10 Things Financial Planners Won't Tell You

There’s a huge market of consumers out there desperately seeking financial guidance—especially in the wake of the 2008 market crash. And a wealth of advisers are eager to serve them. In the early 1990s, only about 25,000 people called themselves financial planners, according to Boston-based research firm Dalbar, but by 2006 that number had climbed to around 650,000. Part of the reason for the boom is that anyone can present themselves as a financial planner—one of several generic titles for someone who provides advice to clients about how best to handle their money. (As opposed to money managers, for example, who actually manage your accounts.) And since there’s no required training or experience necessary, why not hang out a shingle and tap into the profit?

But it can get even trickier than terminology—many of those seeking to provide you with financial advice are actually trying to sell you something. Bank-employed pitchmen are often called “personal financial consultants,” for example, while insurance salesmen may present themselves as “financial advisers.” Indeed, “The bulk of people who market themselves as financial advisers are salespeople,” says the Consumer Federation of America’s director of investor protection, Barbara Roper.

How can you be sure you’re hiring a qualified pro? You can start by narrowing the field to one of the 56,000 Certified Financial Planner licensees out there (visit www.cfp.net). In contrast to run-ofthe- mill planners and advisers, CFPs do have to meet specific requirements: Their license means three years’ minimum experience and passing a comprehensive 10-hour exam. Next, grill candidates on how much real planning they’ve done. Wind Lake, Wis.–based CFP Jim Cantrell says he’s met advisers who claim to have 10 years’ experience, “then you find out that they became a planner only a year ago and spent eight years as a bank manager.”