Why financial planner? Why CFP?

APRIL 99, Toronto - The term "financial planning" has been as ubiquitous as complaints about the weather this tax season.

When the dust from the avalanche of financial product and service advertising finally settles, you might be able to see a little more clearly into your future - the one beyond this tax season. But chances are, looming on that not too distant horizon, these three questions will still be there: What is financial planning? Do you need it? And where do you get it?

So let's clear the air for a better view.

Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement. It is a process that consists of specific steps that help you take a big-picture look at where you are financially. Using these steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals.

This process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.

In the end, financial planning should provide direction and meaning to all your financial decisions, like how buying a particular investment product might help you pay off your mortgage faster or delay your retirement. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

Once you understand what the process is, it is fairly easy to see how just about anyone can benefit from some level of financial planning.

But, how do you know if you need the advice of a professional financial planner? A good rule of thumb is: when in doubt, ask the expert.

You might want to consult a financial planner when you are doubtful that you have enough expertise to evaluate the level of risk in your investment portfolio or to adjust your retirement plan to reflect changing family circumstances.

If you have an immediate need or unexpected life event such as a birth, inheritance or major illness, you may not know how to make the financial adjustment, what is available to you and how you can cope.

Perhaps you want a second expert opinion about the financial plan you developed or are managing for yourself - for peace of mind. Or you know you need to improve your current financial situation, but you don't know where to start.

Even in the absence of any doubts about you're financial planning expertise, you might not feel you have the time to devote to it.

All these are good reasons to consult a financial planner.

Financial planners are individuals who use the financial planning process, the big-picture approach, to help you figure out how to meet your life goals. They can look at all your needs, including budgeting and saving, taxes, investments, insurance and retirement planning. Or they may work with you on a single financial issue, but within the context of your overall situation.

This big-picture approach to your financial goals sets planners apart from all other financial advisers, who may have been trained only to focus on a particular area of your financial life. But which financial planner do you choose? From whom can you get this kind of big-picture planning that is tailored to you and your financial situation?

In all provinces except Quebec, anyone can hang out their shingle as a financial planner. That leaves the field wide open for charlatans and incompetents. Fortunately, the financial services industry addressed this problem three years ago. Organizations whose memberships were involved in the personal finances of Canadians created Financial Planners Standards Council (FPSC).

FPSC is the standard-setting and licensing not-for-profit organization that licenses individuals who meet rigorous qualifications in experience, education, examination and ethics to call themselves Certified Financial Planners, or use the letters CFP or this mark:

Finding the CFP mark, letters or the words, Certified Financial Planner, beside the name of a financial planning practitioner, 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 Certified Financial Planner has made a life-long commitment to continuing education (30 hours per year) to keep their technical skills and theoretical knowledge current.

The CFP four-step qualifying process includes the successful completion of a 6-hour examination that is based on regularly up-dated 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 the FPSC. Or they must hold a professional designation and three years experience in a field related to financial planning. Additionally, all licensees must have at least two years financial planning experience (three for those qualifying to write the exam through a professional designation).

Today there are about 8,000 CFP licensees in Canada. And the designation is recognized world-wide with 45,000 CFP licensees practising around the globe.

This internationally recognised CFP mark of the professional has the resounding endorsement of individuals and organizations representing virtually every segment of the financial services industry in this country.

So when it's your hard-earned money you're talking about, when it's your financial independence that's at stake, you might want the added assurance of going to an expert for advice. And you might want the added assurance of knowing that expert has these three letters beside his or her name: CFP. It's the mark of the professional.

(CFP and Certified Financial Planner certification marks are used by the FPSC under a license agreement with the CFP Board of Standards, Inc.)