Financial Planner or CERTIFIED FINANCIAL PLANNERâ„¢? One Word Can Make a World of Difference

    Martha and Matt have goals. They want to find the time and the money to travel with their kids. They want to better manage their household finances. They want to help pay for their kids to attend college. They want to save enough now to eventually live comfortably in retirement. And they want a financial professional to help them develop a plan that puts them on track to meet their goals.

    The couple has narrowed their search to two financial professionals, one who is a CERTIFIED FINANCIAL PLANNER™ professional, or CFP®, and the other who calls himself a “financial planner” but who has not earned the CFP® designation. Both candidates seem experienced and well qualified. Now Martha and Matt are wondering if there are distinctions between the CFP® designation and the generic “financial planner” label, and if so, whether those distinctions matter.

    “A lot of people don’t understand there are differences between the two,” says Sallie Mullins Thompson, a CFP® professional who practices in New York City. Yet people like Martha and Matt should be aware of these distinctions, because they can impact the direction of a person’s financial life, their ability to attain their goals, and their overall experience working with a financial professional.

    “Anyone can call themselves a financial planner,” notes Richard K. Colarossi, CFP®, of Colarossi & Williams Financial Advisory Group in Islandia, NY. That includes professionals who exclusively sell insurance, provide investment advice or handle stock market investments, for example.

    Not everyone can call themselves a CFP® professional, however, explains Harold Evensky, a CERTIFIED FINANCIAL PLANNER™ professional at Evensky & Katz, a wealth management firm in Lubbock, TX. “CERTIFIED FINANCIAL PLANNER™ is a registered trademark indicating the individual has met a series of substantive criteria indicating their professional qualifications to provide unbiased, comprehensive financial planning advice. This is coupled with on-going educational, ethics and practice standards.”

    This article, the first in a five-part series on The Power of Financial Planning, highlights 10 key distinctions between a financial planner and a CERTIFIED FINANCIAL PLANNER™, and explains why it's important for consumers to be aware of the differences.

    1. CERTIFIED FINANCIAL PLANNER™ professionals are held to a fiduciary standard. That means they are obligated under the terms of their CFP® designation to always put the interests of their clients first, above their own interests and those of their firm or the company (or companies) whose products and services they represent.

    Professionals who aren’t subject to a fiduciary requirement instead may do business under a less stringent set of requirements called a suitability standard, which requires them to recommend products that are “suitable” to the client — that is, that the recommended security or product fit the client’s investing objectives, needs and circumstances.

    Most financial professionals who work under a suitability standard are regulated by the independent body FINRA. And there are grey areas in that standard. For example, a financial professional to whom only the suitability standard applies may recommend a suitable product that happens to carry a higher cost to the consumer and a higher sales commission for the financial professional, instead of a nearly identical but lower-cost, lower-commission product. The adviser opted for one suitable product because of the opportunity to earn a higher commission, even though another, more suitable (less costly) product for the client was available.

    When evaluating products that are identical except for their fees, a fiduciary is obligated to recommend the lowest-cost product to the client, even if it means a lower commission in the fiduciary’s pocket. A financial professional who’s working under a suitability standard may opt to recommend a higher-cost product, because their interests may lie first with the firm and/or the company whose products they’re recommending and selling.

    The distinction is important, and one that can make a material financial difference to the consumer, as the money an investor pays in fees could instead have gone toward the investment, where it would have the opportunity to grow over time. This can mean hundreds, even thousands, of dollars of appreciated investment value time.

    2. CERTIFIED FINANCIAL PLANNER™ professionals must adhere to a code of ethics that governs their behavior, priorities, etc. The CFP Board, the governing body that oversees all CERTIFIED FINANCIAL PLANNER™ programs, requires that CFP® professionals follow a Code of Ethics in all their professional activities, including interactions with clients. The code includes seven principles:

    • Principle 1 – Integrity: Honesty and candor must not be   subordinated to personal gain or advantage.
    • Principle 2 – Objectivity: Regardless of the service they’re providing or the capacity in which they are functioning, CFP® professionals must maintain objectivity and avoid subordination of their judgment.
    • Principle 3 – Competence:CFP® professionals must attain and maintain an adequate level of knowledge and skill, and apply that knowledge and skill in providing services to clients.
    • Principle 4 – Fairness: This requires CFP® professionalsto act with impartiality and intellectual honesty, and to disclose any material conflict of interest.
    • Principle 5 – Confidentiality: Ensure that client information is accessible only to those authorized to have access.
    • Principle 6 – Professionalism: Behaving with dignity and courtesy to clients, fellow professionals and others in business-related activities.
    • Principle 7 – Diligence: Provide services in a reasonably prompt and thorough manner.


