Financial planner
A financial planner or personal financial planner is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes: cash flow
Cash flow
Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.Cash flow...

 management, education planning, retirement planning
Retirement planning
Retirement planning, in a financial context, refers to the allocation of finances for retirement. This normally means the setting aside of money or other assets to obtain a steady income at retirement...

, investment planning
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...

, risk management
Financial risk management
Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc...

 and insurance planning, tax planning, estate planning
Estate planning
Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses...

 and business succession planning (for business owners).

The work engaged in by this professional is commonly known as personal financial planning. In carrying out the planning function, he is guided by the financial planning process to create a financial plan; a detailed strategy tailored to a client's specific situation, for meeting a client's specific goals. The key defining aspect of what the financial planner does is that he considers all questions, information and advice as it impacts and is impacted by the entire financial and life situation of the client.


People enlist the help of a financial planner because of the complexity of performing the following:
  • Finding direction and meaning in one's financial decisions;
  • Understanding how each financial decision affects other areas of finance; and
  • Adapting to life changes to feel more financially secure.

The best results of working with a comprehensive financial planner, from an individual client or family's perspective are:
  • To create the greatest probability that all financial goals (anything requiring both money and planning to achieve) are accomplished by the target date, and
  • To have a frequently-updated sensible plan that is proactive enough to accommodate any major unexpected financial event that could negatively affect the plan, and
  • To make intelligent financial choices along the way (whether to "buy or lease" whether to "refinance or pay-off" etc.).

Before working with a comprehensive financial planner, a client should establish that the planner is competent and worthy of trust, and will act in the client's interests rather than being primarily interested in selling the client financial products for his own benefit. As the relationship unfolds, an individual financial planning client's objective in working with a comprehensive financial planner is to clearly understand what needs to be done to implement the financial plan created for them. So, in many ways, a financial planner's step-by-step written implementation plan of action items, created after the plan is completed, has more value to many clients than the plan itself. The comprehensive written lifetime financial plan is a technical document utilized by the financial planner, the written implementation plan of action is just a few pages of action items required to implement the plan; a much more "usable" document to the client.


Personal financial planning is broadly defined as "a process of determining an individual's financial goals, purposes in life and life's priorities, and after considering his resources, risk profile and current lifestyle, to detail a balanced and realistic plan to meet those goals." The individual's goals are used as guideposts to map a course of action on 'what needs to be done' to reach those goals.

Alongside the data gathering exercise, the purpose of each goal is determined to ensure that the goal is meaningful in the context of the individual's situation. Through a process of careful analysis, these goals are subjected to a reality check by considering the individual's current and future resources available to achieve them. In the process, the constraints and obstacles to these goals are noted. The information will be used later to determine if there are sufficient resources available to get to these goals, and what other things need to be considered in the process. If the resources are insufficient or absent to meet any of the goals, the particular goal will be adjusted to a more realistic level or will be replaced with a new goal.

Planning often requires consideration of self-constraints in postponing some enjoyment today for the sake of the future. To be effective, the plan should consider the individual's current lifestyle so that the 'pain' in postponing current pleasures is bearable over the term of the plan. In times where current sacrifices are involved, the plan should help ensure that the pursuit of the goal will continue. A plan should consider the importance of each goal and should prioritize each goal. Many financial plans fail because these practical points were not sufficiently considered.


Financial planning should cover all areas of the client’s financial needs and should result in the achievement of each of the client's goals. The scope of planning would usually include the following:

Risk Management
Financial risk management
Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc...

 and Insurance Planning : Managing cash flow risks through sound risk management and insurance techniques
Investment and Planning Issues : Planning, creating and managing capital accumulation to generate future capital and cash flows for reinvestment and spending
Retirement Planning : Planning to ensure financial independence
Financial independence
Financial independence is a term generally used to describe the state of having sufficient personal wealth to live indefinitely without having to work actively for basic necessities . In the case of many individuals whose financial circumstances fit this description, their assets generate income...

 at retirement including 401Ks, IRAs etc.
Tax Planning : Planning for the reduction of tax liabilities and the freeing-up of cash flows for other purposes
Estate Planning : Planning for the creation, accumulation, conservation and distribution of assets
Cash Flow
Cash flow
Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.Cash flow...

 and Liability Management : Maintaining and enhancing personal cash flows through debt and lifestyle management
Relationship Management : Moving beyond pure product selling to understand and service the core needs of the client
Education Planning for kids and the family members

The process

The personal financial planning process is according to ISO 22222:2005 a six-step process as follows:

Step 1: Setting goals with the client
This step (that is usually performed in conjunction with Step 2) is meant to identify where the client wants to go in terms of his finances and life.

