Financial planner

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A financial planner or personal financial planner is a practicing professional who prepares financial plans 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).

The work engaged in by this professional is commonly known as personal financial planning. In carrying out the planning function, s/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.


People enlist the help of a financial planner because of the complexity of performing the following:

The best results of working with a comprehensive financial planner, from an individual client or family's perspective are:

Before working with a comprehensive financial planner, a client should establish that the planner is competent and worthy of trust, and will act in the client's interests rather than being primarily interested in selling the client financial products for his own benefit. As the relationship unfolds, an individual financial planning client's objective in working with a comprehensive financial planner is to clearly understand what needs to be done to implement the financial plan created for them. So, in many ways, a financial planner's step-by-step written implementation plan of action items, created after the plan is completed, has more value to many clients than the plan itself. The comprehensive written lifetime financial plan is a technical document utilized by the financial planner, the written implementation plan of action is just a few pages of action items required to implement the plan; a much more "usable" document to the client.


Personal financial planning is broadly defined as "a process of determining an individual's financial goals, purposes in life and life's priorities, and after considering his resources, risk profile and current lifestyle, to detail a balanced and realistic plan to meet those goals." The individual's goals are used as guideposts to map a course of action on 'what needs to be done' to reach those goals.

Alongside the data gathering exercise, the purpose of each goal is determined to ensure that the goal is meaningful in the context of the individual's situation. Through a process of careful analysis, these goals are subjected to a reality check by considering the individual's current and future resources available to achieve them. In the process, the constraints and obstacles to these goals are noted. The information will be used later to determine if there are sufficient resources available to get to these goals, and what other things need to be considered in the process. If the resources are insufficient or absent to meet any of the goals, the particular goal will be adjusted to a more realistic level or will be replaced with a new goal.

Planning often requires consideration of self-constraints in postponing some enjoyment today for the sake of the future. To be effective, the plan should consider the individual's current lifestyle so that the 'pain' in postponing current pleasures is bearable over the term of the plan. In times where current sacrifices are involved, the plan should help ensure that the pursuit of the goal will continue. A plan should consider the importance of each goal and should prioritize each goal. Many financial plans fail because these practical points were not sufficiently considered.


Financial planning should cover all areas of the client’s financial needs and should result in the achievement of each of the client's goals. The scope of planning would usually include the following:

Risk Management and Insurance Planning 
Managing cash flow risks through sound risk management and insurance techniques
Investment and Planning Issues 
Planning, creating and managing capital accumulation to generate future capital and cash flows for reinvestment and spending, including managing for risk-adjusted returns and to deal with inflation
Retirement Planning 
Planning to ensure financial independence at retirement including 401Ks, IRAs etc.
Tax Planning 
Planning for the reduction of tax liabilities and the freeing-up of cash flows for other purposes
Estate Planning 
Planning for the creation, accumulation, conservation and distribution of assets
Cash Flow and Liability Management 
Maintaining and enhancing personal cash flows through debt and lifestyle management
Relationship Management 
Moving beyond pure product selling to understand and service the core needs of the client
Education Planning for kids and the family members


The personal financial planning process is according to ISO 22222:2005 a six-step process as follows:

Step 1: Setting goals with the client This step (that is usually performed in conjunction with Step 2) is meant to identify where the client wants to go in terms of his finances and life.

Step 2: Gathering relevant information on the client This would include the qualitative and quantitative aspects of the client's financial and relevant non-financial situation.

Step 3: Analyzing the information The information gathered is analysed so that the client's situation is properly understood. This includes determining whether there are sufficient resources to reach the client's goals and what those resources are.

Step 4: Constructing a financial plan Based on the understanding of what the client wants in the future and his current financial status, a roadmap to the client goals is drawn to facilitate the achievements of those goals.

Step 5: Implementing the strategies in the plan Guided by the financial plan, the strategies outlined in the plan are implemented using the resources allocated for the purpose.

Step 6: Monitoring implementation and reviewing the plan The implementation process is closely monitored to ensure it stays in alignment to the client's goals. Periodic reviews are undertaken to check for misalignment and changes in the client's situation. If there is any significant change to the client's situation, the strategies and goals in the financial plan are revised accordingly.

