“Real” Financial Planning As Told By The Goldbanded Jobfish

“Real” Financial Planning As Told By The Goldbanded Jobfish

Recent headline stories revealed that fish mislabeling was rampant through the U.S and as high as 40%-60%. Consumers thought they were buying red snapper but were receiving tile fish, porgy, or the delicious-sounding goldbanded jobfish—a hard-working fish indeed. No offense to the goldbanded jobfish, but not only is the mislabeling deceptive marketing, but also it possibly exposes consumers to serious health risks, including food allergens and heavy metals in pregnant women. Yet, when it comes to your financial health and seeking the help of a financial planning professional, mislabeling may even be at a higher rate than with fish with potentially severe consequences to your financial health.

Fifty Shades of Planning

When compared to more established professions such as law or medicine, financial planning is an infant. Financial  planning was largely born from the insurance industry in the 1970s as commissioned salespeople did just enough planning work to justify the sale of the product they already knew they would recommend. This practice continues today, as I can personally attest.

During the first week of my first financial planning job a tad more than ten years ago after making a career change, I was instructed to make a list of one hundred people I knew. The next step—heavily implied but not explicitly stated—was to figure out how to sell these people life insurance. Though I was as green as they come, I knew this was not what I signed up for and quickly made a change.

Today the subtleties are often more difficult to detect. It is not uncommon for an asset manager to call or imply themselves to be a financial planner or to provide a report generated from financial planning software. The asset manager may even work on a fee basis rather than commissions, which is certainly more client-friendly. However, the difference in this case is asset management is the product being sold with little to no planning work involved.

I have interviewed potential employees that have purportedly had financial planning experience, sometimes spending years at a “financial planning firm” or with well-known banks. Even for those that seemed to be a cut above and that I have hired, I have often been later surprised at how little planning experience they actually had brought with them. While I admittedly may be a bit of a perfectionist and lack interviewing skills, I personally know many good and true financial planning professionals. They do exist. However, the bar has simply been set too low for what a financial planning professional is and does.

Financial Planning Process

While the title of Financial Planner is currently not regulated and can be used by anyone, the Certified Financial Planner Board of Standards is a certification board that has developed minimum standards for the professional practice of financial planning. Further, the CFP Board outlines a six-step process for the delivery of financial advice. Succinctly, real planners follow a process where they get to know a client and evaluate with some rigor the client’s goals and objectives, taxes, insurance, current portfolio, and future cash flows. They then create and most often help implement and monitor a plan to guide the client to get there.

The CFP Board has done a good job of establishing a process for financial planning and minimum standards for CFP practitioners. They are, however, generally technical in nature. While technical competency is certainly important, it is simply the ante to the game.

Most financial planning clients are not only seeking technical experts to tell them what to do but relationships where they have a trustworthy and competent advisor to guide them in critical decision making that may have profound effects on their family and life goals. Open, honest, and clear communication is paramount. Understanding psychology, neuroscience, and how decisions are made is also necessary to help effect positive change.

Questions to Ask

So how can you tell you are getting a real financial planner and not a goldbanded jobfish? Interviewing someone who is a Certified Financial Planner® is a good start but not sufficient. Having a list of questions to ask can also help. These could include asking what services are offered and how many clients one has. Industry studies show that established financial planners tend to have sixty to one hundred and fifty clients that they serve on an ongoing basis. The more complex these client relationships are the less clients that can effectively be handled. It is very common for salespeople to have several hundred ‘clients’. Yet, I would argue many of these people simply had products sold to them.

What is most important is not the questions you ask in search of a real financial planner or the responses you receive but the questions that they ask you. If they are a real financial planner, they will take the time to get to know and understand you as a person and what is important to you about money and life. Then they will go through the financial planning process in depth. If a financial planner starts with trying to impress you with their technical expertise or first asks questions about your net worth or assets, it would be best to move on and keep searching. You want someone who is more concerned about you as a person rather than how much you are worth or about demonstrating how much they know.


Kevin Kroskey, CFP®, MBA is President of True Wealth Design, an independent investment advisory and financial planning firm that assists individuals and businesses with their overall wealth management, including retirement planning, tax planning and investment management needs.