Demystify the Financial Planner

What is a Financial Planner?

A financial planner is someone who can help you live the lifestyle you desire by carefully planning what you do with your money, ensuring that you can meet your goals. Your financial planner can help you define these goals, which will could include steps like buying a house, paying for the education of your children, having enough saved for a comfortable retirement, and planning your estate.

After your goals have been defined, your financial planner can help you examine your finances to determine how close you are to reaching them. Then he or she will help you decide what you need to do to achieve them.  Additionally, your financial planner can help you evaluate risks and determine the impact of various actions on your overall finances.

For example, if you want to buy a vacation home, your financial planner could tell you how many years that purchase would push back your retirement and what investments you could make to offset the price of purchase.

Why is the Term "Financial Planner" So Confusing?

Because the government does not regulate the general financial planning industry, anyone can be a financial planner.  In fact, there are even software programs to help you do much of your own financial planning.  However, there are areas in which you will likely require the help of a professional financial advisor to reach your goals.

How is an Accountant Related to a Financial Planner?

A financial planner deals with a general plan for achieving your financial goals.  The specifics of how to achieve those goals are usually handled by a financial advisor.  An accountant is one kind of financial advisor, who usually handles filing taxes and dealing with the IRS.

Other Financial Advisor Specialties Include:

• Estate Planner - An accounting professional who can help you create a strategy for managing estate taxes and passing on your material wealth after your death.  Accredited Estate Planner (AEP) is a typical certification for this accounting industry.
• Investment Advisor - An accounting professional who is authorized to provide advice about stocks and securities.
• Stockbroker - A financial advisor who is authorized to buy and sell stocks on your behalf.  A stockbroker must be registered with and certified by the National Association of Securities Dealers (NASD).
• Insurance Agent - A financial advisor who is authorized to evaluate your needs for health insurance, life insurance, homeowners insurance, and more.  Unlike a regular financial planner, an insurance agent can also sell you insurance policies.  Chartered Life Underwriter (CLU) is a common certification for an insurance agent.

A professional financial planner may be certified in one or more of these specialties.  If you require additional advice that your financial planner cannot provide, he or she can refer you to an appropriate financial advisor.

Who Needs a Financial Planner?

It is easy to believe that financial planning is something that can be ignored until you are middle-aged or beyond. But the fact is that a good financial planner can help anyone.  The earlier you start managing your finances, the easier it will be to achieve a comfortable lifestyle.

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