Job function[edit]

A financial planner specializes in the planning aspects of finance, in particular personal finance, as contrasted with a stock broker who is generally concerned with the investments, or with a life insurance intermediary who advises on risk products.

Financial planning is usually a multi-step process, and involves considering the client's situation from all relevant angles to produce integrated solutions. The six-step financial planning process has been adopted by the International Organization for Standardization (ISO).[1] Financial planners are also known by the title financial adviser in some countries, although these two terms are technically not synonymous, and their roles have some functional differences.

Although there are many types of "financial planners," the term is used largely to describe those who consider the entire financial picture of a client and then provide a comprehensive solution. To differentiate from the other types of financial planners, some planners may be called "comprehensive" or "holistic" financial planners.

Other financial planners may specialize in one or more areas, such as insurance planning (risk management) or retirement planning.

Financial planning is a growing industry with projected faster than average job growth through 2014.[2]

Licensing, regulations and self-regulation[edit]

The title of 'financial planner' is largely an unregulated term in many countries. Lack of regulation has allowed financial services personnel in these countries to use the title indiscriminately. Often, financial products intermediaries, such as life insurance and unit trusts agents, use the title to project a professional image to clients even when they are not trained in the professional aspects of financial planning. This has sometimes led to abuse. Clients may be deceived to receive financial planning services that are unprofessional, from unethical providers.

To protect the industry, financial planning professionals and practitioners from across the globe (starting from the United States) have begun to form trade organizations to provide self-regulations and to maintain some orderliness in the industry. Some, such as The American College of Financial Services and the Financial Planning Association, FPA, have begun to organize high-level training programs and certify members who successfully completed these programs.

The title of 'financial planner' continues, however, to be used by individuals in the financial industry in most countries, as there are little or no legal barriers to prevent the use of the title. The governments in many countries where the financial planning profession is taking roots are beginning to play an increasingly active role in tasking themselves to ensure the market is orderly. More stringent laws and guidelines are being progressively introduced to keep the profession in check. Additional qualifications have also recently emerged that have extended on the financial planner series of designations, to include specialist skill sets like those in wealth management or private banking.


In Australia, the financial planning services are initially delineated by law by the granting of licence to deal in securities or advise on investments. Licences are issued under stringent criteria by the Australian Securities and Investments Commission (ASIC), which has evolved these regulations vigorously over the years.[3] Financial planning is now a highly regulated industry in Australia especially where financial advice to the public is involved. Practitioners who offer advice that could influence a client's decision to purchase a financial product must meet minimum training requirements and be licensed by the ASIC. The meaning of 'licenced' refers to Australian Financial Services Licence (AFSL) holders and representatives or authorised representatives of licence holders. Broadly, most people embarking in financial planning will start as an authorised representative of a licence holder.

Becoming a financial planner in Australia involves two main steps:

  1. Meet the training requirements of Regulation Guideline 146;
  2. Select a licence holder with whom to be affiliated.

The license holder is the authorized representative, and will be ultimately responsible for the advice given by the planner. The license holder therefore must make sure the representatives meet all compliance and training prerequisites. In November 2005, there were approximately 4,300 license holders registered with ASIC and over 42,500 authorized representatives in Australia.


The first country to introduce legislation that requires a person to be licensed before he can hold himself out to be a 'financial planner' is Malaysia.[citation needed] Financial planning is considered a newer profession in the Asian region as compared to those in the west, such as the United States and Australia where the profession is more established. The Securities Commission Malaysia introduced legislation through amendments made to the Securities Industry Act in 2003 to regulate financial planning and the use of the title or related-title of 'financial planner' or to conduct activities related to financial planning.[4]

In 2005, amendments to the Malaysian Insurance Act require those who carry out financial advisory business (including financial planning activities related to insurance) and/or use the title of financial adviser under their firm (which, like in Singapore, must be a corporate structure) to obtain a license from Bank Negara Malaysia (BNM).[5] Some persons who offer financial advisory services, e.g. licenced life insurance agents, are exempted from licensing as a practising requirement.