Step 2: Gathering relevant information on the client
This would include the qualitative and quantitative aspects of the client's financial and relevant non-financial situation.

Step 3: Analyzing the information
The information gathered is analysed so that the client's situation is properly understood. This includes determining whether there are sufficient resources to reach the client's goals and what those resources are.

Step 4: Constructing a financial plan
Based on the understanding of what the client wants in the future and his current financial status, a roadmap to the client goals is drawn to facilitate the achievements of those goals.

Step 5: Implementing the strategies in the plan
Guided by the financial plan, the strategies outlined in the plan are implemented using the resources allocated for the purpose.

Step 6: Monitoring implementation and reviewing the plan
The implementation process is closely monitored to ensure it stays in alignment to the client's goals. Periodic reviews are undertaken to check for misalignment and changes in the client's situation. If there is any significant change to the client's situation, the strategies and goals in the financial plan are revised accordingly.

What is a financial planner's job function?

A financial planner specializes in the planning aspects of finance, in particular personal finance, as contrasted with a stock broker who is generally concerned with the investments, or with a life insurance intermediary who advises on risk products.

Financial planning is usually a multi-step process, and involves considering the client's situation from all relevant angles to produce integrated solutions. The six-step financial planning process has been adopted by the International Organization for Standardization (ISO). Financial planners are also known by the title financial adviser in some countries, although these two terms are technically not synonymous, and their roles have some functional differences.

Although there are many types of 'financial planners,' the term is used largely to describe those who consider the entire financial picture of a client and then provide a comprehensive solution. To differentiate from the other types of financial planners, some planners may be called 'comprehensive' or 'holistic' financial planners.

Other financial planners may specialize in one or more areas, such as insurance planning (risk management) or retirement planning.

Financial planning is a growing industry with projected faster than average job growth through 2014.

Licensing, regulations and self-regulation

The title of 'financial planner' is largely an unregulated term in many countries. Lack of regulation has allowed financial services personnel in these countries to use the title indiscriminately. Often, financial products intermediaries, such as life insurance and unit trusts agents, use the title to project a professional image to clients even when they are not trained in the professional aspects of financial planning. This has sometimes led to abuse. Clients may be deceived to receive financial planning services that are unprofessional, from unethical providers.

To protect the industry, financial planning professionals and practitioners from across the globe (starting from the United States) have begun to form trade organizations to provide self-regulations and to maintain some orderliness in the industry. Some, such as the FPA
Financial Planning Association
The Financial Planning Association , created in 2000 through the merger of the Institute of Certified Financial Planners and the International Association for Financial Planning , is a leadership and advocacy organization for those who provide, support and benefit from financial planning...

, have begun to organize high-level training programs and certify members who successfully completed these programs.

The title of 'financial planner' continues, however, to be used by individuals in the financial industry in most countries, as there are little or no legal barriers to prevent the use of the title. The governments in many countries where the financial planning profession is taking roots are beginning to play an increasingly active role in tasking themselves to ensure the market is orderly. More stringent laws and guidelines are being progressively introduced to keep the profession in check. Additional qualifications have also recently emerged that have extended on the financial planner series of designations, to include specialist skill sets like those in wealth management or private banking.


In Australia, the financial planning services are initially delineated by law by the granting of licence to deal in securities or advise on investments. Licences are issued under stringent criteria by the Australian Securities and Investments Commission (ASIC), which has evolved these regulations vigorously over the years. Financial planning is now a highly regulated industry in Australia especially where financial advice to the public is involved. Practitioners who offer advice that could influence a client's decision to purchase a financial product must meet minimum training requirements and be licensed by the ASIC. The meaning of 'licenced' refers to Australian Financial Services Licence (AFSL) holders and representatives or authorised representatives of licence holders. Broadly, most people embarking in financial planning will start as an authorised representative of a licence holder.

