Consumer FAQs

  • Set realistic financial and personal goals
  • Assess your current financial health by examining your assets, liabilities, income, insurance, taxes, investments and estate plan
  • Develop a realistic, comprehensive plan to meet your financial goals by addressing financial weaknesses and building on financial strengths
  • Put your plan into action and monitor its progress
  • Stay on track to meet changing goals…changing personal circumstances…changing stages of your life…changing products, markets and tax laws

How do you know if you could benefit from the services of a qualified financial planner? You may not have the expertise, the time, or the desire to actively plan and manage certain financial aspects of your life. You may want help getting started. YOU may benefit from an objective, third-party perspective on what are often emotional, difficult decisions. And in today’s hectic world, it can be beneficial just to have a financial expert looking over your shoulder to double-check your planning efforts and make sure you stay focused and follow through with your financial plans.

Often a specific event or need will trigger the desire for professional financial planning guidance. Events that might prompt you to seek the services of a planner might include:

  • Saving enough for retirement, or rolling over a pension or IRA
  • Handling the inheritance of a large sum of money or other unexpected financial windfall
  • Preparing for a marriage or divorce
  • Planning for the birth or adoption of a child
  • Facing a financial crisis such as a serious illness, layoff, or natural disaster
  • Caring for aging parents or a disabled child
  • Coping financially with the death of a spouse or close family member
  • Funding education
  • Buying, selling, or passing on a family business

No! Be wary of people who call themselves financial planners but who appear more interested in pushing specific financial products at the expense of your real needs and goals. A genuine financial planner can help you address a variety of financial needs, not just investments, just insurance, or just taxes. Moreover, not every financial planner is a Certified Financial Planner™ professional. CFP® professionals have an ethical obligation to act in your interest.

No! People who call themselves financial planners are not currently regulated as financial planners by either state or federal government. Many financial planners are regulated by states through subsets of financial planning, such as insurance and taxes, but not for their overall financial planning activities.

The Securities and Exchange Commission (SEC) and most states have requirements for people who give investment advice, which would include many financial planners. The FPA encourages you to ask whether the planner you are considering is a registered investment adviser or an agent of a company that is registered.

CFP® practitioners are licensed and regulated by the Certified Financial Planner™ Board of Standards, Inc. (CFP® Board). By virtue of their CFP® license, granted by the CFP® Board, CFP® professionals are held accountable to the CFP® Board’s code of ethics for their financial planning activities.

Most CFP® professionals are dedicated to using the financial planning process to serve the financial needs of individuals, families and businesses. Most CFP® professionals have earned a four-year college degree in finance related areas, and have completed a course of study in financial planning approved by the CFP® Board.

To earn the prestigious CFP® designation and remain licensed as a CFP® professional, individuals must meet four main requirements

Examination — They must successfully complete the CFP® Board’s comprehensive certification examination, which tests the individual’s knowledge on various key aspects of financial planning.

Experience — They must acquire three to five years’ financial planning-related experience before receiving the right to use the CFP® marks.

Ethics — They must voluntarily ascribe to the CFP® Board’s code of ethics and additional requirements as mandated. CFP® licensees who violate the code can be disciplined, including the permanent loss of the right to use the CFP® marks.

Education — They must complete 30 hours of continuing education every two years to stay current in financial planning knowledge, including ethics.

Compliance with these four all-important areas assures you that an individual who holds the CFP® license is well prepared and qualified to give you sound, professional advice.

As a result of its established recognition and credibility as a symbol of educational competence and continued commitment to financial planning excellence, FPA recommends the use of a Certified Financial Planner™ licensee for your financial planning needs. There are also other credible designations such as the Chartered Financial Consultant (ChFC) and the Personal Financial Specialist (PFS) which have their roots in financial disciplines such as insurance and accounting.

Ask for names from friends or business associates who may have used a financial planner. Attorneys, accountants, insurance agents, bankers, and other financial specialists also can be good sources because planners often work with them to carry out a client’s plan.

The FPA of San Diego provides a list of CFP® professionals in the San Diego area. You can go to www.fpanet.org or you can request planner information by calling our toll-free hotline at 800-282-PLAN (7526).

