What is an “Independent Financial Planner”?
William Chan • Mar 09, 2021
Being an "independent financial planner" has more to do with how I operate vs. what I do.
The simplest way to help people understand is by breaking it into two parts, “independent” and “financial planner”.
Independent
There are many advisors who are either employees of a specific company or are contracted to one as a representative. You will notice they may
exclusively
or primarily recommend their company’s products or those of “preferred partners”.
For example, as an independent, investment and insurance products are not developed by the companies I am contracted with. I operate through a “distributor” which is called
dealer
for investments and
managing general agency
(broker) for insurance. This allows for
unbiased
financial recommendations.
I can also operate as an independent planner on a fee-only basis, which means no specific product recommendations would be provided. Advice can be charged hourly or as project based financial plans.
Financial Planner
I am considered a Certified Financial Planner® having completed the designation requirements. Only those who are qualified to do so can you use this title and offer financial plans to clients. It basically shows a level of proficiency when it comes to knowledge, skills, experience, and ethics when examining a client’s entire financial picture.
As an “independent financial planner” I have a fiduciary responsibility to the client and their interests, with the ability to not only strategize, but also implement those plans.
What is the difference between an advisor and planner? Advisor is a general term, whereas a planner is more specific, requiring additional education and experience.
The easiest way to understand how financial advisors
can vary is by comparing the role to restaurant cooks. There are many levels and areas of financial advice, like there being different roles in a restaurant kitchen and cuisines in the world. Similarly, there are some great home cooks who can prepare meals of restaurant quality, self taught through hard work, similar to how some people may manage their own finances.
Unfortunately, it can be overwhelming for people to know the difference in quality and clearly identify an advisor’s abilities. There are those who may be newer to the financial industry and have just completed sales licenses, and those advisors operating for decades with no additional designations.
Certain advisors can be specialists in areas such as financial management, investments, insurance, tax, retirement, and estate planning, while there may be some that have all the above. It comes down to asking the right questions and knowing what you are looking for in an advisor.
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When leaving an employer, the last thing you're thinking about is the group plan that was in place. People usually rely on a company representative, make a decision, then forget to make changes. Being a corporate employee leaving to build an independent financial advisory practice, I wanted my first article to have a personal touch and to better guide others who were also transitioning during this time.
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When leaving an employer, the last thing you're thinking about is the group plan that was in place. People usually rely on a company representative, make a decision, then forget to make changes. Being a corporate employee leaving to build an independent financial advisory practice, I wanted my first article to have a personal touch and to better guide others who were also transitioning during this time.
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