    3. CFP® professionals are trained and have demonstrated competency in multiple areas of finance.To earn their designation, CFP® professionals must complete a comprehensive course of study offered by a college or university program that follows a personal financial planning curriculum approved by the CFP Board. That course of study encompasses more than 100 topics in stocks, bonds, taxes, insurance, retirement planning and estate planning. In addition, they must have earned a bachelor's degree from a regionally accredited college or university.

    Standing behind the CFP® designation is a governing body, the Certified Financial PlannerBoard of Standards Inc., that administers the national CFP® exam, sets continuing education requirements and enforces rules and requirements to ensure CFP® practitioners live up to the standards of the designation. The requirements for CFP® certificants are constantly being reviewed, evaluated and updated by the Certified Financial PlannerBoard of Standards, which is expected to issue a new code of standards in the Spring of 2018.

    4. CFP® professionals emphasize plan over product. Ever felt like you were being sold a product by someone who never really made an effort to determine whether that product was the right fit for you? CFP® professionals are trained to look thoroughly at a client’s circumstances, goals, needs and priorities, then to build a plan around those. Any product recommendations they make to clients must fit in the overall context of that financial plan. That plan then is regularly monitored, revisited and fine-tuned as necessary. 

    On the other hand, a financial professional who lacks the CFP® marks “might get paid more for selling certain products, regardless of how well these fit inside an overall plan,” notes Geoffrey H. Owen, a CFP® practitioner with GreerWalker in Charlotte, NC. “Unfortunately, for many it is a guise, as they continue to be product salesmen or investment brokers without any real skillset or desire to engage in bona fide planning for their clients.”

    5. CFP® professionals must disclose how they are paid. It’s not always clear how a financial professional makes money, because they aren’t always up-front about the fees, commissions and other costs they charge customers. The priority for CERTIFIED FINANCIAL PLANNER™ practitioners is to be completely transparent and forthcoming about how they are compensated. They are required to make certain oral and/or written disclosures at certain times during their interactions with clients and prospects. 

    6. CFP® professionals see and address the entire picture, not just part of it. They’re trained to synthesize every aspect of a person’s financial life into a coherent, orchestrated plan, something that financial professionals with a narrower focus may not have the education or the expertise to do. A person who calls themselves a “financial planner” in reality may only be qualified to handle a segment of a person’s overall financial needs — insurance, for example, or investments.

    CERTIFIED FINANCIAL PLANNER™ professionals, on the other hand, are trained in:

    • Financial statement preparation and analysis, including cash flow analysis/planning and budgeting.
    • Insurance planning and risk management.
    • Employee benefits planning.
    • Investment planning.
    • Tax planning.
    • Retirement planning.
    • Estate planning/wealth transfer.


    7. CFP® professionals must follow a prescribed process when working with their clients. Other financial professionals may have no such requirement. The process CFP® practitioners are required to follow includes six steps:

    1. Establishing and defining the client-planner relationship.
    1. Gathering client data, including goals.
    2. Analyzing and evaluating the client’s current financial status and their assets.
    3. Developing and presenting recommendations and/or alternatives.
    4. Implementing the recommendations.
    5. Monitoring the recommendations and updating the plan as needed.

    8. Due diligence is part of the job description. CFP® professionals are trained to perform a complete data-gathering process with all their clients, allowing them to see the big picture before making any recommendations to the client. Other financial professionals may or may not follow as thorough a process. 

    9. Continuing education is required. CFP® practitioners must take continuing education courses, annually, on topics specifically related to financial planning. This helps them stay abreast of the latest tactics, technologies and practices to benefit their clients.

    10. CFP® professionals are inclined to work with other advisers as part of a team. When a client’s situation calls for specialized expertise, a CFP® practitioner is trained to seek out other professionals to meet the client’s needs. Under the CFP Code of Ethics, CFP® professionals are required to recognize “when consultation with other professionals is appropriate or referral to other professionals [is] necessary,” and to act accordingly.

    Ultimately, “people deserve to know more about the people they are trusting with their hard-earned money,” says Jon L. Ten Haagen, CFP®, of Ten Haagen Financial Group in Huntington, NY. With an understanding of what sets a CERTIFIED FINANCIAL PLANNER™ professional apart from the crowd, they’re more likely to get the quality financial guidance they deserve.

    To find a CFP® professional in your area, visit the Financial Planning Association’s searchable database at

    March 2018 — This column is provided by the Financial Planning Association® (FPA®) of Iowa, the principle professional organization for Certified Financial PlannerTM (CFP®) professionals. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process.  Please credit FPA of Iowa if you use this column in whole or in part.

    The Financial Planning Association is the owner of trademark, service mark and collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING ASSOCIATION.  The marks may not be used without written permission from the Financial Planning Association.




