What is a Financial Planner? – Forbes Canada Advisor

A financial planner helps you chart the course of your financial life, from budgeting and saving to reducing your tax burden and passing on a financial legacy to your children. If you’re thinking about hiring a financial planner, here’s what you need to know.

What does a financial planner do?

When you hire a financial planner, they help you understand your financial goals and how you plan to achieve them. Financial planning goals include things like buying a new home, investing money for retirement, setting aside funds for your children’s education, or deciding what insurance products you need.

A financial planner analyzes every aspect of your situation and deploys their expertise and insight to help you optimize your budget and expenses to achieve your goals. This can include strategies for paying off debt, an ideal asset allocation for your retirement accounts, and advice on which financial products you should consider purchasing to help you achieve your dreams more easily.

Financial Planner vs Financial Advisor

The terms financial planner and financial advisor are often used somewhat interchangeably. In fact, both types of professionals offer financial planning services that help clients achieve their financial goals.

Financial advisors, however, are generally considered a much broader category. They can include many types of financial professionals, ranging from a stockbroker or insurance agent to an employee of a financial institution.

Financial planners actually report to the financial advisor, but financial planners are limited to more focused services that are generally more committed to helping you achieve your long-term goals.

Types of Financial Planner

It is important to note that “financial planner” itself is an unregulated term. In Canada, anyone can call themselves a financial planner and offer financial planning services. Some may specialize in certain aspects of planning, such as retirement or tax management, while others take a more holistic approach. A few may not even have your best interests at heart and are best avoided.

Although any Canadian can call themselves a financial planner, there are still three professional designations for Canadian financial planners: Certified Financial Planner, Personal Financial Planner, and Registered Financial Planner.

In Quebec, it’s a little different from the rest of the country. Only trained individuals are authorized to use the title “financial planner” or, in French, “financial planner”.

Certified Financial Planner

A Certified Financial Planner (CFP) holds the most recognized financial planner designation in Canada. The requirements for earning this designation include completing a rigorous education program, passing a national exam, and demonstrating three years of qualifying work experience.

In order to maintain their credential, CFPs must complete 25 hours of continuing education each year. They must also adhere to a standard of professional responsibility, including ethics that require placing the interests of their clients first.

When choosing a financial planner, it is prudent to choose a CFP.

Personal financial planner

The Personal Financial Planner (PFP) is another top title for comprehensive financial planning in Canada. The PFP designation is recognized by Canada’s leading financial institutions and ensures finance professionals have the knowledge and skills to understand all aspects of a client’s financial situation.

Similar to a CFP, personal financial planners must meet several requirements, such as completing an approved training path, passing an exam offered by the Canadian Securities Institute, and adhering to a code of ethics.

Registered Financial Planner

Certified Financial Planners (RFPs) focus on comprehensive financial planning that considers six practice disciplines: Financial Assessment, Taxes, Estates, Risk, Investment, and Retirement Planning.

They must meet several requirements, such as practicing as a financial planner for at least 3 years, proving their ability by submitting a mock financial plan for peer review, meeting educational requirements, passing an exam, and more.

Do you need a financial planner?

Although almost anyone can benefit from the services of a financial planner, the truth is that not everyone may need one. If your finances are fairly simple, meaning you work, have savings, and put money into a retirement account, you may not need a planner. financial.

However, a financial planner can help you if your finances are more complex or your situation changes, such as if:

  • You receive a significant windfall. If you experience a sudden influx of money, such as a large job bonus or an inheritance after the death of a loved one, a financial planner will work with you to develop a cash plan to ensure you can achieve your goals.
  • Your income changes. If you get a new job that significantly changes your income, a financial planner can help you create a new budget and adjust your retirement contributions.
  • You are getting married. If you’re getting married, you and your future spouse might meet with a financial planner to discuss how to manage existing debt, save for a new home, or plan for children in the future.
  • You divorce. Financial planners can also help you deal with difficult situations, such as a divorce. By working with a financial planner who specializes in divorces, you can get help determining alimony and child support, dividing personal assets, and understanding tax laws.
  • A new child arrives in the family. If you are planning to adopt or planning to adopt, a financial planner can help you decide what kind of life insurance policies you need and how to save for your child’s post-secondary education.

How to choose a financial planner

If you decide that working with a financial planner is the right decision for you, there are a few things you’ll want to look for:


In addition to evaluating their education and years of experience, look for financial planners with designations like a Certified Financial Planner, Personal Financial Planner, or Registered Financial Planner.

Along with their references, it’s essential to make sure they have your best interests at heart. Members of the Financial Planning Association of Canada (FPAC) are a good starting point for finding the right planner.

Payment Structure

Financial planners can be paid in countless different ways. Some rely on commissions from the products they recommend; others charge a percentage of the assets they manage for you. Still others charge by the hour or are held back on a monthly or annual retainer. Make sure you know how your financial planner will be compensated for their services before engaging with them.

Typical clientele

Even general CFPs may specialize in specific types of clients, such as doctors, lawyers, or those with high student loan debt. Ask potential financial planners what types of people they typically work with and what types of services they tend to provide. This way, you can ensure that you choose a professional with extensive experience in dealing with the types of financial problems that you regularly face.

Formal complaints

Unfortunately, not all financial planners are good performers. Before approaching a financial planner, who will have access to confidential financial information, check their references and disciplinary background. If complaints have been filed against them, these could be red flags.

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