Taking the Next Step


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Why you should consider working with a CFP

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Taking the Next Step

  1. 1. Taking the Next Step
  2. 2. What is financial planning? Financial planning is a process that provides a client with impartial assistance in analyzing and organizing personal financial affairs in order to achieve financial and lifestyle goals.
  3. 3. What is Financial Planners Standards Council? <ul><li>Financial Planners Standards Council (FPSC) was incorporated on November 10, 1995, as a not-for-profit organization. </li></ul><ul><li>It is here to benefit the public and the financial planning profession by </li></ul><ul><li>establishing and </li></ul><ul><li>enforcing standards for </li></ul><ul><li>financial planners who </li></ul><ul><li>choose to earn the </li></ul><ul><li>internationally recognized </li></ul><ul><li>CFP™ designation. </li></ul>
  4. 4. Who created Financial Planners Standards Council? Created as a result of the initiative of organizations whose members deal with the personal finances of individuals.
  5. 5. Why was Financial Planners Standards Council created? <ul><li>These seven associations believe: </li></ul><ul><ul><li>the public needs a way to identify competent, ethical financial planners. </li></ul></ul><ul><ul><li>competent, ethical financial planners need a way to distinguish themselves as professionals </li></ul></ul><ul><ul><li>the financial planning profession needs to coalesce around a single designation. </li></ul></ul><ul><ul><li>it is important for Canada to participate in the international movement toward the establishment of a globally recognized financial planning profession. </li></ul></ul>FPSC was formed as a result of the industry’s desire to be proactive in these areas.
  6. 6. CFP Certification Process <ul><li>The 4E’s of Professionalism </li></ul><ul><li>Education - Candidates must complete an approved education program. </li></ul><ul><li>Examination - Tests the candidate’s ability to apply planning knowledge to practical financial planning situations. </li></ul><ul><li>Experience - Two years working for compensation in a financial planning related position. </li></ul><ul><li>Ethics - Agree to abide by FPSC’s Code of Ethics. </li></ul>
  7. 7. Post-Certification Requirements <ul><li>CFP licensees must attest annually as to their compliance with the Code of Ethics. </li></ul><ul><li>FPSC requires 30 hours of continuing education (CE) a year to ensure that CFP licensees are staying up- to-date on areas in their field. </li></ul>
  8. 8. A brief history of Financial Planning in Canada <ul><li>In 1977, Charles H. Coveney founded The Canadian Institute of Financial Planning - there was no single organization offering a comprehensive educational program that addressed all issues relating to the personal financial planning practice on a day-to-day basis. </li></ul><ul><li>With the economic growth of the '80s & '90s, attitudes toward financial consultants changed and the services being offered by them were becoming more popular and highly sought after by both the general public and business. </li></ul>
  9. 9. A brief history of Financial Planning in Canada <ul><li>With the increase in demand for financial advice, more education providers with a variety of designations came on the scene. </li></ul><ul><li>The alphabet soup of designations served to confuse the public even more with many so called financial planners concentrating on the sale of products such as securities, mutual funds or insurance. </li></ul><ul><li>This blurring of financial services continues as all sectors of the industry struggle for a piece of a growing and more demanding market. </li></ul>
  10. 10. A brief history of Financial Planning in Canada <ul><li>In 1995, FPSC was formed and sought to simplify things for consumers and raise the bar for those holding themselves out as financial planners by establishing the CFP designation as the pre-eminent financial planning designation in Canada. </li></ul><ul><li>Membership in FPSC initially included nine organizations whose members dealt with the personal finances of individuals. </li></ul><ul><ul><li>They recognized they have a responsibility to better define and explain the role of financial advisors and to ensure advisors provide ethical, consistent and competent advice to clients. </li></ul></ul>
  11. 11. A brief history of Financial Planning in Canada <ul><li>The CFP has flourished amid wide-scale changes within the financial services sector. </li></ul><ul><ul><li>Two of the nine members withdrew from FPSC but the sectors they represent - banks and brokerages - continue to support the CFP. </li></ul></ul><ul><ul><li>Consumers recognize that individuals holding the only internationally recognized financial planner designation, the CFP designation, are well trained and adhere to a code </li></ul></ul><ul><ul><li>of ethics that puts the consumers best interest first. </li></ul></ul>