Again, in 2007, the Capital Market Services Act (CMSA) comes into force as another of the consolidation exercises of the government to move the industry towards a one regime regulatory environment.

As it currently stands, one of the basic requirements to apply for a financial planner or financial adviser licence in Malaysia is that the key company officers, e.g. directors, must be an RFP designee (most if not all Malaysian FChFP designees also carry the RFP designation). Subsequently, in September 2006, the CFP qualification is included as one of the alternatives that can be used by the financial adviser licence applicant. With this development, the demand for financial planning courses has begun to take root in more concrete forms in Malaysia. The licence applicant must also be a member of a self-regulatory organisation (SRO) in financial planning recognised by the authorities. For this purpose, the two SROs currently recognised by both the Security Commission and Bank Negara are the Malaysia Financial Planning Council (MFPC) and the Financial Planning Association of Malaysia (FPAM). The purpose of this requirement is to ensure some form of self-supervision for persons practicing financial planning.

In Malaysia there is a financial planning software developed by Malaysia First Financial Planning Portal - AtOneGoFinancial that is available to be use either by Financial Planners or individuals. The software encompasses all the process and steps neceesary to develop a holistic financial plan.

Other countries[edit]

In Canada, except for Quebec, financial planners are under no legal requirement to have obtained a designation to be called a financial planner although it is common for many to hold a voluntary designation obtained from a credible financial body, such as FPSC or CSI. In the United States, financial planners must be registered as an investment adviser first. This requires an employee within a firm to pass the series 65 or 66 Registered Investment Adviser Exam. A private adviser or company can apply to the state and SEC for an RIA Registered Investment Adviser License or Status.

Being 'licensed' to practice financial planning is not the same as merely having a professional 'qualification' in financial planning. A person may be professionally qualified in financial planning, but without a licence required by the law, they cannot practise the trade in that country or call themselves a financial planner there. There are many qualifications related to financial planning that can be found in the world. The most prestigious financial planning designations are not just of advanced standing and well-known, but are also recognized by relevant licensing authorities. Examples of these include the CFP in the United States and Canada, PFP in Canada, and JAFP in Japan.

In some places, individual employees within a licensed & registered Investment Advisor firm such as a: brokerage, bank or insurance company may be exempt if providing complementary financial planning services in relation to their existing products and services. Moreover, financial planners should be extremely careful in providing estate planning or taxation advice for a fee, as these fields are highly regulated by government agencies that control the practice of lawyers and Certified Public Accountants (CPAs). The term "Investment Advisor" includes any person who uses the title "financial planner" and who, for compensation, engages in the business, whether principally or as part of another business, of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as part of a regular business, publishes analyses or reports concerning securities.

History of certifications in financial planning across the globe[edit]

The lack of regulation of financial planning has prompted numerous independent organizations to create certification programs for professionals in the field, often in connection with a registered trademark. The programs can include education and work experience/apprenticeship requirements, ethical standards, competency testing, disciplinary/complaint processes and continuing education. Those who meet the requirements of the certification process, and who pay membership and/or licensing fees associated with use of the certification mark, are able to use the organization's designation when marketing their services.

One of the oldest financial planning certification programs is that associated with the CFP trademark, which has been in use since 1970 and was registered as a trademark in the US in 2002.[6] The Certified Financial Planning Board of Standards, Inc., based in Washington, D.C. owns the CFP marks within the United States. The CFP marks are owned outside of the United States by Financial Planning Standards Board (FPSB), a non-profit standards-setting body based in Denver, Colorado. CFP is an acronym for "Certified Financial Planner," a phrase whose attempted registration as a certification mark was denied by the US Patent and Trademark Office on the grounds that it the phrase is a merely descriptive mark.[7]

CFP Board was founded in July 1985 as the International Board of Standards and Practices for Certified Financial Planners, Inc., (IBCFP) by the College for Financial Planning (College) and the Institute of Certified Financial Planners (ICFP). The IBCFP became Certified Financial Planner Board of Standards Inc. (CFP Board) on February 1, 1994. As a professional regulatory organization acting in the public interest by fostering professional standards in personal financial planning, the CFP Board establishes and enforces education, examination, experience and ethics requirements for CFP certificants. The CFP mark is promoted worldwide through member associations such as the Financial Planning Associations.

