Financial planning – what is it?

Financial planning is often an intimidating process for most individuals and families. Fortunately, there are plenty of professionals who can sort through the confusion and chart a clear path to successful money management. Different professionals have different skill sets, and it’s important to keep a few points in mind when deciding which company or individual will work best for your personal and family needs.

Seek Referrals: Perhaps one of the best ways to find the right person for your personal financial needs is to listen to what your friends and family have to say. Who do they work with? Who do they trust? Who did they have a bad experience with and would avoid at all costs in the future? Doing a little initial research can save you a lot of time and money.

Determine what you need: Whether you’re a solo bachelor with your own business or a growing family, financial planning requirements vary greatly by person and situation. Do you want someone to manage your personal income or personal investments? Are there any particular situations that affect you and for which it would be better to involve a specialist? Do you just need something as simple as retirement advice, or do you want to fund a few kids through university?

Discussion – Before confiding your hopes, goals, and dreams in someone, it’s a good idea to interview them and get to know them. Do you share common interests? Is it easy for you to communicate with them? Are you not shy about asking questions and sharing problems? This introductory meeting should be offered free of charge and without any obligation. Other issues you will want to address include things like how they are paid. Do they charge a flat fee, an asset-based fee, or do they pay themselves via commission?

Finally, it is important to understand the differences between professional designations. A Certified Public Accountant (CPA) is an educated and knowledgeable person who is often the best choice for tax-related situations. This level of certification meets strict licensing requirements. A Personal Finance Professional (PFS) is a CPA who has completed additional training in financial planning. A Certified Financial Planner (CFP) is someone who has a minimum of three years of experience, adheres to a strict code of ethics, and has passed a series of rigorous exams. A Chartered Financial Adviser (Ch.FC) is an insurance claims professional who also specializes in some aspects of financial planning. Certified Retirement Planning Consultant (CRPC) is a special designation that allows professionals to focus on retirement planning needs.

For many individuals in a wide variety of situations, a little knowledge and information is all it takes to develop a sound financial plan. While most people can manage their finances on their own, there are a few special situations where a professional will be able to provide sound advice at a reasonable price. Complex situations can be easily dealt with by a specialist with appropriate education and experience.

Leave a Reply

%d bloggers like this: