You call that a “Financial Plan”?

Most news related to financial planning for the last few years has been exclusively focused on the Department of Labor’s push to force the fiduciary standard upon the industry. For now, this push has been stymied. Though the proposed regulations were far from perfect the DOL did have its heart in the right place. I’m of the belief that clients are best served in working with a fiduciary, someone legally required to advance their clients’ interests ahead of their own.

Even if the fiduciary standard finds its footing in the mainstream, it probably doesn’t go far enough. The financial planning industry will still be entangled amidst an identity crisis. That’s because the SEC, our Federal regulatory body, has never made clear the definition of a financial plan. From the SEC website:

“A financial planner typically prepares financial plans for his or her clients. The kinds of services financial planners offer can vary widely. Some financial planners assess every aspect of your financial life—including saving, investments, insurance, taxes, retirement, and estate planning—and help you develop a detailed strategy or financial plan for meeting all your financial goals. Other professionals call themselves financial planners, but they may only be able to recommend that you invest in a narrow range of products and sometimes products that aren’t securities.” (emphasis mine)

This admission that some professionals can run around calling themselves financial planners when they don’t help people create or implement financial plans is baffling. It causes enormous misconceptions amongst consumers. People often tell me they have a financial planner, when really they’re working with just an investment broker or insurance solicitor.

There’s nothing wrong with a solid investment or insurance portfolio but let’s please not confuse those items with a financial plan. A good financial plan certainly pays mind to those items, but also addresses other ancillary items that equally affect your financial future: tax, healthcare, legal protections, etc.

I’ve got nothing against professionals who choose to focus exclusively on just one element of your financial picture. Sometimes that solitary focus is all you need. But I have a major problem with them abusing the spirit of the financial planner title.  The SEC might be comfortable leaving it ambiguous, but clients would be best served if the title were reserved exclusively for professionals who offer holistic services and deliver documented plans concerning investment allocation, tax reduction and insurance/legal protections.

In the absence of paying mind to these items, you may be missing opportunity to further enhance or protect your financial future. Why stop halfway? Get yourself a proper financial plan!

Questions to ask:

If you’re working with a financial planner, where’s the plan?

Are you working with a fiduciary?

Are they practicing as a Certified Financial Planner™?


Leave a Comment

Ready to Take The Next Step?

For more information about any of the products and services listed here, schedule a meeting today or register to attend a seminar.

Or give us a call at 603.681.9190