Because the Financial Planning profession is still developing, there are huge differences in the services of those holding themselves out to be "Financial Planners". One of the main differences is how financial planners are regulated. While those planners, registered as advisers, are regulated as fiduciaries, the vast majority are not. Even though planners may be duly licensed and credentialed, they are not held to a fiduciary standard to act in the best interest of the client and provide full disclosure unless they are also registered as advisers.

Of course, only planners who are registered can legally charge fees for financial planning. There is currently a loophole allowing stockbrokers the ability to charge fees for money management without being registered. The Securities and Exchange Commission (SEC) currently does not require stockbrokers to register as Advisers if they are acting only as a Solicitor for Money Managers. Money management is not the same as financial planning. Many planners attract clients because of their ability to analyze client's issues and produce an initial financial plan. The quality of the plans varies widely, some are boiler plate plans giving the same general recommendations to different clients with similar assets, and some are very well researched and presented.

Financial planning is a process, not an event. Since the initial financial plan is a static document, it quickly becomes interesting only from a historical perspective. It has been my experience that most planners, who produce financial plans, send only investment reports thereafter. What the clients can end up with is fee-based money management that is expensive with no ongoing planning. This sets clients up for another solicitation from another planner willing to use the creation of a new financial plan as a loss leader and solicitation for yet another money manager. Many clients want ongoing advice, not just a quarterly investment report.

Clients’ goals and circumstances change over time, assets get shuffled, hard assets are depreciated, and their income tax and estate situation is dynamic. Financial planning is ongoing, not just pages of recommendations and the implementation of products and services. Every transaction during the planning process must be recorded and analyzed so the planner can advise clients as their world changes. Having all the tools to quickly analyze the effects of selling real estate, for example, on a client’s cash flow, income taxes, financial statement and estate plan is critical, and is the service most often missing in a “Financial Planning” engagement. Ongoing financial planning can be the most critical. Planners need to have all of the systems in place to allow them to answer your questions “on-the-fly” aided by financial planning reports produced in real time; where they are able to make immediate recommendations.

Being able to make recommendations backed up with real-time analysis in the areas of Retirement, Cash Flow, income Tax, Investment and Estate allows a planner to:

• Create a formal Financial Plan
• Proactively contact clients when upcoming tax and other changes occur that could affect their income tax situation and/or their investment portfolio
• Clearly show client’s the overall results and expenses of their investment portfolio
• More fully incorporate a client’s goals and objectives into their financial plan
• Identify when to bring in appropriate experts to help with important financial decisions
• Provide a coordinated and integrated process for investment decision making
• Coordinate and organize all financial documents

Troy Smith, CFP^® is financial planner offering advice to clients in Raleigh, Cary, Durham, Chapel Hill, Garner, Clayton and all throughout the Triangle. His company website is www.asktroy.com.

DISCLAIMER: This article is intended to serve as a basis for further discussion with your professional advisers. Competent legal and tax advisers should be a part of every sound financial plan. This information is not intended as legal or accounting advice and should not be relied upon in the preparation tax returns or when making any business or personal financial decisions. You should always seek the counsel of your advisers to understand how this information applies to your particular facts and circumstances.