What Is A Financial Planner?

What Is A Financial Planner?

A financial planner helps you chart a course for your financial life, from budgeting and saving, to minimizing your tax burden and leaving a financial legacy for 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 meet 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 which insurance products you need.

A financial planner analyzes every aspect of your situation, deploying their expertise and insight to help you optimize your budget and spending to achieve your goals. This may include strategies for paying off debt, ideal asset allocations for your retirement accounts and guidance on financial products you should consider purchasing to help you more easily accomplish your dreams.

Financial Planner vs. Financial Advisor

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

Financial advisors, however, are generally considered to be a much broader category. They can include many types of financial professional, from a stock broker or an insurance agent to an employee at a financial institution.

Financial planners actually fall under umbrella of financial advisor, but financial planners limit themselves to more targeted services that are usually more committed to helping you reach your long-term goals.

Types of Financial Planner

It’s 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, like 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.

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

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

Certified Financial Planner

A Certified Financial Planner (CFP) holds the most widely recognized financial planning designation in Canada. The requirements to gain 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 designation, CFPs must complete 25 hours of continuing education each year. They must also adhere to a standard of professional responsibility, including ethics that mandate placing their clients’ interests first.

When choosing a financial planner, it’s a safe practice to choose a CFP.

Personal Financial Planner

Personal financial planner (PFP) is another leading designation for comprehensive financial planning in Canada. The PFP designation is recognized by Canada’s largest financial institutions and it ensures that financial professionals have the knowledge and skills to comprehend all aspects of a client’s financial situation.

Similar to a CFP, personal financial planners must meet several requirements, like completing an approved education path, successfully writing an exam offered through the Canadian Securities Institute and adhering to a code of ethics.

Registered Financial Planner

Registered Financial Planners (RFP) focus on comprehensive financial planning that takes six practice disciplines into consideration: financial assessment, taxes, estates, risk, investment and retirement planning.

They must meet several requirements, like 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, completing an exam and more.

Do You Need a Financial Planner?

While most everyone could benefit from the services of a financial planner, the truth is not everyone may need one. If your finances are fairly simple—meaning you are working, have some money in savings and are tucking money away into a retirement account—you may not need a financial planner.

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

  • You receive a significant windfall. If you come into a sudden influx of cash—such as a large bonus from work or an inheritance after a loved one passes away—a financial planner will work with you to develop a plan for the money to ensure you can reach your goals.
  • Your income changes. If you get a new job that changes your income substantially, a financial planner can help you create a new budget and adjust your retirement contributions.
  • You are getting married. If you are getting married, you and your future spouse might meet with a financial planner to discuss how to handle existing debt, save for a new home or plan for children in the future.
  • You are getting divorced. Financial planners can also help you deal with difficult situations, like divorce. By working with a financial planner that specializes in divorces, you can get assistance with determining child support and alimony, dividing up personal property and understanding tax laws.
  • A new child is coming into the family. If you are expecting or are planning to adopt, a financial planner can help you decide what type 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 working with a financial planner is the right move for you, there are a few things you’ll want to look for:


Aside from assessing their education and years of experience, look for financial planners with designations like a Certified Financial Planner, Personal Financial Planner or Registered Financial Planner.

Aside from their credentials, ensuring they have your best interests at heart is key. Members of the Financial Planning Association of Canada (FPAC) are a good place to start when looking for 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 hourly or are held on a monthly or annual retainer. Make sure you know how your financial planner will be compensated for their services before entering into a relationship with them.

Typical Clientele

Even general CFPs may specialize in specific types of clients, like doctors, lawyers, or those with high amounts of student loan debt. Ask potential financial planners about the kinds of people they typically work with and the kinds of services they tend to provide. This way you can make sure you choose a professional with extensive experience dealing with the kinds of financial issues you face on a regular basis.

Formal Complaints

Unfortunately, not every financial planner is a good actor. Before you enter into a relationship with a financial planner, who will have access to confidential financial information, check their credentials and disciplinary history. If they’ve had any complaints filed against them, those could be red flags.

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