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Why CFP Professionals Are Better

Taylor Liao, CFPBy Taylor Liao, CFP, Chinese Taipei

In today’s financial industry, there are many salespeople who sell investment products unfairly to consumers. They use persuasion and manipulate the information to make their products seem favorable. Let’s use a foreign currency insurance product as an example:
The terms of this product are:
• The consumer pays a single premium of 1,000,000 NT Dollars.
• In the case that the exchange rate of New Zealand dollars to NT Dollars remains the same, the consumer receives 1,258,488 NT Dollars after eight years.

The product sounds so good, because the yearly compound rate is about 2.88%, which is presently twice the interest rate offered from the bank. In addition, the product’s brochure says that it is a principle guarantee.

This product is very tempting and sells quite well because of the “principle guarantee”. The reality is that when you invest the principle amount, administrative fees and insurance fees are deducted and the remaining amount is invested. The tricky part is the exchange rate of the New Zealand Dollar and the NT Dollar must be the same after eight years for the consumer to receive the amount of 1,258,488 NT Dollars. The principle is not actually
Foreign Currency Insurance Productguaranteed either. It’s based on the exchange rate; if the rate drops, the client will lose money. The rate of NZ Dollar to NT Dollar is 24.4 now, but on January 23, 2009, it was 17.5 (as you can see in the image to the right) and that’s a 30% depreciation compared with the rate now.

This means that when the client wants their money back, they have to suffer a 30% depreciation, or in other words, their 1,258,488 NT Dollars will become 880,942 NT Dollars only. The product claims to be a principle guarantee but it doesn’t guarantee your loss in exchange rate depreciation.

The most valuable aspect of CFP certification and financial planning to clients is that we know all the tricks used to sell products to consumers and we can share our knowledge with our clients. Our value is that we put the clients’ interests first. Even if we use the financial product as a solution for our client, we are honest with them about the pros and cons of that product.

I think another important value of CFP certification is that we are ethical in our comprehensive services. CFP certificants study for 240 hours and pass a very difficult exam whereas non-CFP certificants pay money and take short training courses which guarantee you to pass their exams. CFP certificants are more qualified than their competitors.

CFP certificants have a wide knowledge base that gives them access to many financial tools to solve clients problems. I had a client who was a successful entrepreneur with assets in Taiwan and overseas. She didn’t want to leave many assets to her children, but wasn’t sure what approach to take. I proposed that she set up a self-benefit trust to take care of herself after retirement and set up a charitable trust to give the rest of her money to charity.

This client had an accountant to do her business accounting, a lawyer to take care of legal matters such as her will and inheritance, and she handled all the other details of her assets. I told her that she needed a financial planner who could manage her whole wealth plan. She travels between her businesses in Taiwan and China and if an accident were to happen, nobody would have the information necessary to process her inheritance.

CFP professionals might not have the in-depth knowledge of an accountant or a lawyer, but financial planners are the only ones who can do comprehensive planning for clients and offer truly trustworthy advice.

Taylor Liao's Blogs

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