What Does a Financial Planner Do?

What Does a Financial Planner Do?

To grasp what financial advisors do, it helps to start with a bit of history of financial advice/financial planning and how we got to where we are today.

Financial planning describes the process of looking at the individual parts of your financial life as a whole and the activities required to reach specific goals.  Personal financial planning, at least as we know it today, hasn’t really been around that long.


In the early 1970’s a handful of folks from the investment and insurance industries decided there was a need for a comprehensive educational framework for the components (investing, tax, estate, insurance, etc.) that comprise financial planning. They formed The College for Financial Planning in Denver, Colorado and set into motion educational requirements for the Certified Financial PlannerⓇ professional designation.

Today, more than 80,000 individuals have completed the educational, examination and experience requirements for the CFPⓇ designation. It is unquestionably the preeminent professional designation for planners.

In the early days of financial planning, many of the planners came from either the investment or insurance industry and continued to focus on selling products until a small band of folks determined there was a better, more client-centric way of providing planning.

In the early 1980’s an organization called NAPFA was formed, (National Association of Personal Financial Advisors), dedicated to providing financial planning on a fee-only basis. The concept was to avoid the conflicts of interest from selling products so that the planner could render objective advice. I was privileged to serve as President of NAPFA in 1990.

As the CFPⓇ designation gathered steam, a regulatory body to govern the issuance of the designation came into being. Today this entity is known as The CFP Board of Standards. I was honored to serve as a member of the Board of Governors of The CFP Board in the 1990’s.


Words have meaning and over time old line investment and insurance firms co-opted some of the main planning words. For example, almost everyone associated with an investment or insurance firm now calls themselves a wealth manager, financial advisor or investment professional (whatever that is).

Since we don’t teach personal finance basics in school, many well intentioned otherwise well- educated individuals are left to figure out the confusing landscape of planning words and titles on their own.

I recently read an article  from one of the sales oriented ”planning firms” that stated that the purpose of financial planning is to “help you create strategies for eliminating financial risk and building wealth over the long term.” Wow! Eliminating financial risk? Yes, that type of certainty is what people crave but it’s a fantasyland.

Reality based financial planning is about dealing with uncertainty.  A totally different approach.

What that firm and the myriad of other product pushers masked as advisors or planners still focus on is SELLING INVESTMENT PRODUCTS. That’s why “investment professionals” can be so dangerous to your financial health.


Here’s the unvarnished truth: accomplishing what matters most to you financially HAS LITTLE TO DO WITH INVESTMENT PRODUCTS. Instead, it has much more to do mastering your money mindset.

The 3 pounds of grey matter between your ears holds the key to a successful and sustainable financial life. Your emotions can get in the way of even the best plans.

The most important task a financial planner has is helping guide you through the land of the unknown by keeping your emotions in check. As humans we aren’t wired for this task which adds to the difficulty.

Can you do financial planning on your own? Yes, but with a huge caveat concerning controlling your emotions. A competent planner should be able to guide you along with “dispassionate discipline.”


If you decide to seek help, here’s a simple checklist. Any financial planner you work with needs to check ALL THREE BOXES. If not, walk away.

  1. They must be a CFPⓇ. This demonstrates a serious commitment and an acknowledgement of a fiduciary duty to you. If not, move on.
  2. If the majority of what the planner talks about in your initial discussion centers around investments, investment returns, beating the market, insurance products, etc., walk or better yet, run away.
  3. Your planner should be paid directly by you AND ONLY BY YOU. Otherwise, they are one of those “investment professionals” who are really focusing on selling investments. These “planners” can never provide true objectivity which is central to good advice.

Start there. Financial life is a journey. Become engaged in it, be smart and enjoy the ride! Ready for a real conversation?