A financial planner or personal financial planner is a qualified financial advisor. Practicing in full service personal finance, they advise clients on investments, insurance, tax, retirement and estate planning.
As a general rule, a financial planner’s work can: integrate into the range of professional services (eg: lawyer, accountant); or integrate into the offer of a range of financial products and services (eg: financial advisor, insurance agent); or not be integrated into other products or services, providing stand alone financial planning.
Scope
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 as required. The scope of planning would usually include the following: Risk management 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, including managing for risk-adjusted returns and to deal with inflation Retirement planning: planning to ensure financial independence 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 and liability management: maintaining and enhancing personal cash flows through debt and lifestyle management
Process
The personal financial planning process is described in ISO 22222:2005 as consisting of six steps:
Establishing and defining the client and personal financial planner relationship
Gathering client data and determining goals and expectations
Analysing and evaluating the client's financial status
Developing and presenting the financial plan
Implementing the financial planning recommendations
Monitoring the financial plan and the financial planning relationship
Licensing, regulations and self-regulation
In many countries, there are no requirements (no legal framework) regarding the use of the title of 'financial planner'.
The scope of the title "financial planner" varies from one jurisdiction to another. The legal framework of the profession may include: a reserved title (eg: PFA-certified financial planner, CFP, financial planner): the protection of the title ensures that the services are provided by accredited persons meeting ethical standards; reserved activities: as a general rule, the asset planning activity is shared between several professions; compulsory basic and continuing training: the training requirements of financial planners ensure updating of skills; professional liability insurance; a compensation fund; a supervised service offer; supervised instrumentation; an obligation of written mandate before delivering a professional service.
Australia
In Australia, financial advisors must be authorised under an Australian Financial Services licence holder to provide financial product advice. The licence holder must obtain a licence from the Australian Securities and Investments Commission (ASIC). The ASIC website states that "Holding an AFS licence does not provide a guarantee of the probity or quality of the licensee's services."
There has been recent reforms to the licensing of financial advisors in Australia as a result of several scandals involving things such as inadequate or improper advice and fees charged to clients for no service. From 1 January 2019, new education and training standards apply to financial advisers these standards include undertaking approved post graduate study, passing a national accredited examination and undertaking continuing professional education. New entrants to the industry have additional requirements.
Belgium
In Belgium, advice in this area is regulated by the law of 25 April 25, 2014 relating to the status and control of independent financial planners and to the provision of planning consultations by regulated companies. Notaries, lawyers, accountants and auditors are however not targeted. The law uses the term "financial planning", which creates an amalgamation between two disciplines.
Canada
In Canada, "financial planners" are unregulated in every province except Quebec, where only individuals holding the Planificateur Financier (Pl.Fin / F.Pl.) designation are allowed to use the title "Financial Planner" and offering financial planning services.