  12. 12. The Financial Planning Process Financial planning consists of six distinct steps. Understanding what they entail and finding out if your planner understands how to use them to develop the best plan for you will help you determine if you are receiving the guidance you should expect. -Six Distinct Steps-
  13. 13. The Financial Planning Process 1 <ul><li>Establish the client/planner engagement. </li></ul><ul><li>Your planner should: </li></ul><ul><ul><ul><li>Explain issues and concepts related to the </li></ul></ul></ul><ul><ul><ul><li>overall financial planning process that is appropriate to you. </li></ul></ul></ul><ul><ul><ul><li>Explain the services he or she will provide, the process of planning and documentation. </li></ul></ul></ul><ul><ul><ul><li>Clarify your responsibilities as a client. </li></ul></ul></ul><ul><ul><ul><li>Clarify his or her responsibilities as your planner. This should include a discussion about how and by whom he or she will be compensated. </li></ul></ul></ul><ul><li>You and your planner should: </li></ul><ul><ul><ul><li>Discuss the scope of the client/planner engagement. </li></ul></ul></ul><ul><ul><ul><li>Agree on how decisions will be made. </li></ul></ul></ul>
  14. 14. The Financial Planning Process <ul><li>Gather client data and determine your goals and expectations. </li></ul><ul><li>Your planner should: </li></ul><ul><ul><ul><li>Obtain information about your financial resources and obligations through interviews or questionnaires. </li></ul></ul></ul><ul><ul><ul><li>Gather all the necessary documents before. giving you the advice you need. </li></ul></ul></ul><ul><li>You and your planner should: </li></ul><ul><ul><ul><li>Mutually define your personal and financial goals, needs and priorities. </li></ul></ul></ul><ul><ul><ul><li>Mutually define your values, attitude and expectations, and if relevant, how you feel </li></ul></ul></ul><ul><ul><ul><li>about risk. </li></ul></ul></ul>2
  15. 15. The Financial Planning Process <ul><li>Clarify your present financial status and identify any problem areas and opportunities . </li></ul><ul><li>Your planner should: </li></ul><ul><ul><li>Analyze your information to assess your current situation (cash flow, net worth, tax projections, etc.) Identify any problem areas or opportunities with respect to your: </li></ul></ul><ul><ul><ul><ul><li>Capital needs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Risk management needs and coverage </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Investments </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Taxation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Retirement planning </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Employee benefits </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Estate planning </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Special needs: (i.e. adult dependant needs, education needs) </li></ul></ul></ul></ul>3
  16. 16. The Financial Planning Process <ul><li>Develop and present the financial plan. </li></ul><ul><li>Your planner should: </li></ul><ul><ul><li>Develop and prepare a financial plan tailored to meet your goals and objectives, values, temperament and risk tolerance, while at the </li></ul></ul><ul><ul><li>same time provide you with projections and recommendations. </li></ul></ul><ul><ul><li>Present the plan to you and establish an appropriate review cycle. </li></ul></ul><ul><li>You and your planner should: </li></ul><ul><ul><li>Work together to ensure that the plan meets your goals and objectives. </li></ul></ul>4
  17. 17. The Financial Planning Process <ul><li>Implement your financial plan. </li></ul><ul><li>Your planner should: </li></ul><ul><ul><li>Assist you in implementing the recommendations discussed if you want. This may involve coordinating contacts with other professionals such as: </li></ul></ul><ul><ul><ul><li>Accountants </li></ul></ul></ul><ul><ul><ul><li>Lawyers </li></ul></ul></ul><ul><ul><ul><li>Investment fund sales representatives </li></ul></ul></ul><ul><ul><ul><li>Insurance agents </li></ul></ul></ul>5
  18. 18. The Financial Planning Process <ul><li>Monitor the Financial Plan. </li></ul><ul><li>This review should include: </li></ul><ul><ul><ul><li>A discussion about changes in your personal circumstances and how they might affect your goals. </li></ul></ul></ul><ul><ul><ul><li>A review and evaluation of the impact of changing tax laws and economic circumstances. </li></ul></ul></ul><ul><ul><ul><li>A review of your life circumstances and an adjustment of the recommendations if needed as those circumstances change through live events such as birth, illness, marriage and retirement. </li></ul></ul></ul>6
  19. 19. Why do I need a financial planner? <ul><li>People seek help from financial planners </li></ul><ul><li>for a number of reasons, including but not </li></ul><ul><li>limited to: </li></ul><ul><li>planning for retirement </li></ul><ul><li>finding the best way to finance a new home </li></ul><ul><li>saving for children’s education </li></ul><ul><li>to get help putting finances in order </li></ul>Whatever your needs, working with a financial planner can be a helpful step in securing your financial future.