    Working Through Tough Financial Issues with Aging Parents

    For many families, it’s the elephant in the room: the necessary but potentially awkward discussions between aging parents and adult children about subjects like where the parents envision living as they grow older and more dependent on others, the role family members are willing (and not willing) to play in caring for an ailing parent, and, of course, how the potentially weighty financial responsibilities associated with elder care will be handled.

    As much as families tend to avoid talking frankly and openly about sensitive issues such as these, the best outcomes tend to be those in which a family addresses the “what-ifs” proactively, putting the issues on the table for discussion before a crisis forces their hand, says Sandra D. Adams, a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional with the Center for Financial Planning, Inc., in Southfield, MI. “I suggest people talk about this stuff earlier rather than later, before there’s a real issue. Otherwise you end up having to make snap decisions in crisis mode, when emotions are running high and people maybe aren’t thinking as clearly as they need to be.”

    How, then, to banish the elephant in the room and start having these crucial conversations around the family dynamics of elder care? And, once the ice is broken, what issues to prioritize during the dialogue? Here are five suggestions to help initiate and frame the discussions:

    1.        Enlist an objective third party to facilitate and offer guidance. Chances are neither parents nor their children have been down this road before. What’s more, cross-generational discussions involving aging and family dynamics can be emotionally charged. “It’s not always easy to approach issues like these, especially if the parents don’t bring them up,” observes Adams, who holds a Master's degree in Gerontology, the study of aging, “which is why it makes a lot of sense to find a financial professional to facilitate these conversations. The financial professional can help mediate if the need arises, they can be the ones asking the tough questions, taking on sort of a ‘bad guy’ role so family members feel like they’re on the same side, and they can help find answers to those tough questions. Really they can take a lot of weight off a family’s shoulders.”

    To find a CFP® professional with experience in elder care and family issues, get a referral from someone you know who’s been in a situation similar to your family’s. Or to find one in your area, check out the Financial Planning Association’s searchable national database of personal finance experts at

    1.        Hone in on the housing issue. Where do the parents want to live as they age? Do they envision staying in their own home? Do they expect to move in with a family member? If either of these options appeals to them, how might the home need to be modified to accommodate an older person with restricted mobility and other limitations? Is assisted living an option? Do the parents have the financial means to pay for home modifications, or for assisted living or nursing home care, should that become necessary? Answering these and other housing-related questions will help parents and their adult children “get their head around the issue,” says Adams.
    1.        Dare to discuss care. Contemplating the possibility that you, your spouse or a parent will encounter a serious health issue that requires some form of long-term care is hard enough. But not only should families discuss the real possibility that parents will need long-term care at some point in their lives — the U.S. government puts the chances at about 70% — they also need to dig deeper into the issue, says Adams, by discussing expectations, roles, and finances. Are parents expecting a family member (or family members) to assume a caregiver role if the need arises? Are family members willing to serve as caregivers? If so, who, in what capacity, and for how long? What impact would taking time off to care for a parent have on the caregiver’s finances and career? If not, where will the parent get care if it’s needed? Does the parent prefer in-home care, if that’s an option? If not, what are the other care options? What might the various care options cost, who will be responsible for covering those costs, and how?  Would it be wise and financially practical to invest in some form of long-term care insurance, and if so, what kind? The issues are myriad and complex. Here’s an area where guidance from a CFP® professional with elder care expertise can be especially valuable.
    1.        Be forthcoming about your financial picture. In working through the family dynamics of elder care, it’s important that the parents and their adult children be upfront with one another about their financial situations, Adams asserts. “They need to be open to sharing that information, so they understand one another.”

    Do the parents have the means to cover their expenses in retirement? If not, what resources (government programs, etc.) might be available to help? And to what extent are the adult children willing and able to provide financial assistance?

    Being organized is also a priority, according to Adams. Are the parents’ assets properly titled? Is information about assets, accounts and beneficiaries (retirement, bank, insurance, etc.) up-to-date, well-organized and readily accessible to the children, should they need it?

    Being organized helps families avoid “a huge financial mess” later, she says.

    1.        Ensure that parents’ estate and affairs are in order. In the same organizational vein, it’s vital that parents have the legal documents related to their estate in order and up-to-date. That includes wills specifying how assets will be distributed, powers of attorney (over financial, medical and other decisions, should one or both of the parents be incapacitated), and a living will specifying their end-of-life wishes.

    January 2018 — This column is provided by the Financial Planning Association® (FPA®) of Iowa, the principle professional organization for Certified Financial PlannerTM (CFP®) professionals. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process.  Please credit FPA of Iowa if you use this column in whole or in part.

    The Financial Planning Association is the owner of trademark, service mark and collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING ASSOCIATION.  The marks may not be used without written permission from the Financial Planning Association.