Becoming a financial planner in Australia involves two main steps:
  1. Meet the training requirements of Regulation Guideline 146
    Regulatory Guideline 146 on training of financial product advisers , formerly known as policy statement 146 , is an Australian financial regulation issued by the Australian Securities and Investments Commission related to the training required by individuals selling financial products...

  2. Select a licence holder with whom to be affiliated.

The license holder is the authorized representative, and will be ultimately responsible for the advice given by the planner. The license holder therefore must make sure the representatives meet all compliance and training prerequisites. As of November 2005, there were approximately 4,300 license holders registered with ASIC and over 42,500 authorized representatives in Australia.


The first country to introduce legislation that requires a person to be licensed before he can hold himself out to be a 'financial planner' is Malaysia. Financial planning is considered a newer profession in the Asian region as compared to those in the west, such as the United States and Australia where the profession is more established. The Securities Commission Malaysia introduced legislation through amendments made to the Securities Industry Act in 2003 to regulate financial planning and the use of the title or related-title of 'financial planner' or to conduct activities related to financial planning.

In 2005, amendments to the Malaysian Insurance Act require those who carry out financial advisory business (including financial planning activities related to insurance) and/or use the title of financial adviser under their firm (which, like in Singapore, must be a corporate structure) to obtain a license from Bank Negara Malaysia
Bank Negara Malaysia
Bank Negara Malaysia is the Malaysian central bank. Established on January 26, 1959 as the Bank Negara Malaya, its main purpose was to issue currency, act as banker and adviser to the Government of Malaysia and regulate the country's credit situation...

 (BNM). Some persons who offer financial advisory services, e.g. licenced life insurance agents, are exempted from licensing as a practising requirement.

Again, in 2007, the Capital Market Services Act (CMSA) comes into force as another of the consolidation exercises of the government to move the industry towards a one regime regulatory environment.

As it currently stands, one of the basic requirements to apply for a financial planner or financial adviser licence in Malaysia is that the key company officers, e.g. directors, must be an RFP designee (most if not all Malaysian FChFP designees also carry the RFP designation). Subsequently, in September 2006, the CFP qualification is included as one of the alternatives that can be used by the financial adviser licence applicant. With this development, the demand for financial planning courses has begun to take root in more concrete forms in Malaysia. The licence applicant must also be a member of a self-regulatory organisation (SRO) in financial planning recognised by the authorities. For this purpose, the two SROs currently recognised by both the Security Commission and Bank Negara are the Malaysia Financial Planning Council (MFPC) and the Financial Planning Association of Malaysia (FPAM). The purpose of this requirement is to ensure some form of self-supervision for persons practicing financial planning.

Other countries

In Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

, financial planners are under no legal requirement to have obtained a designation to be called a financial planner although it is common for many to hold a voluntary designation obtained from a credible financial body, such as FPSC or CSI. In the United States, financial planners must be registered as an investment adviser first. This requires an employee within a firm to pass the series 65 or 66 Registered Investment Adviser Exam. A private adviser or company can apply to the state and SEC for an RIA Registered Investment Adviser License or Status.

Being 'licensed' to practice financial planning is not the same as merely having a professional 'qualification' in financial planning. A person may be professionally qualified in financial planning, but without a licence required by the law, he cannot practice the trade in that country or call himself a financial planner there. As of now, there are quite a bit of qualifications related to financial planning that can be found in the world. The most prestigious financial planning designations are not just of advanced standing and well-known, but are also recognized by relevant licensing authorities. Examples of these include the CFP in the United States and Canada, PFP in Canada, and JAFP in Japan.

In some places, individual employees within a licensed & registered Investment Advisor firm such as a: brokerage, bank or insurance company may be exempt if providing complementary financial planning services in relation to their existing products and services. Moreover, financial planners should be extremely careful in providing estate planning or taxation advice for a fee, as these fields are highly regulated by government agencies that control the practice of lawyers and Certified Public Accountant
Certified Public Accountant
Certified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...

s (CPAs). The term "Investment Advisor" includes any person who uses the title "financial planner" and who, for compensation, engages in the business, whether principally or as part of another business, of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as part of a regular business, publishes analyses or reports concerning securities.

