Challenges of finding a single way to define financial planning

CISI Chief Executive Simon Culhane, Chartered FCSI talks about the various challenges to finding a single way to define financial planning

finance def 1920x1000
People say if you ask five economists to forecast what a single index will be in a month, you will receive five different opinions.

The same can be said for planners. I attended a meeting in Toronto recently with 25 CEOs who operate CFPTM examinations in their territory, and asked them to define what is financial planning – and received 25 opinions.

One person’s financial advice is another’s financial planning and it is clear there is a big overlap and therefore it is not possible to generalise. There is a consensus that financial planning is holistic and goal centred – and while some advisers would also fit that description, many would not. Most, however, would agree that financial planning and financial advice are interwoven to the point the terms can sometimes be interchanged. If we assume, for example, that financial advice is product related, and financial planning is lifestyle and goal-centred, then we can agree that financial planning will contain an element of financial advice.
One person’s financial advice is another’s financial planningLikewise, advice without an element of planning is just product sales, so most advisers will be providing at least an element of planning. Regulators across the world do not distinguish between financial planners and advisers. Nor do customers. This ignorance is why, in the US and Australia (where most of the 160,000 global financial planner professionals are based), the CERTIFIED FINANCIAL PLANNERTM examination, consciously and deliberately, interchanges the words 'planner' and 'adviser'. The last US marketing campaign said: “make sure that your financial adviser is a CFP professional.”

The conclusion of the Toronto meeting was clear. To grow financial planning as a profession, we need to look outwards, widen our appeal and make our qualifications and membership services attractive to advisers, many of whom do not know, yet, what it means to be a planner. We need to ensure that planners and advisers look after their clients to their benefit – using the trusted six-step financial planning process and CFP designation. Whether they call themselves financial planners or advisers is secondary, it is action that counts.

What do you think? Take part in our online survey now and share your thoughts
Published: 24 May 2016
  • Financial Planner Magazine
  • Financial Planning
  • The Review

No Comments

Sign in to leave a comment

Leave a comment

Further Information