Check with the SEC, appropriate state agencies, your local Better Business Bureau, and the CFP® Board at 888-CFP-MARK (237-6275) to determine if complaints have been filed against the planner you are considering.

Choosing a financial planner is as important as choosing a doctor or lawyer. Working with a financial planner is a very personal relationship. In addition to competency, a financial planner should have integrity, trust, and a commitment to ethical behavior and high professional standards. You want a planner who will put your needs and interests first.

Also, many planners specialize in working with certain types of clients, such as small business owners, executives or retirees. Many have minimum income and asset requirements. Some specialize in certain areas of planning such as retirement, divorce or asset management. This is why we recommend that you interview at least three planners in person to find the right one to serve your needs.

At the heart of any working relationship with a financial planner is trust. Trust is built on two factors: the planner acting in your best interests and full disclosure of the planner’s background, business practices and other issues.

Full disclosure means the planner is forthright in providing answers about the planner’s work experience, compensation, methods of planning and so on. For example, what business relationships does the planner have? These might be relationships with companies whose products the planner sells, or referral fees the planner earns by referring you to certain professionals.

The financial planner also should disclose any disciplinary actions that may have been taken against the planner by various government regulatory agencies and professional associations. The CFP® Board (888-CFP-MARK) can confirm whether disciplinary action has been taken against a particular CFP® licensee.

If you do not receive full disclosure from a financial planner, that is a sign you should take your financial planning needs elsewhere.

First, request a written disclosure document from the planner. This will either be what’s called a Form ADV or an equivalent brochure. This should answer many of your questions. You may then want to follow up with a personal interview, which many planners will do for free.

Some of the basic information you want to gather:

  • What financial planning and other financial designations the planner holds
  • Educational background and work experience
  • Licenses to sell certain financial products, such as life insurance or securities
  • Services the planner provides
  • The planner’s basic approach to financial planning
  • Areas of specialization
  • Types of clients the planner serves, and any minimum net worth or income requirements
  • Professional affiliations, including membership in the Financial Planning Association
  • How the planner prepares a plan
  • How the planner might address your particular needs
  • Whether the planner or others will implement recommendations from the plan
  • Business relationships the planner has that might present a conflict of interest
  • How the planner is paid for services, and the typical charges

A face-to-face interview also should give you a personal sense about the planner. Does the person seem forthright in their answers? Do you have a sense of trust and rapport? Is the person focused on your needs, not selling products?

Financial planners can be paid in a variety of ways for their work, which are listed below. Some are paid by more than one method.

The FPA has no formal position on the merits of any form of compensation. Instead, it is our belief that the planner’s competence and ethical standards should be the primary consideration in your selection process. However, before entering into a relationship with a planner, you should have a clear understanding of how he or she will be compensated. A particular compensation arrangement may best suit your needs.

There are several commonly accepted methods:

Fee-only: The planner is compensated entirely from fees for purposes of consultation, plan development, or investment management. These fees may be charged on an hourly or project basis depending on your needs, or on a percentage of assets under management.

Commission-only: There is no charge for the planner’s advice or preparation of a financial plan. Compensation is received solely from the sale of financial products you agree to purchase in order to implement financial planning recommendations.

Combination Fee/Commission: A fee is charged for consultation, advice and financial plan preparation on an hourly, project or percentage basis. In addition, the planner may receive commissions from the sale of recommended products used to implement your plan.

Fee-offset: Commissions from the sale of financial products are offset against fees charged for the planning process.

Salary: Some planners work on a salary and bonus basis for financial services firms.

In all of the above categories of compensation, you should request information on any real or potential conflicts of interest. In addition to commissions received from any financial product sales, you should ask whether there are outside incentives or bonuses to be gained by the planner for certain recommendations.

To find a CFP® professional in your area, go to PlannerSearch, the National FPA’s online consumer assistance service. Go towww.fpanet.org or call our toll-free hotline at 800-282-PLAN (7526).

The Financial Planning Association (FPA) is the membership organization for the financial planning community. Its members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. FPA believes that everyone needs objective advice to make informed financial decisions and that when seeking the advice of a financial planner, the planner should be a Certified Financial Planner™ licensee.

To locate a Certified Financial Planner™ professional in your area, CLICK HERE or call 800-282-PLAN (7526).