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Do I Need a Financial Advisor or a Financial Planner? Thumbnail

Do I Need a Financial Advisor or a Financial Planner?

Financial Planning

Much ado is currently being made about who can/should call themselves a “Financial Planner,” and it is safe to assume that this will continue to be a very hot topic as the financial services industry tries to keep pace with a rapidly changing regulatory environment. 

To those outside the industry this may appear to be a trivial issue with a very simple solution – a financial planner creates financial plans for clients!   But I would warn that in fact this is a very difficult issue to sort out mostly because the vast majority of Canadians, including those writing the rules, would have a hard time agreeing on what exactly constitutes a financial plan.  Is a document that shows an investment account growing to meet some goal a financial plan?  Does it need to account for inflation and taxes?  Does it need to incorporate other -  possibly conflicting - goals?  Is it 10 pages, 20 pages, 100 pages, more? 

In my opinion, this is a case of asking the wrong question.  It’s not what a financial is that’s the issue, it’s what a financial plan does that’s important.  And here’s my opinion on that.

  1. A plan should set or clarify goals.  Obvious, I know.
  2. It should also set out – clearly – your present situation.  You can’t go from A to B if you don’t know where A is.
  3. Then, it maps out the possible routes to the goals.  That’s where all the charts and graphs fit in. 
  4. Most importantly, a financial plan should build belief.  Wait, what?  More than anything else what holds us back from achieving our dreams is the belief that we can’t.  And far too often that lack of belief sounds something like, “I can’t afford it.”  Ok, let’s go through steps 1 through 3 and see if the math supports your disbelief.  I assure you, given enough time, most of our dreams are mathematically possible.
  5. Our financial lives can very quickly become complicated – and for many people, that means zoning out.  Your financial plan should simplify and keep you engaged.
  6. And finally the acid test – if all of the above are accomplished, you will be inspired.  Inspired to take action – to actually follow the plan. 

I’m quite certain that this will not be the template used to determine who can and can’t call themselves a financial planner.  But for us, it’s been a useful means of ensuring that what we do has true value to those who might call us their financial planner. 


-Bill