Objectives

People enlist the help of a financial planner because of the complexity of knowing how to perform the following:

• Providing direction and meaning to financial decisions;
• Allowing the person to understand how each financial decision affects the other areas of finance; and
• Allowing the person to adapt more easily to life changes in order to feel more secure.

Defining personal financial decisions

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.

Along side 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.

Scope

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;
• Retirement Planning: Planning to ensure financial independence at retirement;
• 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.

The process

The personal financial planning process is generally accepted as 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 quantitive aspects of the client's financial and relevant non-financial situation.

Step 3: Analysing 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 deviation or significant change to the client's situation, the strategies and goals in the financial plan are revised accordingly.

What is a financial planner's job function?

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

Financial planning is usually a six-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) and the details can be obtained from the organization Financial planners are also known by the title financial advisor 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' financial planners.

Other financial planners may specialize in one or more areas, such as, insurance planning and retirement planning.

Financial planning is a growing industry with projected faster than average job growth through 2014 and continues to evolve drastically.

Thinking of a career in financial planning? Perhaps you are thinking are fresh out of school, thinking of changing careers, or would like to develop yourself as a financial services professional. What ever your reason, if you want to set yourself apart from financial advisors and consultants, becoming a Certified Financial Planner™, is the best internationally recognized certification to have. So what is financial planning like and what does it mean to be a Certified Financial Planner™?

The public is too often confused about how to select a financial planner. As increasing numbers of people in financial services call themselves "financial advisers," financial planning professionals need a way to differentiate themselves and demonstrate quickly that they are competent and capable. That differentiator is the CERTIFIED FINANCIAL PLANNER™ certification awarded in the U.S. by Certified Financial Planner Board of Standards Inc., and more than 54,000 professionals around the country already set themselves apart in this meaningful way.

Why Become a CERTIFIED FINANCIAL PLANNER™ Practitioner?
Why has the CERTIFIED FINANCIAL PLANNER™ certification become so sought after by consumers and the financial planners who serve them? The answer is simple. The public is looking for a planner who has demonstrated a commitment to competency, and financial professionals want an established certification that sets them apart in a globally expanding financial planning profession. CFP Board research shows consumers increasingly rely on credentials when selecting a financial adviser.

As a CERTIFIED FINANCIAL PLANNER™ practitioner, you can energize or revitalize your career, whether as an entrepreneur or in a large firm, by leveraging the knowledge and prestige associated with the world's most recognized financial planning certification. You will be equipped to provide truly personalized services to clients and maintain high levels of financial planning professionalism and expertise.

The Benefits of CFP® Certification
The CFP® and CERTIFIED FINANCIAL PLANNER™ certification marks are the most recognized financial planning marks in the world. Unlike an educational designation offered by a college or university, CFP® certification is based on independently established public interest standards. As a result, it prepares you for a career-long commitment to meeting the ever-changing needs of your clients. Examples of the benefits of CFP® certification include:

• Your Expertise and Credibility as a Financial Planner is Instantly Communicated.
  Only a select group of planners have met the rigorous education, examination, experience and ethics requirements necessary to call themselves CERTIFIED FINANCIAL PLANNER™ professionals or CFP® practitioners. CFP® certification communicates your expertise and credibility among your peers, and consumers view CFP® certification as an indication of a qualified, trustworthy financial planner.
• Your Career and Professional Development Opportunities Are Enhanced.
  Increasingly, large financial services firms make CFP® certification part of their hiring requirements for financial planning divisions, while other firms reward attainment and retention of the certification with career and salary enhancements. Whether you are in a large or small firm setting, CFP® certification provides the advantage of easily communicating expertise to clients and supervisors and opening career opportunities. The international appeal of CFP® certification helps ensure that your career will not get derailed should you choose to work in another country.
• You Become a Coach and a Problem Solver.
  Financial planning is a six-step process you go through when counseling clients. CERTIFIED FINANCIAL PLANNER™ practitioners use the process in a flexible manner, consistent with being a valued professional adviser who must deal with unique and often challenging client situations. As a CFP® practitioner, you will help clients discover and solve financial problems and achieve life goals by serving as both counselor and coach. As you gain more experience, you can also mentor those entering the profession, helping guide the next generation of CFP® practitioners.
• Your Clients Are More Satisfied.
  CFP Board research shows that clients of CFP® practitioners are more satisfied than the clients of other financial advisers and are interested in a broader range of financial advice. CFP® practitioners often become involved with many aspects of their clients' lives and help multiple generations of the same family. Most CFP® practitioners use a comprehensive approach to problem solving and communication that better prepares them to meet and anticipate client needs. Because CFP® practitioners make recommendations based on their clients' needs, the typical client relationship for a CFP® practitioner lasts many years.
• Your Earnings Reflect Your Personal Status.
  The amount of income you make as a CFP® practitioner will vary based on your level of experience, areas of specialization and geographic location. As in any of the established professions, a certain level of competence and experience is expected and financially rewarded by users of professional services. CFP® certification instantly establishes your expertise in financial planning among consumers and supports your professional status among your peers.
• You Have Tested Yourself Against the Best, and Met the Challenge.
  While many may choose to call themselves "financial planners" with little preparation or ability, you will have the satisfaction of knowing that you have proven yourself among the most knowledgeable and capable financial planners in the world. By completing the CFP® certification process, you become part of an international financial planning community committed to putting clients' interests first and meeting the profession's highest standards.

What it Means to be a CERTIFIED FINANCIAL PLANNER™ Practitioner
If you are interested in being part of a profession that helps people gain control over their lives and their futures; if you are a big picture thinker and a good listener; and if you are looking for a career filled with opportunities and challenges - then choosing to become a CERTIFIED FINANCIAL PLANNER™ practitioner is the career for you.

Whether you are already a financial planner or have recently decided to enter the profession, going the extra step and obtaining CFP® certification will identify you as a true professional in one of the fastest growing and exciting careers today.

Request Information on CFP® Certification
CFP Board's CFP® certification process consists of initial requirements in the areas of Education, Examination, Experience and Ethics (known as "the four Es"). Once you have successfully met the requirements and completed the initial certification process, you will need to meet ongoing education and disclosure requirements to maintain CFP® certification.

Your career in financial planning will be filled with opportunities and challenges. Many Americans are now responsible for their own financial future and are looking to professional advisers for assistance. The 2001 Jobs Rated Almanac's choice of financial planner as the number one career in America has awakened people to the benefits of this rapidly growing profession. Your Career as a CERTIFIED FINANCIAL PLANNER™ Practitioner (PDF , 222KB)

Read 10 Myths of Financial Planning

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