  20. 20. Why do I need a financial planner? Even if you think you have a good plan, it is always a good idea to have a professional financial planner review it. <ul><ul><li>A good rule of thumb - </li></ul></ul><ul><ul><li>“ When in doubt - ask.” </li></ul></ul>
  21. 21. Questions to ask when choosing a financial planner <ul><li>What are your qualifications? </li></ul><ul><li>What experience do you have? </li></ul><ul><li>What services do you offer? </li></ul><ul><li>What is your approach to </li></ul><ul><li>financial planning? </li></ul><ul><li>Will you be the only person </li></ul><ul><li>working with me? </li></ul><ul><li>How are you compensated? </li></ul><ul><li>How much do you typically charge? </li></ul><ul><li>Are you regulated by an organization? </li></ul><ul><li>Could anyone besides me benefit from your recommendations? </li></ul><ul><li>Can I have it in writing? </li></ul>
  22. 22. Common mistakes consumers make when seeking financial planning advice <ul><li>Confuse financial planning with investing. </li></ul><ul><li>Neglect to evaluate their financial plan periodically. </li></ul><ul><li>Neglect to set measurable financial goals. </li></ul><ul><li>Think financial planning is the same as retirement planning. </li></ul><ul><li>Expect unrealistic returns on investments. </li></ul><ul><li>Don’t understand how advisors are compensated. </li></ul><ul><li>Are looking for a quick financial fix instead of a long term strategy. </li></ul><ul><li>Don’t understand that good professional planning advice is largely dependent on good information from clients. </li></ul><ul><li>Believe financial planning is primarily tax planning. </li></ul><ul><li>Think they’ll lose control over their decisions if they use a planner. </li></ul>
  23. 23. Canadians’ thoughts on financial planning <ul><li>According to the survey of consumers conducted by Hart & Associates on behalf of Financial Planners Standards Council, Canadians think about financial planning when they reach certain milestones in their lives: </li></ul><ul><ul><li>when they have children </li></ul></ul><ul><ul><li>when their marital status changes </li></ul></ul><ul><ul><li>when they buy a house </li></ul></ul>
  24. 24. How important is financial planning to Canadians? <ul><li>Most Canadians think that having a will is only slightly more important than having a financial plan. </li></ul><ul><li>72% say having a written financial plan is somewhat to very important. </li></ul><ul><ul><li>However, only 40.6% say they have a written plan. </li></ul></ul><ul><li>Of those individuals who are not currently using the services of someone in the financial industry, 19% intend to within </li></ul><ul><li>the next year. </li></ul>
  25. 25. How happy are Canadians with their financial planners? <ul><li>Canadians give their planners an overall 8.9/10 satisfaction rating. </li></ul><ul><li>The planners strengths are seen as their ability to explain things, their responsiveness and their ability to understand clients’ goals. </li></ul><ul><li>Respondents indicated that financial planning is more important than love or jobs. </li></ul>
  26. 26. How do I find a CFP licensee? CFP licensees work in various sectors of the industry. To make your job easier, FPSC maintains a database of CFP licensees and their particular expertise.
  27. 27. Where do CFP licensee’s work? Bank/ Trust Company/ Credit Union 22.8 Mutual Fund Company 8.7% Securities/ Brokerage 5.8% Accounting Firm 8.8% Insurance Company 10.4% Financial Planning Firm 38.9% Other 4.6%
  28. 28. Why put your faith in a CFP licensee <ul><li>CFP standards are built on the basis of Ethics, Education, Examination and Experience to: </li></ul><ul><ul><li>1 - Produce duly educated, experienced, examined and ethical individuals qualified to hold themselves out as financial planners. </li></ul></ul>
  29. 29. Why put your faith in a CFP licensee <ul><li>CFP standards are built on the basis of Ethics, Education, Examination and Experience to: </li></ul><ul><ul><li>2 - Ensure that the growing body of professionals it is identifying through the CFP certification process can be found in all the traditional industry sectors Canadians expect to </li></ul></ul><ul><ul><li>find them. </li></ul></ul>
  30. 30. Why put your faith in a CFP licensee <ul><li>CFP standards are built on the basis of Ethics, Education, Examination and Experience to: </li></ul><ul><ul><li>3 - Keep regulators abreast of the important work it is doing to protect the public and to develop financial planning as a profession in Canada and world-wide. </li></ul></ul>
  31. 31. Why put your faith in a CFP licensee <ul><li>CFP standards are built on the basis of Ethics, Education, Examination and Experience to: </li></ul><ul><ul><li>4 - Ensure the Canadian public has access to professional financial planners in all sectors of the industry in whom they can safely put their trust. </li></ul></ul>
  32. 32. Where is the CFP designation recognized? United Kingdom Germany South Korea Japan Malaysia New Zealand Australia South Africa Switzerland United States Singapore Canada France Hong Kong