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Choosing A Financial Planner
During the boom years of the 1980s, the number of persons calling themselves "financial planners" proliferated. Largely this was due to new financial products flooding the marketplace and a perception that consumers needed someone to help them sort through all of their options. Anyone, it seemed, could hold himself out as a financial planner. Confusion abounded. Regulators were concerned about use of the term "financial planner" as a marketing moniker for sellers of investment products. Unscrupulous con-artists were hiding behind the term to lend an air of legitimacy to their fraudulent activities. And financial planning industry groups began a push to define and set standards for financial planners. Were financial planners to be regulated by securities agencies, insurance regulators, state accountancy boards, real estate agencies or by some other means?
It is far easier to define a financial planner by describing what the planner should be rather than what he or she actually is. A financial planner should be one who, for compensation, provides you with a comprehensive system of money management recommendations, including advice on taxes, estate planning, insurance, educational funding for your children, real estate and investments, including securities. In reality, however, many planners either focus on only a few of these areas or consult with outside specialists on your behalf as to the others.
Ultimately, regulators decided on a "functional approach" to the oversight of financial planners. What this means is that if a financial planner will be offering advice on securities, that person would be subject to regulation by securities agencies. If that person is selling insurance or real estate, he or she would most likely be subject to the jurisdiction of insurance or real estate regulators, and so on. Thus there is potentially a great deal of information available to you from government agencies concerning a particular financial planner, depending on the services the planner will be providing.
Remember that in dealing with a financial planner, you will be turning over information that reveals a great deal about yourself - how much money you make, how much you have saved, your bills and outstanding loans, whether you own your home, what your tax situation looks like and the educational needs of your children - so it's important to choose someone you can trust and who is qualified to meet your needs.
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