What’s in a name? That which we call a Certified Financial Planner, by any other name, may not smell as sweet

By Kelly Robinson, Spring 2016 Student Intern

Shakespeare made a variation of this line famous in his play Romeo and Juliet, indicating that a name is an artificial and meaningless convention. However the sentiment can be lost if the person handling your money isn’t who you thought they were based on this designation. So what is a Financial Planner and what does that name mean for you and your money?

The designation of financial planner can be confusing, as it is a phrase that can encompass a variety of skills and services. Some financial planners may have no training in finances whatsoever and are completely unregulated. Others may be regulated under other professional designations such as investment advisers and accountants, who are be regulated by the SEC and the state Board of Accountancy, respectively. Some others have earned the designation of a Certified Financial Planner (CFP) and are subject to strict standards to both earn and maintain their CFP designation.

Just to put into perspective “what’s in a name,” to earn the title of Certified Financial Planner, the Certified Financial Planner Board of Standards requires the following: at least a bachelor’s degree from an accredited university, three years of full-time personal financial planning experience (2,000 hours equals one year for a total of 6,000 required hours), completion of a CFP-board registered program (or holding one of few graduate degrees related to finances), pass a final certification examination, and finally attend thirty hours of continuing education classes every two years.

So what does this mean for you? Clearly, the range of services and skill sets varies quite a bit. This is why it is important to do your homework and determine what type of planning you are looking for. If you are focusing on one particular aspect of your finances, versus looking for a more comprehensive life plan, you may not need the extra services (and extra cost) that a CFP offers. Additionally, it’s important to consider that the higher the designation, the higher the regulation, so you might have more protection in working with a more highly regulated professional (however, that NEVER eliminates all risk). Finally, it’s important to consider that if a financial planner offers products, they have an incentive to recommend those products. Keep these factors in mind as you look for a professional to help you achieve your goals. If you have a particular person in mind that you’d like to hire, you can look up their designation using FINRA’s Profession Designation tool to determine exactly how (or if) they are regulated.