Personal Finance Planner

Professional Planning

There is a limit to how much help one can get from personal finance websites. A personal finance planner is a professional whose job is to provide guidance to people who are dealing with financial issues.

The guidance ranges from casual advice to intense, detailed planning. Detailed planning encompasses spending and budgeting (or more fancily cash flow management), a child’s education expenses for high school or college, investing for retirement, income and capital gains taxes, and insurance. The personal finance planner tries to gain an understanding of his or her client in two ways: the financial state of the client, and the life goals of the client. Types include the fee only financial planner and the chartered financial planner.

Finance Is A Complex Topic That Could Use Some Help

Why do people look toward professionals for help with such personal issues? By personal it is meant that topics like income, taxes and investing are usually not topics of conversation. The fundamental reason is that each of these topics is highly complex on several levels even with personal finance training. On one level, people do not make long term rational decisions well because there is a lack of experience in confronting these topics. On another level, the laws governing investments and taxes is complicated, filling many books, and requiring deep knowledge of abstruse lawyerly language. Advisors will teach you how to manage personal finance.

Economic Downturns Force People To Reassess

Another reason, highlighted by the relevancy of events from 2007-2010, is that many people have been deeply troubled by severe losses of equity in either their home values or retirement accounts that were vested in the stock market. Compounded with a general sense of anxiety about high unemployment and fears of recession, these events have caused people to flock to personal finance planners in a quest for stability and reassurance that all will be well.

Looking For A Personal Finance Planner

People looking for a personal finance planner must be aware of a few caveats. The worst thing to do is to look up the yellow pages or in a directory and pick out a planner without due diligence. Although the professional title sounds genuine, the truth is that there is no governmental regulatory body that dictates the requirements for calling oneself a planner. This is in contrast to accountants who must endure one or two years of intense training in an accredited institution and pass a difficult CPA exam to become certified for the top jobs.

Conflicts Of Interest Between You And The Planner

One serious problem is the likelihood of a conflict of interest between what the finance planner wants and what his client wants. The client is looking for someone to look after his money and perhaps offer suggestions about how to invest savings. The personal finance planner might suggest investing in stocks, but in fact is looking to be compensated by a third party for a successful sale of shares in the fund. Essentially some of them are acting as commissioned salesmen for a brokerage who benefits from the client putting money into their firm. Using a fee only personal finance planner can help diminish such conflicts.

Chartered And Certified Planners Are A Sign Of Quality Control

To avoid engaging with an unscrupulous individual posing as a skilled professional, one should look for one of three kinds of professional designations. These are the CFP, or Certified Financial Planner, the ChFC, or Chartered Financial Planner, and the PFS, or Personal Financial Specialist. The latter two were devised by the insurance field, and the accounting field.