Basics of financial planning

Doug Horn

Financial planning does not have to be something that is available only to who make over $100,000 per year or have a net worth in the millions. There are thousands of Certified Financial Planners, each offering unique services. While some have specialized or restrict their services, many are open to working with the general public.

The CFP is educated and tested in the principles of financial planning, investments, retirement plans, insurance, risk management, estate planning, and taxes. It is these keys areas that benefit individuals and applying the expertise of a trained planner should enable most to be able to reach their financial goals.

CFPs can be located working exclusively for insurance companies, major brokerage firms, small independent firms as well as on their own. Generally one type of firm over another does not hinder the results. It is the relationship that should develop between the planner and the client which is most important. Only when the client believes their wishes, feelings, and goals are understood, can trust develop. When events like the 2008 financial crisis occurs and there is little or no trust between the planner and the client, any guidance offered by the planner may not be heeded by the client. Such action by the client could result in greater losses than those when the advise is followed.

When selecting a CFP or financial advisor, it is important to understand their expertise and service they will provide. Not every planner is an asset manager. Inquiring with the planner to determine the tools they use to manage the investments may provide sufficient information to determine if they truly manage assets or if they merely sell the investment. Those managing investments will have the means to determine performance of the client’s assets for any period requested. This does not mean knowing the investment performance of the fund or stock, but rather the client’s personal position based upon purchase date and costs.

Another safe guard when working with planners is knowing what licenses they hold and who performs supervision and compliance for the planner. Planners can hold state insurance licenses which permits the sale of life and annuity products. Planners can also hold federal security licenses offered by FINRA. These licenses permit the sale of commissionable security products like mutual funds, variable annuities, stocks, REITS, or bonds. Most brokers obtain the series 7 license which offers the ability to sell the products listed. However, some elect to obtain licenses that only permit the sale of certain products like mutual funds. Lastly, an advisor may elect to become a registered investment advisor either on the state level or with the SEC. A registered investment advisor cannot receive commissions but offers their services through fee arrangements. Planners can hold one or all three of these licenses. Naturally, those holding all three have the ability to offer the broadest range of services.

Lastly, when investing the checks should rarely be made payable to the advisor or their firm. In most cases, the check should be payable to the brokerage firm or the actual investment if it is a direct registration. The only time checks should be made to the advisor is for services provided by the advisor such as consulting or tax preparation.

For assistance with portfolio allocations, insurance, estate planning, or investment management contact me at Quality Financial Concepts or one of the other Certified Financial Planners in our area. To continue a personal quest for education, you can also view our learning center on our website, There you will find articles on a variety of topics, on-line seminars, calculators, as well as a host of other free tools.

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