The Chartered Financial Consultant (ChFC) is the "Advanced Financial Planning" designation conferred by The American College. The ChFC professional is qualified to assist individuals, professionals, and small-business owners with comprehensive financial planning, including insurance, income taxation, retirement planning, investments, and estate planning. The ChFC curriculum provides the most extensive education of the widely recognized financial planning designations, requiring nine courses, each of which is followed by an exam. Six of the nine courses are the same courses required for a CFP candidate; therefore, one who passes their CFP certification exam can, in many cases, go on to earn their ChFC by successfully completing the three additional courses and exams. To date, more than 41,000 individuals have attained this distinction. This designation has also spread to Asia, where designees are found in countries like Singapore, Malaysia, Indonesia, China and Hong Kong.[citation needed]

The Fellow Chartered Financial Practitioner (FChFP) designation was developed by the National Association of Malaysian Life Insurance and Financial Advisors (NAMLIFA) in 1996. The designation was adopted by the Asia Pacific Financial Services Association (APFinSA) in 2001 as the unified designation for its member associations in 11 countries.

The Registered Financial Planners Institute (RFPI) formed in 1983 in the United States to promote professionalism among those who are or will be active in the field of financial planning for individuals and businesses. The RFPI is an international organization with chapters and members throughout the world. The RFPI offers study programs both in classroom conducted seminars and correspondence courses. RFPI is a collective membership of financial planners and is designed to serve the interest of both its members and the general public in matters relating to financial planning. RFPI recognizes qualified individuals by designation of RFP or SRFP who are in the financial planning field. This includes insurance, attorneys, real estate, bankers, CPAs, stock brokers, securities, or other professionals licensed in similar fields that can properly financial plan individuals or businesses in their related fields. In a separate development, the Malaysian Financial Planning Council, incidentally also introduced a professional designation for financial planners called Registered Financial Planner (RFP) in 2004, which was recognised by the regulatory bodies, Bank Negara and Securities Commission in the country for the purpose of licensing financial planner.

The Personal Financial Specialist (PFS) credential was established for CPAs in the United States who specialize in personal financial planning. The credential is awarded exclusively to members of the American Institute of Certified Public Accountants (AICPA) who have demonstrated considerable experience and expertise in that area. The AICPA has granted approximately 5,000 CPA/PFS credentials.

In Australia, the financial planning specialisation, CPA (FPS), is available to those members of CPA Australia who can demonstrate their eligibility through experience and education within the financial services industry.

The objectives of the FPS designation are to:

The FPS designation is available to CPAs, and is based on a points system, where a minimum of 100 points must be accrued. Although all CPA Australia members who provide financial product advice must be licensed by ASIC, a member need not be licensed to first obtain the CPA (FPS) designation.

In Europe, the €uropean Financial Planner (€FP) designation conferred by the €uropean Financial Planning Association (€FPA) is gaining ground as a financial planning certification mark. The €FPA is the largest professional and educational organisation for financial planners and financial advisors in Europe and is the only Financial Planning Association created solely in the interest of European financial planning consumers and practitioners.

Globally, the Chartered Wealth Manager (CWM) is one of the fastest growing financial planner specializations focused on developing critical relationship management skills for financial planners and advisors. The designation is conferred by the Board of Standards of the American Academy of Financial Management in 145 countries.

The rest of the certification qualifications related to financial planning include: Fellow, Financial Services Institute (conferred by LOMA, USA); the Certified Private Banker designation (conferred by the American Academy of Financial Management); the Certified Financial Marketing Consultant (CFMC) conferred by the Institute of Marketing Malaysia.

Accredited business school, training centers and other providers[edit]

Globally, cross-recognition agreements are being developed to facilitate the learning of financial planning. The 2 major accrediting agencies, the Association to Advance Collegiate Schools of Business (AACSB) and the Association of Collegiate Business Schools and Programs (ACBSP) accredit the best business school programs.

See also[edit]


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