Frequently Asked Questions
We collected the most frequently asked questions below
What is a Personal Financial Planner?
Personal financial planning focuses on the individual — all the financial and non-financial factors that impact a person’s life. Although each financial planning practitioner has his or her own style, every member of the IAFP is dedicated to providing comprehensive, impartial advice that takes all factors into consideration.
What is the difference between Financial Advice and Financial Planning?
Financial advice comes in many forms and from many sources. Your accountant might offer tax tips; your lawyer may suggest estate planning tips; your banker might recommend a new type of GIC. A professional financial planner, on the other hand, thoroughly reviews and analyses all of the aspects of your financial state of affairs and prepares a comprehensive individualized plan to help you achieve financial security in the long term.
How are professional financial planners compensated?
These professional planners either charge an hourly rate or a fee based on a percentage of assets under management.
These professional planners may charge a combination of fees (as described above) and commissions derived from the purchase of financial products.
These professional planners are compensated through commissions derived on the purchase of financial products.
Understanding how your financial planner is being compensated is important, and should be disclosed to you prior to engaging the services of a financial planner.
Provided you are dealing with a professional financial planner who has the education and expertise to deal with you — and is ethical — it does not matter how the planner is compensated. Each and every R.F.P.® is an experienced financial planner who has proven their ability through examination and the submission of a comprehensive financial plan. And, they are required to adhere to an enforced Code of Professional Ethics.
How should I choose a financial planner?
“Financial planning” have become buzzwords. The public is seeking financial planners and, therefore, everyone is jumping on the bandwagon to call himself or herself one — stock brokers, insurance agents and bankers. Given the very broad definition of the term “financial planner/advisor” by various groups, the fact is that the public is always going to have to be careful when choosing a financial planner.
Qualified R.F.P.®/P.F.C.s work in all of these sectors. While many other advisors/planners in those areas may provide sound advice in one particular area, they would not necessarily meet the Institute of Advanced Financial Planner’s definition of a professional financial planner. You likely need someone who gives full consideration to the many disciplines (e.g., taxes, investments, insurance, wills and estates, etc.) that are required in a comprehensive financial planning process. Even if you only need advice in one area, or are looking to purchase a financial product, R.F.P.s are committed to your best interests by being process-driven rather than product-driven.
You can be assured that when dealing with an R.F.P.®, you are dealing with an experienced and objective professional. R.F.P.s have demonstrated, both to their clients and their peers, that they are experienced professionals, who actively practice financial planning and that they have the ability to produce a high quality comprehensive written financial plan.
Finding a qualified financial planner you can trust is important. Equally important, is to find a qualified financial planner who you are comfortable with. Professional financial planners have different personalities and communication styles. You may wish to interview a few professional financial planners to determine who most fits your personality and communication style.
Use the “Find a Planner” section here to find an R.F.P.® in your area.
What questions do I ask prospective financial planners?
(i) Does the financial planner have the R.F.P.® designation? Do they have the CFP® designation? If not, why not?
(ii) Does the financial planner belong to the Institute of Advanced Financial Planners™?
(iii) What are the planner’s areas of expertise?
(iv) Does the planner have criteria for new clients, such as an income or asset level?
(v) Will you be dealing primarily with the planner or an assistant?
(vi) How is the planner compensated and what is an estimate of fees for your situation?
(vi) Does the planner feel that you need a comprehensive financial plan or a modular plan?
(vii) What documentation can you expect and how many times will you meet in person?
(viii) Does the planner sell investments and other financial products, and if so, what is the scope of the products he/she sells?
(ix) Are you free to implement the planner’s recommendations elsewhere if you choose?
(x) Is the planner willing to provide you with references?
Why another financial planning association?
The R.F.P.®/P.F.C.® designation has always been distinct from other financial services designations. It is awarded only to those experienced planners who have demonstrated competency in the practice of comprehensive financial planning. An essential part of the R.F.P.®/P.F.C.® qualification process is the mandatory submission of a comprehensive financial plan for peer review.
How is the Institute of Advanced Financial Planners™ different from other planning associations?
The Institute is the only association that requires its Professional Members to demonstrate an ability to produce a comprehensive financial plan for peer review. The Institute is also unique in that it requires all of its members to regularly engage in comprehensive financial planning for their clients, and not just do it on the side or have previously qualified for something they don’t do now.
The Institute also provides an educational forum for the exchange of advanced financial planning issues amongst its members.
What is so important about a financial plan submission?
The financial plan submission is unique in that it demonstrates the ability to apply a body of financial planning knowledge in a practical situation. This is the cornerstone of a financial planning professional. Given the high failure rate on plan submissions previously experienced in the Canadian Association of Financial Planners (CAFP), it is clear that acquiring a financial planning designation that only tests knowledge is merely a first step, albeit an important one.
We believe that when the public is seeking a financial planner, they should have the assurance that the practitioner has the ability to complete a comprehensive financial plan. The Institute of Advanced Financial Planners™ is the only financial planning association in Canada that requires its Professional Members to be primarily employed in the profession of financial planning.
Other groups use the term “practicing or professional financial planner”…
This can be confusing for the public. For example, other groups have a broader definition of the term and define a “practicing financial planner” as “an individual engaged in offering any financial planning related services as part of their professional activities”. This does not require the ability to produce a full financial plan or the ongoing disciplined practice of comprehensive financial planning. Many of the individuals who meet this broad definition would not meet the more stringent R.F.P.® definition, in that they are allowed to take a product-centric versus process-centric approach to financial planning.
The Institute of Advanced Financial Planners™ and its R.F.P.®/P.F.C.® designation provide the public with the assurance that they are dealing with a financial planner capable of providing advanced financial planning solutions.
Last updated: 17 Jan 2014 10:10 AM
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