History of certifications in financial planning across the globe

The lack of regulation of financial planning has prompted numerous independent organizations to create certification programs for professionals in the field, often in connection with a registered trademark
A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or...

. The programs can include education and work experience/apprenticeship requirements, ethical standards, competency testing, disciplinary/complaint processes and continuing education. Those who meet the requirements of the certification process, and who pay membership and/or licensing fees associated with use of the certification mark, are able to use the organization's designation when marketing their services.

One of the oldest financial planning certification programs is that associated with the CFP
CFP is a three-letter acronym that can stand for:*C Form-factor Pluggable, a form-factor that allows the transmission of digital signal with up to 100Gb/s...

 trademark, which has been in use since 1970 and was registered as a trademark in the US in 2002. The Certified Financial Planning Board of Standards, Inc., based in Washington, D.C. owns the CFP marks within the United States. The CFP marks are owned outside of the United States by Financial Planning Standards Board (FPSB), a non-profit standards-setting body based in Denver, Colorado. CFP is an acronym for "Certified Financial Planner," a phrase whose attempted registration as a certification mark was denied by the US Patent and Trademark Office on the grounds that it the phrase is a merely descriptive mark.

CFP Board was founded in July 1985 as the International Board of Standards and Practices for Certified Financial Planners, Inc., (IBCFP) by the College for Financial Planning (College) and the Institute of Certified Financial Planners (ICFP). The IBCFP became Certified Financial Planner Board of Standards Inc. (CFP Board) on February 1, 1994. As a professional regulatory organization acting in the public interest by fostering professional standards in personal financial planning, the CFP Board establishes and enforces education, examination, experience and ethics requirements for CFP certificants. The CFP mark is promoted worldwide through member associations such as the Financial Planning Associations.

The Chartered Financial Consultant (ChFC) is the "Advanced Financial Planning" designation conferred by The American College
The American College (Bryn Mawr, PA)
The American College is a nonprofit private educational institution located in Bryn Mawr, Pennsylvania. It offers several professional certifications and two types of Master's degree. Annually, The American College educates approximately 40,000 students, mainly through distance education.The...

. The ChFC professional is qualified to assist individuals, professionals, and small-business owners with comprehensive financial planning, including insurance, income taxation, retirement planning, investments, and estate planning. The ChFC curriculum provides the most extensive education of the widely recognized financial planning designations, requiring nine courses, each of which is followed by an exam. Six of the nine courses are the same courses required for a CFP candidate; therefore, one who passes their CFP certification exam can, in many cases, go on to earn their ChFC by successfully completing the three additional courses and exams. To date, more than 41,000 individuals have attained this distinction. This designation has also spread to Asia, where designees are found in countries like Singapore, Malaysia, Indonesia, China and Hong Kong.

The Fellow Chartered Financial Practitioner (FChFP) designation was developed by the National Association of Malaysian Life Insurance and Financial Advisors (NAMLIFA) in 1996. The designation was adopted by the Asia Pacific Financial Services Association (APFinSA) in 2001 as the unified designation for its member associations in 11 countries.

The Registered Financial Planners Institute (RFPI) formed in 1983 in the United States to promote professionalism among those who are or will be active in the field of financial planning for individuals and businesses. The RFPI is an international organization with chapters and members throughout the world. The RFPI offers study programs both in classroom conducted seminars and correspondence courses. RFPI is a collective membership of financial planners and is designed to serve the interest of both its members and the general public in matters relating to financial planning. RFPI recognizes qualified individuals by designation of RFP or SRFP who are in the financial planning field. This includes insurance, attorneys, real estate, bankers, CPAs, stock brokers, securities, or other professionals licensed in similar fields that can properly financial plan individuals or businesses in their related fields. In a separate development, the Malaysian Financial Planning Council, incidentally also introduced a professional designation for financial planners called Registered Financial Planner (RFP) in 2004, which was recognised by the regulatory bodies, Bank Negara and Securities Commission in the country for the purpose of licensing financial planner.

The Personal Financial Specialist (PFS) credential was established for CPAs in the United States who specialize in personal financial planning. The credential is awarded exclusively to members of the American Institute of Certified Public Accountants
American Institute of Certified Public Accountants
Founded in 1887, the American Institute of Certified Public Accountants is the national professional organization of Certified Public Accountants in the United States, with more than 370,000 CPA members in 128 countries in business and industry, public practice, government, education, student...

