. You don’t know who you are going to see the next time you walk in.
I understand how transparent (exposed) people must feel to reveal their most personal financial details to an advisor but I would also propose that next to your individual medical health and spiritual health, your financial health is the most important area to get right. Unfortunately, the financial profession is not as standardized as the medical profession. In fact, one doesn’t even need to have a college education to call themselves a “financial planner” or “wealth advisor”. Unlike the medical profession where “MD” means “MD”, the financial advice profession has no single designation to impart competence or certifying that the rigorous 5, 10 , 20 or more year training required has been completed to obtain the title.
The term financial planner is often used with only a bare minimum of passing certain very easy (in some cases none) one-hour exams. Some people do not even bother to do that before adopting the title. One “title” I learned of this week has no exam. The Registered Financial Consultant (RFC) designation sounds official but has no pre-qualification test. It does require an undergraduate college degree but that can be in Art History or other non-financial area. There are other “designations” too, which “financial advisors” can purchase that have been created just to give the appearance of credibility and intended to imply expertise.
Since this is such an important role, the role of financial coach or quarterback, what does a person look for to insure (or filter) that their search yields a competent financial planner or investment advisor? My basic recommendations are as follows:
The financial advisor should have 25 plus years of experience in the specialty (or specialties) with which you need help. This means that they have experienced some extreme highs and lows in the market cycles.
For general financial planning they should have the CFP designation. This is a fairly rigorous study program and competency test covering dozens of tax, investment, insurance and business planning situations.
For income, estate and gift tax planning or business planning, the CPA designation implies a thorough knowledge of accounting, tax. investments, financial instruments, and retirement areas.
Get to know the advisor personally. Do you have similar values? Do they communicate well with you? Do they ask the right questions? Do you feel like they understand your goals and expectations?
To summarize, the world of finance is ever-changing. Most people do not have the time or desire to study the vast array of financial disciplines and tools with which to pursue positive financial outcomes. Visit with a qualified financial planner, financial or investment advisor whenever you think you might need guidance with any financial situation you are concerned about. They can help guide you as you navigate the opportunities you will encounter along your financial journey.