More than at perhaps any other time in your life, some skilled planning advice could be invaluable. But with a myriad of professional advisers out there now, to whom should you turn? What do such designations as CFP and PRP mean? (Answer: Certified Financial Planner and Professional Retirement Planner). And how can these people help you navigate all the changes in your life?
Different advisers will have differing skill sets, so which one is best for you will depend largely on your circumstances and needs. If, for example, you want help managing your investment portfolio, an accountant wouldn't be your first choice; if you're looking for health insurance, an investment rep may have little to offer. Most financial planner designations (like CFP or PFP) require the study of a variety of subjects related to personal finance, but even these well-rounded professionals may seek the assistance of someone else with, say, specialized investment or insurance skills.
Other advisers can have a much narrower focus. That's not to say that any given adviser isn't equal to tasks beyond his or her traditional calling – many professionals expand their practice into related areas as their knowledge and experience grow.
Some family lawyers, for example, acquire a thorough grasp of financial and estate planning, as do many investment and insurance advisers. Nor is it to suggest that professional accreditations are the be-all and end-all of dispensing financial advice. Some unaccredited advisers have as broad and deep an understanding of personal finance as any accredited professional.
But designations do provide a degree of assurance to you, the consumer, that this particular expert has made a long-term commitment to his or her profession and is willing to meet all the ethical and ongoing educational requirements of the association or group that administers the accreditation. The important thing is that, whomever you consider, he or she demonstrates in-depth, up-to-date knowledge of all the aspects of personal finance with which you need help. Or, lacking such knowledge, he or she should at least have a circle of associates who can provide insight into any unfamiliar territory.
Finding a good fit
Where do you start looking for a good adviser? Ask your closest friends and associates, particularly those in circumstances similar to your own. Who do those people rely on? Are they satisfied with a given adviser's services, and how have they benefited?
If you can't get some names this way, check with an appropriate professional association. If you're looking for a financial planner, for example, Advocis (the Financial Advisers Association of Canada) will be able to provide the names of accredited members in your neck of the woods.
If you're of a more modest income, you may not be able to afford (or need) highly skilled financial advice. If you do need some help, though, you might get it from your local community centre or outreach clinic; many of these government-funded facilities can provide retirees with free or low-cost access to basic services such as filing tax returns or helping to prepare wills and powers of attorney.
Page 1 of 3 – On page 2, learn how to select the best financial planner for your specific needs.
You should get the names of two or three candidates, if possible, and arrange to speak with them individually. Then you can choose the one that best suits your needs and temperament. Before any meeting(s), make a list of all the points you want to cover and gather up any relevant documentation – tax returns, pension slips, investment account statements and so on. The more groundwork you do now, the less time it will take for the adviser to get up to speed, and the more productive your meetings can be.
Ask lots of questions and make sure you understand the answers. Does he or she have many clients in circumstances similar to your own? What was he or she able to do for them? Would the same strategies work for you? Can the adviser provide references from these other clients? Given a brief outline of your own circumstances, what might he or she be able to do for you, and at what cost?
When it comes to fees, some financial advisers receive part or even all of their remuneration from commissions – indeed, this has become standard practice in the insurance and investment industries. Commissions do create biases toward pushing certain products, though, so if you're looking for a financial planner who will provide totally impartial advice, look for one who earns a living from fees alone.
Also, in listening to the advisers' financial (or insurance or investment) proposals, treat with caution any assumptions they make in their financial projections. Given market conditions lately, is a 15-percent average annual equity yield realistic? Are house prices likely to continue rising? How quickly will that debt be retired if interest rates rise? Is inflation worked into the calculations? Finally, a good personal fit is important. Do you get along well with that person and feel comfortable with his or her attitude and advice? Is this someone you feel you can trust? If not, you should probably keep looking.
