It’s a complex industry, and for that reason it’s no surprise to see that financial planning is widely misunderstood. The problem seems to stem from the fact that financial advisors are “supposedly” only for those individuals and companies who have large amounts of disposable income and in simple terms, need information on where to invest.
According to Keith Springer, it’s for the above reason why all sorts of myths and misconceptions have arisen from this industry. As such, whether you are someone who is perhaps considering one of these professionals, or someone who just wants a better idea on how the industry works, we’ll now take a look at some of the biggest myths and reveal the real truth.
Myth #1 – Every financial planner is government-registered
This is a pretty significant factor. Due to the use of the F-word (finance, let’s add), the general consensus is that this is an industry which is tightly regulated.
Unfortunately, at least with financial planners, this isn’t necessarily the case. While investment advisors and stockbrokers might need to be registered with a government agency, the same isn’t required with financial planners.
Ultimately, it can become slightly more difficult to choose a financial planner, although if you try and look at the person’s details at your local Business Services Division it should give you a good indication on whether or not they are reputable enough for the job. It’s here you’ll see if any complaints have been taken out and suffice to say, if there are any, it might be advisable to look elsewhere.
Myth #2 – It’s fine to ignore the letters after a financial advisor’s name
While financial planners might not be as regulated in the government sense, from a letters point of view there’s plenty of important information to find. This is an industry which most definitely recognizes certification letters and if you can find a professional who has CFP (Certified Financial Planner) you’re halfway there. Any planner who has these letters after their name will have studied for hundreds of hours and will have had to pass an exam. There’s also the small matter of anyone in this group having to pass background checks and adhere to ethics codes, which is again important when looking for someone within this industry.
Myth #3 – Those people who use financial advisors don’t need to know anything about investing
This is a pretty scary one, particularly when you consider the fact that you are effectively giving someone else a large responsibility over your money.
Sure, you are paying for their advice – but you certainly don’t have to take it. In other words, you have every right to question them if you feel that something doesn’t quite feel right. This could be due to poor advice or in the worst case scenarios, because they are attempting to sell you something that really isn’t required.
By making sure you stay at least a little educated on the topic, you can avoid such problems.