Mitchell Freedman, CPA/PFS (CEO, MFAC Financial Advisors) gives expert video advice on: What types of financial planners are there and how can I choose? and more...
What is a "financial planner"?
A good financial planner, aside from being a counsellor, can be a coach; can be a individual who you can go to to ask questions, to help you develop goals, and to help to prepare a financial plan that will enable you to achieve those goals. It's very difficult for individuals to be able to stick to a plan, and the financial planner can be that coach to make sure that you're sticking to the plan. What we tell our clients is, "Don't make any major financial decisions without talking to us first." It's not because we don't trust our clients, it's just that we want them to have somebody else to just give them perhaps a different slant on what they're planning to do, so that they can make a wise decision.
Who needs a financial planner?
Almost anybody would be a candidate for a financial planner, whether they had great wealth or whether they had financial problems, because a good financial planner who could work with clients in holistic fashion can help people with problems get out from under those problems.
What types of financial planners are there and how can I choose?
People hear the term financial planner and are confused by it with good reason. An individual doesn't need a license to be a financial planner, all they need to do is hang out a shingle and say that they are a financial planner. And there's a tremendous amount of alphabet soup associated with financial planners. There are CFP's, and CHFC's and CPA's and PFS's and RIA's all kinds of initials and the consumer can have a difficult time trying to sift through to find out how to get a good competent ethical financial planner. I generally advise people to go to the American Institute of CPA's website and look for and individual who is a CPA and a PFS. First to be a PFS which stands for personal financial specialist you first have to be a CPA and go through the training and education and experience of a CPA before you could qualify to be a personal financial specialist. And the personal financial specialist credential is awarded by the AICPA to those who have passed comprehensive examinations, evidenced experience, have continuing education to make sure that their skills are up to date and honed and CPA's are licensed by the state that they practice in. There are also other sources one can go to there's an organization called the National Association of Personal Financial Advisors and to be a member of that organization you have to agree to be fee only. Meaning that your compensation as an advisor only comes from fees and not from commissions from products that you sell and they are also a good ethical group. The credential certified financial planner or CFP is a well known credential and I would recommend that if somebody is considering a CFP that they check them out to make sure that they don't have any complaints against them and that can be done by checking with the state that the individual is practicing in to see if there are any complaints.