Are Financial Planning Clients Getting What They Pay For?
As an investor, you might not be getting what you pay for regarding financial planning. A recently released study attributes this to the lack of government-enforced professional standards.
According to research conducted on behalf of the Financial Planning Coalition, clients could not identify Certified Financial Planners from other advisers. When they worked with someone who claims to be a Certified Financial Planner, clients were sometimes given inadequate financial guidance.
The study says that when investors looked for help regarding a comprehensive financial plan, nearly one in three received only two services — primarily investment advice and retirement planning. About 30 percent said they weren’t given the help they required, 27 percent sought — but didn’t receive — a financial plan, and less than 10 percent got advice on taxes, estate planning, education planning, debt management or personal budgeting.
Pointing to 2013 data from Cerulli Associates, the study said that of the 168,000 financial advisers who called themselves financial planners, about 100,000 were not actually providing financial planning services.
According to the study conducted by the coalition, financial clients are harmed by the absence of government-required financial-planning standards that would force practitioners to meet competency and ethics benchmarks.
A fiduciary standard for all financial advice is being advocated by the coalition.
Three organizations — the Certified Financial Planner Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Advisors — make up the coalition.
According to a study by the Fondulas Strategic Research LLC, investors are confused by the term “financial planner.” About 82 percent believe it’s the same as “financial adviser,” 70 percent equate it with a “wealth manager,” and 68 percent use the term interchangeably with “investment adviser.”
The team of investment fraud lawyers at Starr Austen & Miller LLP handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence, broker churning, breach of trust, as well as malpractice.
Source: Investment News