Who is a Financial Planner?

We all know who is an accountant is and what they can do for the individual and business. After all, the role of the accountant has been in existent for centuries. However, not many know who is a financial planner is and what they do?

We are in a world where information is available at our fingertips. But little info is available on what a financial planner is doing behind the scene for their client. At best, people will put the Life Insurance Agent, the Unit Trust Agents, and a Financial Planners side by side and label them as one.

I cannot blame the market for having a hazy understanding of what a Licensed Financial Planner does at their work because I believe we have not done enough to clear the air even having been around since 1999. So, I decided to share my thought on it. Hopefully, you will get to know us a little better.

The Discovery Stage


Initially, I had a misunderstanding of what a Financial Planner can do too. I believed that the only difference between an agent and a planner is that a planner will have access to more financial products using a single license as compared to an agent. I was so wrong.

When I was doing my CFP Certification, that was when I experienced an Ah-Ha moment. I immediately saw the vast difference in how a financial planner would approach financial planning compared to an agent, where an agent would focus 80% of their time on how to sell you the product. On the other hand, the financial planner will focus 80% of their time listening to your issues before presenting a solution to you.

A good financial planner should provide financial solutions using the right approach to enhance one’s life. At times, the client may not need to purchase any financial product. Instead, all they need is to apply a piece of new financial advice shared by their Licensed Financial Planner to improve their life.

You may argue. How come the financial planner I engaged with collects a fee from me and still focuses on selling a financial product? It will be another topic which I will cover in my next post. For now, let’s focus on what a Licensed Financial Planner do behind the scene.

What does a Licensed Financial Planner do?

Before I go into it, can we agree that most professional profession has their Standard Operating Procedures (SOP) and Code of Ethics to follow?

For example, a doctor will follow a Clinical Practice Guideline when attending to a patient. A lawyer will follow their Rules and Rulings to have a proper conduct matter of practice and etiquette. Likewise, a Licensed Financial Planner has a similar process and code of ethics to follow.

If you are new to the financial planning industry, you may not hear of the acronym EGADIM. It stands for: Establish and define the relationship, Gather client data (qualitative & quantitative), Analyze information, Develop the financial plan, Implement the financial plan, and Monitor the financial plan. The EGADIM is what we called the SOP when you engage with a Financial Planner. While following the SOP, the code of ethics also forms part of our practice to ensure your right is protected.

Now that we have got the legal stuff cleared off. Let’s get into the activities done behind the scene.

The StepsWhat will happen?What the planner do?What to Expect?
Step 1:
Establish and Define the Relationship
We will spend our time listening to you talking with an intent to understand your why and your situation. Start with your goals, and we will see how to support you to achieve them.We will listen and ask clarifying questions to understand your condition, values, and desires in life.After hearing you out, we will make an offer to you. In it, you will find the recommended services to your condition, the fees, the work required, and the expectations required from both sides. It will be a collaborative effort between you and us from the start until the end of the engagement.
Step 2:
Gather Client Data (Qualitative & Quantitative)
When you agreed to proceed, we will start gathering information on the issue you intend to solve. At this stage, we will define your goals in detail by asking you to prioritize them.We will segregate the information you gave us and strategically arrange them to ensure it is enough to assist you in achieving your goals.We will be collecting qualitative information like your health condition, life expectancy, and family circumstances and quantitative information like your income and expenses.
Step 3:
Analyze Information
After getting the required information from you, we will start analyzing it and further ask clarifying questions to assist you in selecting and prioritizing your earlier goals.Based on your selection and goals priority, we will talk about the likelihood of the goals that you may achieve. If the condition doesn't allow you to achieve the goals on time, we will discuss with you and provide other alternatives.You will be able to see the factual details of your condition and may be required to adjust your goals to suit your desired path. It will include reprioritizing, delay selectively, or redefine the goals.
The StepsWhat will happen?What the planner do?What to Expect?
Step 4:
Develop the Financial Plan
We will develop the financial plan or solution in achieving your objectives after we have sorted out the options with you in the earlier steps.We will set the factual parameters for this plan like saving rate, timing, and the priority of the recommendation. Together with these parameters, we will be converting your personal information into data to key them into highly sophisticated software and start aligning the info form into a financial plan.After we have done key in the data, we will present the financial plan to you for your implementation.
Step 5:
Implement the Financial Plan
At this step, we will establish who will be responsible for implementing the recommendation.We will communicate the recommended implementation to you. At this stage, we will also describe the responsibility covered by us, yourself or any third party involved. We will coach, guide, or provide the actions, products, and services required to put your plan into motion. We will describe to you the advantages and disadvantages of each recommendation.The financial plan will enable you to chart your way forward better and implement your ideal plan.
Step 6:
Monitor the Financial Plan
Like during the implementation stage. We will establish any monitoring responsibility with you.If the monitoring responsibility falls to us, we will assist in updating your plan as you progress in life. We will document any changes in your life and update the financial plan for you and inform you of the likelihood that the changes may impact your goals.The financial plan has become a living plan and will empower you to have more options to choose from before you implement any new goals into your life. Hence, it will enable you to progress in life with peace of mind.
A financial planner should provide you with a solution to your financial matters at heart. If you noticed, I used the word should in my sentence. It is because not everyone who carries the CFPCERT TM title practice as a Licensed Financial Planner. To help you clear the air, I will cover the type of licensed financial planner in the market include those marketed as a financial planner in my next post.
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    1. Thank you Robert for the support and encouragement. Hopefully, with this write up more people will know what a Licensed Financial Planner does in their practice in helping their client to solve their financial concerns.

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