Financial planner

A financial planner or personal financial planner is a professional who prepares financial plans for people. These financial plans often cover cash flow management, retirement planning, investment planning, financial risk management, insurance planning, tax planning, estate planning and business succession planning (for business owners).

Sculpture of bull and bear on seesaw in front of Fross and Fross Wealth Management office in The Villages, Florida.
Personal finance
Credit · Debt
Employment contract
Retirement
Personal budget and investment
See also

Scope
Finance

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:[1]

  1. Establishing and defining the client and personal financial planner relationship
  2. Gathering client data and determining goals and expectations
  3. Analysing and evaluating the client's financial status
  4. Developing and presenting the financial plan
  5. Implementing the financial planning recommendations
  6. Monitoring the financial plan and the financial planning relationship

Licensing, regulations and self-regulation

In many countries, there are no requirements regarding use of the title of 'financial planner'.[2][3]

Australia

In Australia, a company providing financial services must obtain a licence from the Australian Securities and Investments Commission (ASIC). However, there are no requirements for the individuals providing the financial advice, and the ASIC website states that "Holding an AFS licence does not provide a guarantee of the probity or quality of the licensee's services."[4][5]

India

Financial Planning Standards Board India

Malaysia

The Securities Commission Malaysia introduced legislation through amendments made to the Securities Industry Act in 2003 to regulate financial planning and the use of the title or related-title of 'financial planner' or to conduct activities related to financial planning.[6]

In 2005, amendments to the Malaysian Insurance Act require those who carry out financial advisory business (including financial planning activities related to insurance) and/or use the title of financial adviser under their firm (which, like in Singapore, must be a corporate structure) to obtain a license from Bank Negara Malaysia (BNM).[7] Some persons who offer financial advisory services, e.g., licensed life insurance agents, are exempted from licensing as a practising requirement.

Singapore

In Singapore, financial services are highly regulated by The Monetary Authority of Singapore (MAS), the regulator and supervisor of financial institutions in Singapore. Rules are set by MAS for financial institutions and are implemented through legislation, regulations, directions and notices.[8] Currently, the majority of the financial planners (financial consultants) are commission-based, which may cause a conflict of interest related to the products recommended. In 2015, Balanced scorecard framework was implemented to better align the interests of the FA industry and consumers. This ensure FA representatives and supervisors meet key performance indicators that are not related to sales, such as providing suitable product recommendations and making proper disclosure of material information to customers (Non-Sales KPI). Failure to achieve good grades for these non-sales KPI will directly affect their commission (variable income).

New Zealand

The Financial Markets Authority (FMA) (formerly the Securities Commission) provides Authorisation to individuals who provide Personalised Financial Advice, Investment Planning Services and/or Discretionary Investment Management Services.[9] Individuals who receive Authorisation are referred to as an Authorised Financial Adviser (AFA). In order to receive Authorisation individuals must complete the National Certificate in Financial Services (Financial Advice) (Level 5).

See also

References
  1. "ISO 22222:2005 – Personal financial planning – Requirements for personal financial planners". ISO. 21 December 2005. Retrieved 2017-03-31.
  2. Peter Koulizos (2 October 2013). "The unregulated business of property investment advice". Theconversation.com. Retrieved 2017-03-31.
  3. "Is the future of financial 'advice' unregulated?". Professionaladviser.com. 1 November 2012. Retrieved 2017-03-31.
  4. "AFS licensees". Australian Securities and Investments Commission. 20 October 2014. Retrieved 2017-03-31.
  5. "What is a Lady Bird Deed". Saturday, April 18, 2020
  6. Financial Planning Association - Financial Planning History Made in Malaysia
  7. Bank Negara Malaysia - Introduction of Financial Advisers
  8. Monetary Authority of Singapore
  9. Financial Markets Authority
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