Movers and Shakers 2009

[co840]

As an educator of students seeking to earn their CFP designation, and having had somewhere in the vicinity of 35,000 students, I look at the "best financial planner" lists with a different eye. Amazingly, little recognition is given for financial planning. Most of the top "planners" are not providing broad based financial planning. Most of the top "planners" are asset managers or recruiters/managers of asset managers. The question of when asset management became an acceptable substitute for financial planning comes to mind often. Many students over the years have told me they were pursuing the CFP as a marketing tool.  Failure to provide adequate planning while using the CFP letters can easily lead one to find out how effective his or her E&O coverage is.

Not long ago I had the opportunity to sit with one of these recognized planners. His practice, very well thought of, is a practice of asset management. Financial planning comes up only if the client asks for it. This individual, principal of his firm, told me that budgeting and insurance planning were avoided whenever possible.  Isn't that akin to a building contractor saying, the ground is probably solid enought, we don't really need a foundation? 

Like it or not, when someone identifies themselves as a financial planner, it is reasonable for any and all clients to expect financial planning to take place. It appears that far too many financial planners fail to do basic financial planning with their clients. Waiting for a client to ask for it is like a physician waiting to be asked by a patient if it might be a good idea to have his or her blood pressure, pulse, and temperature checked. I'm not ignorant, I realize some clients want to deal with a single issue when meeting with a planner, and that's irrelevant. It is the obligation of the planner to recommend a comprehensive look at a prospective client's situation before making any sort of recommendation. If the client then states s/he doesn't want to do all that, the situation changes. The expert, the professional should never leave it up to the client as to where the conversation starts. How will an asset manager choose investemnts if s/he doesn't know enough about the client?

An asset manager who doesn't know the current financial needs of a client is not capable of making investment recommendations. The same applies if the planner doesn't explore the appropriate level for an emergency fund.  If someone wants to be an asset manager and does not want to do comprehensive financial planning, s/he should not show the CFP letters. In my opinion, it is being unprofessional and simply dishonest.

[Zek, The Grand Nagus]

Word to this post.

Ron

[Marion Asnes]

Hi there. I would like to clarify that the "Movers and Shakers" list does not single people out for the quality of their financial planning. It is about people who are making influential contributions to the future of the industry.

That said, you ask an interesting question: Should everyone who has a CFP, a credential that requires a considerable investment of time and effort, be required to focus his or her practice around comprehensive planning? 

Warm regards,

Marion Asnes

editor in chief, Financial Planning

[Carriage Trade]

I agree that co840 asks an interesting question.  I also teach the CFP preparatory classes although I have not educated anywhere near the number of students.  I also firmly believe that comprehensive financial planning is the best way to work with clients.  I think there is a clear distinction between holding yourself out as a Certified Financial Planner and holding yourself out as a financial planner.

I hold a CFP designation but I do not provide financial planning services to my clients (my clients are financial planners).  I think an estate planning attorney's clients could profit from the attorney earning a CFP designation while continuing to offer estate planning services.  An insurance sales person could provide better insurance service to his or her clients by learning about the other disciplines included in CFP training.  An investment advisor could provide better investment advice with the training of a CFP. While focusing on their chosen discipline, each of these professionals can do a better job by being exposed to the full range of disciplines involved in earning a CFP designation.

That does not mean that these people are financial planners.  They are Certified Financial Planners who are acting as estate planning attorneys, insurance sales people and investment advisors.  That suggests that they would use the initials after their name but not call themselves financial planners.  To hold yourself out as a financial planner and not provide those services seems to me to be a version of bait and switch.  To hold yourself out as an investment advisor who is has received the training of a CFP seems like a reasonable marketing proposition.  I will only provide investment advisory services to you but, since I have the training, I am better able to identify other issues you may have (for other professionals to address) and am better able to recommend security strategies that will not trigger issues for you in the other financial disciplines.

That also means that those of us who are financial planners need to raise the understanding of the public.  We need to educate the public to ask for those services.  We need  to create a list of the "best" financial planners to increase awareness that assets under management are not the sole criteria for success. 

John Comer

www.jcomerconsulting.com

[Vig Oren]

Hi Marion, I agree with you that if you have decided on  criteria for choosing a "Mover and Shaker" then no one should criticize it by coming up with different criteria.

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A problem that I see with the Movers and Shakers idea is that if a comprehensive financial planner is chosen then he/she would become so "famous" that this FP would have no more time for rendering financial planning advice and would pursue other more profitable avenues such as hi fees lecturing, etc. Our beloved hero Mike Kitces seems to be an example.

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By the way,  the one Mover and Shaker that you have picked and who would be my favorite is this one:

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Carolyn McClanahan|
Founder, Life Planning Partners, Jacksonville, Fla.
Age: 44
Years in the Industry: 7 in finance; 18 in medicine

First Job: Working in the family bakery, making doughnuts.

Best Career Decision: Making the change to financial planning.

Worst Career Misstep: Lacking sharp career focus in the past.

Fantasy Career: Professional javelin thrower

Favorite Way to Relax: Throwing the javelin.

Role Model: Cheryl Holland [CFP, president of Abacus Planning Group, Columbia, S.C.]

Most Important Thing Learned in 2008: Don't let people talk you into decisions that would be bad for them.

Wish for 2009: That we learn from the financial/credit debacle.

Worst Fear for 2009: That we don't learn from the financial/credit debacle.

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Carolyn McClanahan came to financial planning in 2001 with seemingly irrelevant credentials. She had made a change from a career in healthcare—first, as a physician and next, in sales for an insurance company—to embark on her new life as an independent financial planner.

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Now, with a CFP in hand and her own firm up and running since 2004, McClanahan is using her medical background to benefit clients in a singular way: She helps them position for life, long-term care and health insurance coverage, and to garner lower rates for these policies. This is an invaluable service, as many baby boomers are reaching the age when insurance is more difficult—and far more expensive—and healthcare costs are soaring.

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Much of McClanahan's advice centers on ways that clients can clean up their medical records, she says. This involves clients' gaining control over their conditions, follow-up visits to show doctors how they've improved, and reviewing records closely. It also means asking for appropriate changes to update diagnoses, when potentially beneficial.

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"Let's say your client went to the doctor a few years ago and complained about anxiety from a divorce," McClanahan explains. "But the client doesn't have that anxiety any longer. The client can go to the doctor and talk about it, and can ask the physician to amend the chart to say that anxiety is no longer a problem." This case in point is an important one, she says, because anxiety is associated with myriad ailments and is therefore troublesome for insurance purposes.

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McClanahan, who routinely makes presentations on insurability at professional conferences, including FPA and NAPFA meetings, traces the origins of this facet of her full-service practice to her initial intuition when she joined the profession. "As a physician, I know how physicians are paid. The more they can diagnose, the better their reimbursements from insurance companies." These diagnoses can come back to haunt clients when they seek insurance.

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Clients following McClanahan's advice have countered this tendency to their advantage. For example, disability insurers are vigilant for diagnoses of arthritis. "Sometimes arthritis is nothing more than a default diagnosis" that doctors make when they actually don't know the cause of the pain, she says. If arthritis isn't demonstrably present, McClanahan adds, these doctors might be persuaded to change the record to something more objective, "like 'painful' thumb."

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As a physician and a planner, McClanahan reminds clients that the way to have the best medical records is by improving their health as much as possible. She does a basic health inventory on clients, asking a few general questions that yield indications of their insurability, and may even prompt them to take steps toward better health.