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Financial Planners

Unlike the terms investment adviser and broker, financial planner is not a legally defined 

term. It generally refers to someone who develops, and may also implement, comprehensive 

financial plans for clients based on their long-term goals.

A financial plan typically covers such topics as estate planning, tax planning, insurance 

needs, and debt management, in addition to more investment-oriented objectives, such  

as retirement and college planning. But you’ll want to be sure to ask about a planner’s  

experience and credentials before you sign a contract to work with him or her. 

Alphabet soup of designations

A financial professional may use various titles, whether or not he or she is registered or  

licensed with a regulatory authority. The problem is that there are at least 150 designations 

in use. As a 2013 investor bulletin from the SEC and the North American Securities  

Administrators Association pointed out: “The requirements for obtaining and using  

[professional designations] vary widely, from rigorous to nothing at all.”

Some designations fit no one’s idea of rigorous. Becoming a Certified Senior Adviser, for 

example, requires one self-study class, passing a three-hour exam, and doing volunteer  

work with seniors. 

To become an Accredited Retirement Adviser, an applicant can buy a study guide for a 

100-question, multiple choice test. There’s no coursework, and no way to check disciplinary 

actions or submit a complaint.

There are, of course, many designations that require extensive testing and continuing educa-

tion, and whose oversight body may impose disciplinary sanctions. Earning the Chartered 

Financial Analyst (CFA) designation requires hundreds of hours of study to pass three, 

six-hour exams. Earning the Certified Financial Planner (CFP) designation requires the 

completion of seven semester-long courses and three years of financial planning experience.

Investors need to look beyond the acronym or designation to determine what’s behind it:  

the exams, ethical standards, and oversight body, as well as the continuing education  

required to maintain the designation.

Regardless of the type of financial professional you choose to help  

you, there is one absolutely critical step to take beforehand: Read the 

contract. That sounds like obvious advice, but it’s advice that some investors do not 

heed. Knowing the precise terms of the contract can forestall misunderstandings,  

disagreements, and even lawsuits down the line. Clear up any questions with the  

prospective financial professional ahead of time, and if necessary, consult with a  

lawyer, accountant, or trusted third party to review the contract terms.

KeeP in MinD

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