Frequently Asked Questions on Financial Planning and Financial Planners

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Are financial planners regulated? ^^^
There is no stand alone regulatory legislation for financial planners. However, even though federal and state governments do not regulate financial planners as a professional group, their activities are regulated in their various capacities. For example, as investment advisers, insurance agents, stock brokers, accountants, and attorneys, they would be regulated as a member of each of these groups.
Can a financial planner help me set up a personal and family budget? ^^^
This is one of their specialties. They will help you recognize how much you need to be saving, whether you are living within your income and what changes you need to consider.
Can I trust my financial planner to understand all of the issues concerning my financial plan? ^^^
A certified financial planner will have a broad background in all of the issues regarding your financial life. However, most companies have staff who specialize in certain areas such as tax regulation, estate law and stock or bond market analysis to whom the planner can refer complex issues and questions.
Do financial planners have to be licensed? ^^^
Except as required by the duties they are performing, such as accounting, selling stocks or life insurance, or giving legal advice, financial planners are not licensed per se. Many financial planners choose to be certified by a certifying organization to indicate to the public that they have the competency and ethical standards necessary for their duties.
Do financial planners work for a firm, or are they individuals? ^^^
They can be either. Companies such as insurance firms, investment companies, banks and accountant/CPA firms will offer these services to their clients. In addition, individuals, usually with a background in one of these fields may establish a financial planning practice. Because of the risks involved, however, most of these individuals choose to do business as a corporation or some other kind of limited liability entity.
Do I have to do what a financial planner tells me to do? ^^^
Some of the advice a planner gives may be a bitter pill to swallow, such as cutting back on expenses in order to save more, but the more you are able to follow the advice, the more readily you will achieve the goals set.
Do I have to invest or buy insurance only from the company that the financial planner works for? ^^^
A well qualified and ethical planner will not try to sell you products that are not appropriate for you, even if s/he would earn a higher commission on those products. If you feel you are being “railroaded” into certain investments, you should object, and even report this activity to the board that certified the planner.
Do I need a financial planner or can I do this myself? ^^^
There are personal finance software packages, magazines or self-help books that can help you do your own financial planning if you feel you are capable and are willing to spend the time and effort involved.
How are financial planners paid? ^^^
There are many payment schemes for financial planning services. Some charge either a fixed fee, some charge an hourly fee for the time it takes to develop a financial plan and meet with you, but don’t sell investment products; some are paid by commissions on the insurance or investment products they sell; and others use a combination of fees and commissions.
How do I get in contact with a financial planner? ^^^
If you are already working with an insurance agent, investment firm or have your taxes done by an accounting firm, they can probably refer you to a financial planner within their firm, or if they do not offer these services, refer you to another firm. Otherwise, you can contact an organization that certifies financial planners in your country and get a list of members.
How does a planner decide upon the best mix of investments for me? ^^^
The risks you are willing to take at this point in your life, the constraints you may have in terms of earnings and therefore investments, and the appropriate mix of insurance and investment vehicles are all taken into consideration in deciding your mix of investments or “portfolio”.
How much time can I expect to spend with a financial planner? ^^^
That will depend totally on how much you want the planner to be involved in the process, how big your portfolio is, and whether the planner is being paid separately or as part of managing your portfolio.
How much will the planner explain about my investments? ^^^
As much or as little as you want to know. Most people who have no financial training just want a general idea of how the investment is expected to perform. Others will want to understand yields, valuation methods, technical analyses, etc.
How will my current life be affected by a financial plan? ^^^
Depending on how closely you follow the planner’s advice, you may have to cut back on expenses and increase savings and insurance in order to achieve your goals.
Once a financial planner designs my plan, am I done? ^^^
Not usually. The wisest choice is to meet periodically with your planner to review your portfolio, any changes in your life or new goals that have arisen. Of course, this is your plan and your money, so even though it is not advised, you can stop working with a planner whenever you want.
What does a financial planner do? ^^^
Depending on where you are in your life, a financial planner will map out a strategy for your long term financial needs. S/he will help you fix a budget, understand your risk tolerance, save for a home and help determine how to finance it, plan for children’s educations, develop a savings and investment plan, advise on insurance needs, calculate retirement dates and projected retirement needs and income, advise on the use of credit, plan tax strategies and charitable gifts, plan your estate and work with legal advisors to draft your will.
What information will I have to have if I see a financial planner? ^^^
You will have to share all of your financial information, and the more the planner knows, the better s/he will be able to advise you. You should therefore bring tax returns, bank and investment statements, a list of current living expenses, copies of insurance policies (including health insurance), retirement plans, mortgage escrow statements, list of outstanding credit card balances, and a list of financial obligations you may have such as college tuition.
What is financial planning? ^^^
Financial planning is having a set plan to manage your finances, including budgeting, cash, savings and investments, tax planning, retirement planning, etc.
What issues should a financial planner consider as I get closer to retirement? ^^^
When you will start to receive your benefits and from what sources, if and how they will be taxed, whether or not you want to continue living in your home, long term care insurance, health insurance and life insurance and how you want your estate set up.
What issues should a financial planner consider while I am still far from retirement? ^^^
You and your planner should set retirement goals, determine how much you will need for retirement, and then design a plan that will assure that you will have sufficient funds for a comfortable retirement.
What kind of investments do financial planners invest a client’s funds in? ^^^
Most financial planners will recommend the more common, accepted types of investments. Commodities such as grains, gold and oils, derivatives such as financial or foreign exchange futures and investments in real estate or collectibles are for the pros and a planner will steer away from these highly risky investments. Usually, an individual or family portfolio will be comprised of cash or certificates of deposit, government and corporate bonds, stocks, and annuities.
What will affect my retirement plans? ^^^
Your current age, desired retirement age, contributions to retirement funds by both you and your employer, and future eligibility requirements.
Who are financial planners? ^^^
Individuals who specialize in managing an individual’s finances, including budgeting, cash, savings and investments, tax planning, retirement planning, etc.
Who sets goals in financial planning? ^^^
A good financial planner will delve deeply into your dreams and aspirations and help you recognize what you changes you can make to achieve them. Therefore, goals are set by both of you as the planner helps you to see what the most important things are for you: a child’s college education, a vacation home, a dream vacation, or caring for an elderly parent.
Will a financial planner help coordinate retirement benefits such as social security with my company’s retirement plan? ^^^
A planning firm will help you to project all of your retirement income and expenses and, depending on where on the road to retirement you are, will help form an investment program to build for the future, or map out a plan for drawing against your retirement funds to live on.
Will a financial planner help me with my will and estate? ^^^
Most financial planning firms offer full service estate planning to their clients. They either have lawyers and tax experts on staff, or work with others in these professions to deal with issues of estate planning.