Step 5 In the Financial Planning Process: Implementing the recommendations #FinancialPlanning

If your planner works at one of the large banks, brokerage firms, or insurance companies, she will likely want to carry out all of the recommendations.  In fact, her firm may be using the financial plan as a way to do more business with you by uncovering your financial needs.  In addition to investment management services, most of these plans will uncover a need for some type of insurance or a loan.At the brokerage firm where I used to work, management’s goal in selling financial plans was uncovering assets that you invested somewhere else and finding your needs for other financial services and products.  The purpose was to get the client to consolidate their holdings and buy more of our products.  The financial plans were very useful to the company this way.

If your planner works for a registered investment advisory firm, she will probably want to manage your investments for you, and either help you implement the rest of the planning advice or let you do it on your own. Again, do not buy any commissioned products from her and ensure that the investment advice is a distinct part of the overall financial planning advice.

If you go to a financial planner who only does financial planning, you may have to implement the advice yourself, or she may help you to coordinate the whole implementation process with you and other professionals. While it may be more difficult for you to implement the advice yourself, you can have more confidence that the advice is objective and free of conflicts on her part if she is not getting paid anything extra for the implementation.  While it may seem more convenient if your planner offers products for sale, I really advise against buying a product and paying a commission from someone who writes your financial plan.

There is a real conflict of interest there.  It would be very easy for her, for example, to overstate your need for insurance, or to recommend different, more expensive types of insurance for you to buy, because she has a large financial interest in selling it to you.

As an Independent Financial Planning firm, we help our clients through the process, or direct them where to go online to get competitive rates and do it themselves, but we are not in the business of selling insurance.  The important thing is to reduce the conflicts of interest between the financial planner and the client.  That is why I constantly stress the need for independent financial advice from independent financial planners.