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Specialisation in Financial Planning is Actually More Complicated

By Almo Lubowski, CFP 

It would seem that there is a trend amongst financial planners to specialise and specifically in investments. This means that their target market is usually higher net-worth individuals, as the ordinary person does not always have high amounts of additional money to save or invest, but this is another discussion entirely. My question is whether specialising is really keeping it simple?

The CFP certification covers much more than just investments, there is a large focus on estate planning for instance, and overall the material covered is intended to prepare you to become a general practitioner, more than anything else.

One of the first things you should be addressing with a client, in my opinion, is their budget. Spending patterns, especially in the current high debt environment around the world, are a huge problem amongst the general public. Even higher-net worth individuals could adjust their spending patterns (unfortunately they often don’t realise there is a problem because they just have that much more to spend perhaps, but yet are saving too little for the future). Starting with a budgeting exercise and preparing a financial management strategy with a client would surely be very useful to many.

The point I am trying to make is that as CFP professionals we actually have so much more value to add to our client’s financial well being, over and above merely limiting ourselves to a specialised area of practice. Should we not be trying to become the Chief Financial Officer of an individual’s life? We should aim to be the first person they call when anything financially related occurs in their lives or before they make any major financial decisions.

Generalising Is Simpler 

At this point, one might ask how  being a generalist, looking at all the areas of a client’s financial situation and making financial planning recommendations on a variety of areas, can be regarded as “keeping it simple”?  My opinion (I will again use investments to illustrate my point) is that we make our jobs complicated by trying to just be an investment expert. The reason for this is that being an intermediary between the client and an asset manager, unless you have considered the investment in light of a holistic financial plan and/or estate plan, is probably just an unnecessary layer of cost for the client. What then happens, is that the financial planner tries to “add-value” by taking on functions similar to those of an asset manager. This is where it gets complicated, because often this is beyond your qualification, as an advisor. In such cases, you may require additional training and/or qualifications, which many do in fact acquire these with more time and cost. Or if such additional training is not acquired it could open you up to huge risks. Are you starting to see how it’s not really keeping it simple?

I am of the humble opinion that doing what you were trained to do as a CFP professional, and effectively being a generalist, is of huge importance to the majority of clients. Simply being their Chief Financial Officer and financial coach, guiding them in the right direction, brings much value to their lives. This is what so many people simply need and want. Furthermore, potentially turning your client away because you only specialise in a small area, means you could be alienating a valuable client. So, perhaps specialising just complicates matters, for you and for the client.

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