Financial Planners and Other Mysteries of Life

I notice a growing trend in my mailbox: readers looking for financial planners or advisors. Or helpers. The problem is that considering the context of the post, it’s pretty clear that not everyone means the same thing when they refer to a financial “planner-advisor-assistant-assistant”.

A reader wanted to know where to find a “financial planner” who would simply take her paycheck, pay all her bills, invest for her retirement, give her an allowance, balance her checkbook, and not charge her much. (We all wish we had one, right?)

Then there are times when the context lets me know that a desperate reader looking for a “financial planner” really needs a reputable credit counseling agency that offers debt management.

And so, in an effort to clarify and perhaps educate, here is the information on financial planners.

General

Anyone can call themselves a financial planner. If you’re willing to seek the services of a financial planner and avoid an amateur, you want one who has earned the special designations of Certified Financial Advisor or Certified Financial Planner.

These professionals perform a comprehensive analysis of your entire financial life, identify your goals, and then create an investment and insurance strategy to achieve those goals.

Usually, but not always, a professional financial planner will have minimum standards for new clients that have to do with net worth. Financial planners are generally not debt management advisers. If you are deeply in debt, a financial planner will likely tell you to come back once you are debt free.

Planning means more than investing. Not all planners offer full services. Some give investment advice or focus on one aspect of planning such as insurance or taxes. Estate planning is often offered by an accredited financial planner or consultant and includes wills, trusts, tax planning, inheritance and end-of-life planning.

Paid financial planners are only paid for the advice they give. Generally, they charge by the hour ($200 to $250), like a lawyer. They do not earn commissions by selling you financial products such as life insurance and mutual funds. You can find paid planners at NAPFA.org or call 800-366-2732.

Paid planners earn fees plus commissions. As a paid planner, you pay for the advice and the financial plan. The planner also earns commissions if you purchase products recommended in the plan.

Commission planners make money from the products they sell. Typically, this type of planner does not charge for their time, but strongly encourages you to buy the products they recommend.

Other Options

Theoretically, anyone can use the services of a financial planner at some point in their financial journey. But certainly not until one is free from credit card debts as well as other unsecured debts. A financial planner will want to see consistent positive cash flow. Until you have reached this level, there are other services that can help you.

credit counseling

If you’re in trouble with your credit card and can’t even meet your minimum monthly payments, a credit counselor may be the answer.

A qualified counseling organization can go to your creditors on your behalf to create a payment plan that you can afford. You will be trained to ensure that you will not return when you are debt free and there will be a nominal charge.

To avoid scammers and find a certified counselor in your area, go to NFCC.org or call 800 388-2227. It is the only organization that I recommend to my readers. The NFCC has certified counselors in all regions of the country. By connecting to the website or by calling the toll-free number, you will quickly be put in contact with the agency closest to you.

Debt management program

This will be offered to you in conjunction with a credit counsellor. If you enter a DPM, you will write a check each month for all of your credit card debt and payments will be sent to your creditors accordingly.