What to expect of a financial planner.
Imagine going to the doctor for headaches that have been increasing in pain and frequency for the past 2 years. What would you expect in terms of your treatment and how the doctor is paid?
PAYMENT – The first doctors were travelling medicine men who sold magical elixirs out of the back of a wagon. The first dentists were barbers. The first financial planners were life insurance agents and stock brokers. Like doctors, dentists and lawyers, we believe professional financial planners should be paid for their expertise and their services, not for the financial products they sell. They should be paid by so they are loyal to you, and not to the insurance or investment company by whom they are employed.
PROCESS – You would expect the doctor to ask questions and perhaps conduct tests to determine the cause of your headaches. After the diagnosis, you would expect a plan of treatment. You would expect the recommendations to depend on the diagnosis and range from stress management to chemotherapy. In the 21st century, you should expect the same kind of professional standards for treating your financial issues. The Certified Financial Planner® Board of Standards has defined a six-step process for giving financial and investment advice.
The 6-step process for creating your financial plan is similar to the process for creating a medical plan of treatment for your headache. Dispensing investment or financial advice without a process and plan is like writing a prescription without a diagnosis and plan of treatment.
Here is the Six Step Process as defined by the CFP® Board of Standards:
| 1) Establish and define the client-planner relationship |
| 2) Gather client data, including goals |
| 3) Analyze and evaluate financial status |
| 4) Develop and present financial planning recommendations and alternatives |
| 5) Implement the financial planning recommendations |
| 6) Monitor the financial planning recommendations |