Financial planner

From Bogleheads

A financial planner or personal financial planner is a practicing professional who prepares financial planning for people covering various aspects of personal finance which includes: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning (for business owners).[1]

The work engaged in by this professional is commonly known as personal financial planning. In carrying out the planning function, he is guided by the financial planning process to create a financial plan; a detailed strategy tailored to a client's specific situation, for meeting a client's specific goals. The key defining aspect of what the financial planner does is that he considers all questions, information and advice as it impacts and is impacted by the entire financial and life situation of the client.[2]

Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.[3]

When hiring a financial planner, you should know exactly what services you need, what services the planner can deliver, and any limitations on what he or she can recommend. In addition, you should understand what services you're paying for, how much those services cost, and how the planner gets paid. Financial planners charge for their services in different ways: some charge either a fixed fee or an hourly fee for the time it takes to develop a financial plan, but don’t sell investment products; some are paid by commissions on the products they sell; and others use a combination of fees and commissions.[2]

Financial planners who give investment advice to their clients must register with the SEC or the appropriate state securities regulator.

Financial planner credentials

Financial planners may come from many different educational and professional backgrounds. If you’re considering using a financial planner, be sure to ask about their background. If they have a credential, ask them what it means and what they had to do to earn it.[2]

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.[2]

For a detailed breakdown of this veritable alphabet soup of credentials, see Professional Designations. This website contains an extensive list of the many designations used by investment professionals.[4]

Do I need a financial planner?

Certainly, you may perform your own financial planning. However, they may be some situations which require professional assistance.[3]

  • You need expertise you don’t possess in certain areas of your finances. For example, adjusting your retirement plan due to changing family circumstances.
  • You want to get a professional opinion about the financial plan you developed for yourself.
  • You don’t have the spare time to do this yourself.
  • You have an immediate need or unexpected life event such as a birth, inheritance or major illness.
  • You feel that a professional adviser could help you improve on how you are currently managing your finances.
  • You know that you need to improve your current financial situation but don’t know where to start.

Certified Public Account (CPA)

A CPA, or Certified Public Accountant, is a trusted financial advisor who helps individuals, businesses, and other organizations plan and reach their financial goals.[5]

All CPAs are accountants, but not all accountants are Certified Public Accountants (CPAs). The principal differences between accountants and CPAs are education, experience, and opportunity.[5]

The Personal Financial Specialist (PFS) credential allows CPAs to demonstrate their knowledge and expertise in personal financial planning. CPA/PFS credential holders have a specific experience, education and examination requirement that sets them apart from other CPAs and financial planners.[6]

Background checks

Organizations which certify financial planners maintain a directory of their members. You can verify a financial planner's credentials as follows:

  • CFA charterholder: Member Directory Verify an individual’s status as a CFA charterholder and member of the CFA Institute. A member's professional conduct status can be obtained by following the link on the directory's page (here).
  • CFP® certification: CFP® certification and background The search results will identify individuals who currently hold CFP® certification as well as individuals who are not currently certified but who held CFP® certification at one time. Disciplinary actions or bankruptcy filings within the past 10 years will be indicated in the search results.

Credentials of a CPA / Personal Financial Specialist can be verified by the American Institute of CPAs' Credential Directory.[7]

See also


  1. Financial planner - Wikipedia, the free encyclopedia
  2. 2.0 2.1 2.2 2.3 Financial Planners, from the SEC.
  3. 3.0 3.1 Certified Financial Planner Board of Standards Inc. - Financial Planning Basics
  4. 4.0 4.1 FINRA - Investor Information - Understanding Professional Designations
  5. 5.0 5.1 "Frequently Asked Questions FAQs - Become a CPA". American Institute of CPAs. American Institute of CPAs. Retrieved December 5, 2018.
  6. "CPA/PFS Overview". American Institute of CPAs. American Institute of CPAs. Retrieved December 5, 2018.
  7. Bogleheads forum post: "Re: Larry Swedroe: Long/Short Portfolios & Taxes", Greenman72. Dec 05, 2018

External links

Financial advisor sources