 (AICPA) who have demonstrated considerable experience and expertise in that area. As of today, the AICPA has granted approximately 5,000 CPA/PFS credentials.

In Australia, the financial planning specialisation, CPA (FPS), is available to those members of CPA Australia who can demonstrate their eligibility through experience and education within the financial services industry.

The objectives of the FPS designation are to:
  • achieve public recognition for those who hold the specialisation;
  • enhance the quality of financial planning services that members provide; and
  • increase practice development and career opportunities for CPAs.

The FPS designation is available to CPAs, and is based on a points system, where a minimum of 100 points must be accrued. Although all CPA Australia members who provide financial product advice must be licensed by ASIC, a member need not be licensed to first obtain the CPA (FPS) designation.

In Europe, the €uropean Financial Planner (€FP) designation conferred by the €uropean Financial Planning Association (€FPA) is gaining ground as a financial planning certification mark. The €FPA is the largest professional and educational organisation for financial planners and financial advisors in Europe and is the only Financial Planning Association created solely in the interest of European financial planning consumers and practitioners.

Globally, the Chartered Wealth Manager (CWM) is one of the fastest growing financial planner specializations focused on developing critical relationship management skills for financial planners and advisors. The designation is conferred by the Board of Standards of the American Academy of Financial Management
American Academy of Financial Management
The American Academy of Financial Management is a USA-based board of standards, certifying body, and accreditation council dedicated to the finance sector and management professionals....

 in 145 countries.

The rest of the certification qualifications related to financial planning include:
Fellow, Financial Services Institute (conferred by LOMA, USA); the Certified Private Banker designation (conferred by the American Academy of Financial Management
American Academy of Financial Management
The American Academy of Financial Management is a USA-based board of standards, certifying body, and accreditation council dedicated to the finance sector and management professionals....

); the Certified Financial Marketing Consultant (CFMC) conferred by the Institute of Marketing Malaysia.

Accredited business school, training centers and other providers

Globally, cross-recognition agreements are being developed to facilitate the learning of financial planning. The 2 major accrediting agencies, the Association to Advance Collegiate Schools of Business
Association to Advance Collegiate Schools of Business
The Association to Advance Collegiate Schools of Business was founded in 1916 to accredit schools of business worldwide. The first accreditations took place in 1919. The stated mission is to advance quality management education worldwide through accreditation and thought leadership. It is regarded...

 (AACSB) and the Association of Collegiate Business Schools and Programs
Association of Collegiate Business Schools and Programs
The Accreditation Council for Business Schools and Programs , formerly the Association of Collegiate Business Schools and Programs, is a U.S. organization offering accreditation services to business programs focused on teaching and learning....

 (ACBSP) accredit the best business school programs.

See also

  • Registered Investment Advisor
    Registered Investment Advisor
    The term Registered Investment Adviser is used to describe an Investment Adviser who is registered with the Securities and Exchange Commission or a state's securities agency. The term has been popularized due to its use within the Investment Advisers Act of 1940 and its association to the term...

  • Certified Financial Planner
    Certified Financial Planner
    The Certified Financial Planner designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards, Inc...

  • Family planning
    Family planning
    Family planning is the planning of when to have children, and the use of birth control and other techniques to implement such plans. Other techniques commonly used include sexuality education, prevention and management of sexually transmitted infections, pre-conception counseling and...

  • Fee-Only financial advisor
  • Financial advice
  • Financial adviser
    Financial adviser
    A financial adviser, is a professional who renders financial services to individuals, businesses and governments. This can involve investment advice, which may include pension planning, and/or advice on life insurance and other insurances such as income protection insurance, critical illness...

  • Financial plan
    Financial plan
    In general usage, a financial plan is a series of steps which are carried out, or goals that are accomplished, which relate to an individual's or a business's financial affairs. This often includes a budget which organizes an individual's finances and sometimes includes a series of steps or...

  • Financial planning (business)
    Financial planning (business)
    Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set...

  • Life planning
  • Stock broker
    Stock broker
    A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors...

  • 'Brokerage

External links

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