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Does a Financial Planner NEED to be able to Write Comprehensive Financial Plans?

Simon Hassan, CFPBy Simon Hassan, CFP, New Zealand

Should surgeons be able to do surgery, or pilots fly planes! Of course a financial planner (and a CFP professional is supposed to represent the top rung on financial planning’s ladder) needs to be thoroughly capable of creating sound financial plans. If this was not the case it would be high time to invent another name for our profession!

This is not to say that all financial planners should always provide comprehensive financial plans. It is not even the same as saying that a financial planner should sometimes prepare a comprehensive financial plan. Just because you are a surgeon does not mean you should only ever do surgery.

I am a comprehensive financial planner and I assume that any client – unless they tell me otherwise – comes to me because they want comprehensive financial planning advice and services.  In our practice more than 95 per cent of clients have comprehensive financial plans and almost 95 per cent of our revenue is fees.

But there are many other things competent financial planners can do. A financial planner could work as a budget adviser, or a university lecturer.

Comprehensive financial planning is financially rewarding, but may not be as lucrative as more narrowly focused (or specialized) work as say an investment adviser. But I find it very rewarding in the wider sense of that word. Comprehensive Financial PlansI know I add real value to my clients and they know I work in their interest and appreciate what I do for them.

Regardless of how they are going to practice, a CFP professional’s training needs to be comprehensive – covering all the main components (at least financial management, insurance, retirement, estate, tax, and investments) and the whole six-step financial planning process. This is vital so that a practicing planner can recognise and inter-relate relevant parts of a client’s situation, needs and goals, whether or not he or she recommends financial products or strategies to match.

There are various ways a candidate can demonstrate their comprehensive financial planning competence. These include (properly constructed) examinations; using a set of case study facts to develop a comprehensive financial plan – with or without the help of software; and real practice based activities (such as mentored, supervised and/or ‘intern’ experience). The best approach is probably a mix of all three.

In our practice we use Microsoft Excel and Word based tools and templates that I’ve developed over the last 20 plus years (and sell: to write comprehensive and other financial plans. Of course tools like these don’t work well for every client (comprehensive plans are complex, and there is an infinite number of potential real client scenarios).  And they certainly can’t replace the wisdom and skill of an experienced planner.  But they help ensure we don’t miss anything, and they reduce the amount of time required per plan, increasing our productivity – and profit.

See the results of Financial Planet’s Poll: How important is the competency to develop a comprehensive financial plan in your practice?

Simon Hassan's Blogs

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