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FREE SAMPLE: ASK AN EXPERT

 

FAQ: Financial Planning                (reproduced from the FPSC web site with permission)

 

What is financial planning?

 

Financial planning is the process of meeting your life goals through the proper management of your finances.

 

With every one of the countless steps that make up a life, there are choices. Choices that often lead to new goals. Buying a home, saving for a child's education or planning for retirement, are all good examples.

 

The step-by-step Financial Planning Process helps you to reach your goals by gaining perspective on where you are now and defining where you may want or need to be in the future. It provides direction and meaning to all your financial decisions, defining each in context with the other, how they are all part of a whole. In this way, financial planning should help you adapt more easily to life changes and keep you on track.

 

Once the process is understood, it is a simple matter to see how just about anyone can benefit from some level of financial planning.

 

How do I know if I need the advice of a professional financial planner?

 

When in doubt about your finances, it is a good idea to get professional advice.

 

Financial matters can seem, and often are, complicated. If you are in doubt as to your ability to make the most of what you have, or will have for the future, it may be time to consult a professional. Risk evaluation, retirement plan maximization, financial emergencies, estate planning, inheritance: these are a few of the many areas in which a professional financial planner could be beneficial, and at times, crucial to your long-term well being. Even if you haven't any doubts about your financial planning expertise, you may simply feel that you don't have the time to devote to looking after your financial matters.

 

There are many reasons to consult a professional, all of them valid. When it comes to your financial affairs, it's usually worthwhile to take the view: when in doubt, ask an expert.

 

How is a financial planner different from other financial advisors?

 

Financial planners are individuals who know how to use the financial planning process, the big-picture approach, to help you figure out how to meet your life goals.

 

They examine and explore all your needs and can help you with budgeting and saving; and tax, investment, insurance, retirement and estate planning. While they may work with you on a single financial issue, it is always within the context of your overall situation.

 

This big-picture approach to your financial goals sets planners apart from all other financial advisors, who may have been trained only to focus on one particular area of your financial life.

 

See Mistakes & Misconceptions to ensure you don't have some of the more common misconceptions about financial planning.

 

Can Financial Planners sell me a financial product, like life insurance or mutual funds, and do they offer other related services?

 

Services offered by financial planners vary. Their approach and the types of services they offer should be discussed at the beginning of the engagement. (See Ten Questions to Ask Your Planner).

 

Most financial planners are licensed by provincial authorities to sell one or many types of financial products and, depending on their credentials and the organization for which they work, they may offer advice on a range of topics. Others may provide financial planning advice only or specialize in offering advice in specific areas such as estate planning or taxation. Those who offer investment advice must be registered with provincial regulatory authorities and may have other designations (see Acronyms and Designations) that denote specialized areas of expertise.

 

How are financial planners paid?

 

Planners can be paid in many different ways including commissions on the sale of products, salary, fee-for-service or hourly rates, flat rates for specific services or be paid a fee based on a percentage of assets or income. How you pay for the services of your planner should be discussed at the outset. It may be that your planner will offer you a choice of how he or she might be compensated depending on the services you want. However, it is very important that the planner disclose in writing how he or she will be paid for the services provided.

 

How much do financial planners charge?

 

The amount you pay the planner will depend on your particular needs and the planner's experience and specialized expertise. The planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs would include the planner's hourly rates or flat fees or the percentage he or she would receive as commission on products you may purchase as part of the financial planning recommendations.

 

How do I know if my financial planner is qualified to help me?

 

Not everyone who uses the title financial planner is a Certified Financial Planner™ professional. There exists in Canada a very confusing mix of acronyms and designations for financial advisors who may or may not be qualified to give you the kind of big-picture and unbiased planning advice you need - even if they say they can.

 

FPSC licenses individuals who meet rigorous qualifications in experience, education, examination and ethics to earn the professional designation of Certified Financial Planner™ or CFP™.

 

Finding the CFP trademark logo that appears at the top left corner of this page, or the letters "CFP" or the words "Certified Financial Planner" beside the name of an individual, will ensure that you have identified a professional who has been educated in, examined for, and has experience in all aspects of financial planning. You will know that you have found someone who has agreed to adhere to a strict code of professional conduct known as the CFP Code of Ethics. Additionally, you will know that the planner has made a lifelong commitment to continuing education (30 hours per year) to keep technical skills and theoretical knowledge current.

 

What does it take to earn and maintain the CFP designation?

 

The CFP four-step qualifying process includes the successful completion of a 6-hour examination that is based on regularly updated research and in-depth reviews of what planners do. The topic coverage for the exam is developed from a syllabus that outlines 166 topics and additional subtopics covering areas of: estate planning, investment planning, retirement and employee benefits planning, insurance planning, income tax planning, fundamentals of financial planning and the Code of Ethics.

 

To qualify to write the exam, the candidate must successfully complete a program of study (many of which take three years) approved by FPSC. Or they must hold a professional designation and three years experience in a field related to financial planning. Additionally, all CFP professionals must have at least two years financial planning experience (three for those qualifying to write the exam through a professional designation).

 

Where can I find a CFP professional?

 

Today there are more than 15,000 CFP professionals in Canada. And the designation is recognized worldwide with 80,000 CFP professionals having earned the designation from organizations in 17 countries.

 

CFP professionals work in every segment of the financial services industry: in banks, credit unions, brokerage firms, insurance companies, full-service financial groups, accounting firms and other areas.

 

Consult our Find a Planner database or contact FPSC by phone at 416.593.8587 or 1.800.305.9886, or by e-mail to begin your search.

 

How do I choose the planner that is right for me?

 

Finding the right financial planner to serve your particular needs will take some legwork and investigation. You will probably need to interview more than one planner and talk to others who may be able to refer you to one. Financial planning relationships are quite often long-term, so you will want one in which you feel comfortable and feel confident about. You will also want to re-assess the relationship regularly. To help you with your search, FPSC has developed some tips on Choosing a Planner. Remember, the more you know about what you want and what you can expect from your relationship, the better you will be able to choose the right planner for your needs.

 

(CFP Flame logo)™ Certified Financial Planner™ and CFP™ are certification marks awarded by Financial Planners Standards Council under a license agreement with Financial Planning Standards Board Ltd. (FPSB) Copyright © 2004 Financial Planners Standards Council. All rights reserved.