Above all, avoid the temptation to rely on "Oh, my accountant says this" advice from friends and acquaintances; it may be based on misinterpretations of the original comments or generalizations that don't reflect your situation. There could be a lot hanging in the balance, so you shouldn't risk it on hearsay – get it yourself right from the horse's mouth. The payback could be significantly greater than the cost. (Stressed about money? 10 tips for stress-free money management.)
Who's who? A guide to the different areas of expertise among the field of finance
• Certified Financial Planner (CFP)
This is an internationally recognized accreditation bestowed in Canada by the Financial Planners Standards Council (FPSC) and is now the leading planner designation in this country, with almost 17,000 accredited members. CFP education covers wealth accumulation, retirement planning, investment products and strategies, risk management and estate planning. For more information or to find a CFP in your area, contact Advocis (the Financial Advisers Association of Canada) at 1-800-563-5822 or visit their website at www.advocis.ca.
• Chartered Financial Consultant (CH.F.C.)
This designation is no longer conferred in Canada, although some advisers who have already acquired it still use it. CH.F.C.s have advanced knowledge in wealth accumulation and retirement planning; most are also CFPs.
• Chartered Life Underwriter
(CLU) This designation originates in the life insurance industry but denotes specialized expertise in taxation and estate planning. CLUs must complete the core part of the CFP training courses, and most CLUs are also CFPs. Registered Financial Planner (RFP) This designation is conferred by the Institute of Advanced Financial Planners (IAFP) after one has submitted a comprehensive sample financial plan for peer review and passed a rigorous exam. Most RFPs are also CFPs. Contact the IAFP at 1-888-298-3292 (www.iafp.ca).
• Personal Financial Planner (PFP)
This designation is the banking industry's equivalent of the CFP.
Page 2 of 3 – On page 3, learn how to differentiate between accountants and investment advisers.
Accounting professionals focus primarily on taxation and recordkeeping, and the majority practise in corporate or institutional environments. There are three designations for accountants: Chartered Accountant (CA), Certified General Accountant (CGA), and Certified Management Accountant (CMA). CMAs and CGAs work almost exclusively in the corporate/institutional environment, while some CAs may take personal finance training and then go on to specialize in this area.
• Chartered Financial Analyst (CFA)
This international designation is issued by the CFA Institute upon completion of graduate-level courses and examinations in accounting, economics, ethics, money management and security analysis. CFA candidates must have three years' prior working experience and a bachelor's degree.
• Canadian Investment Manager (CIM)
This designation is bestowed by the Canadian Securities Institute (CSI) upon completion of the Institute's courses on investment and portfolio management. Advisers with the CIM designation can sell mutual funds.
• Fellow of the Canadian Securities Institute (FCSI)
This is the highest designation conferred by the Canadian Securities Institute. FCSIs must have a minimum of five years' experience in the securities industry.
• Financial Management Adviser (FMA)
This designation is granted by the Canadian Securities Institute to graduates of its FMA program, which is geared to providing advanced financial planning and wealth management advice to high-net-worth investors.
• Retirement specialist
In recent years, a number of new designations have been introduced denoting specialized retirement knowledge. These are really add-ons for professionals who are already otherwise accredited, as the training courses are quite short. Knowledge of money matters may be limited, for example, if the person has no other credentials.
• Professional Retirement Planner (PRP)
This designation is conferred by the Retirement Planning Association of Canada (RPAC) on members who meet certain educational requirements and are approved by a committee of peers in the retirement planning field, including financial advisers, health care professionals and career transition consultants.
• Certified Senior Advisor (CSA)
This designation is bestowed by the Canadian Academy of Senior Advisors (CASA) on completion of a 3-1⁄2-day program followed by a multiple-choice exam. "CSAs have supplemented their... credentials and education with knowledge about aging and working with seniors," CASA's website says, adding: "The CSA designation does not imply expertise in financial, health or social matters."
• Elder Planning Counselor (EPC)
This designation is bestowed, on completion of a five-day program (23 chapters of a three-volume desk reference) and exam, by the Canadian Initiative for Elder Planning Studies.
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