Is Your Adviser Really a Financial Planner?

Angel Melgoza, CFP®, Virtual Financial Adviser


It was 2009 and I was two weeks away from graduating from the University of Texas-Pan American that I found out about this profession called Financial Planning. It was everything I wanted to be, but why hadn't I heard about it? Could it be because there was only 10 CFP® practitioners in the Rio Grande Valley at the time? Or maybe because there is still a lack of actual comprehensive financial planning in the Rio Grande Valley to this day. After all, that's why I decided to become one. Because neither I or anyone that I've talked to really understood financial planning at the time.

Make no mistake about it, anyone can call themselves a financial planner, financial adviser, retirement planner, etc., but not everyone practices financial planning. So how does one know if their "financial adviser" practices financial planning?

It's In the Recommendations

In financial planning there is no one size fits all solution. There is no magical product or investment that will solve all your financial troubles. Someone who is a true financial planner will take the time to gather a comprehensive amount of information about you to actually advise on your financial issues. A financial planner presents you with options and possible outcomes but ultimately the decisions are up to you. It doesn't stop there, part of the financial planning process is to implement and monitor said recommendations. Much like our lives change, recommendations will change. What was good for you 5-10 years ago, may not be the best solution for you now. A financial adviser who practices financial planning is able to follow the changes in your life and adjust recommendations to your needs.

It's In the Incentives

I can understand why quite a few people ask me if I sell Insurance or only do investments. Financial planning stemmed from those industries and the majority of financial advisers. In fact, quite a few financial planners sell insurance and investments. I have decided not to sell insurance products in my practice and while I do manage investments, it's secondary to my planning practice. Incentives play a big role in whether one receives actual advice or is just being sold something. Think about it, why would someone do something if there is no incentive for them? I've heard of many cases where the planning is free with the purchase of a financial product. What does that say about the planning advice one receives if the condition is purchasing something else?

Designations Mean Something

The State of Texas' minimum requirement for someone to give investment advice consists of a 3-hour exam where one has to answer 130 questions. To sell insurance, one must answer 150 questions in 2.5 hours. There are no prerequisites. Think about that for a second. Someone with no experience or background in the financial services industry, that studies for about three months and passes a test or two can call themselves a financial planner and help you with your financial future. Designations like the Chartered Financial Consultant and Certified Financial Planner™ require your adviser to have course work in areas such as investments, tax planning, estate planning, insurance, retirement planning, and financial plan development. Each designation has an exam that needs to be passed, but on top of that, your adviser must fulfill an experience requirement before obtaining such certifications. Imagine that, having a financial adviser with coursework, experience, and comprehensive knowledge in more than two areas of personal finance that helps you make financial decisions.

While I think there are a lot of great investment advisers (those who pass their series 7, 65, 63, 66) and insurance agents (those that pass their General Lines: Life, Accident, Health, HMO) out there, not all are financial planners. Let's call an apple an apple and an orange and orange.


MyLife Financial is a fee-only financial advisory firm providing objective and independent advice virtually. Our clients are busy professionals that face daunting questions of how today's financial decisions will affect their long-term financial success. Everything written is strictly for informational use only. Please seek the advice of your CPA, Attorney, or financial professional before implementing any strategies.

Want to know more about how a financial plan could help you? Click on the clock below to set up your next meeting. Thanks!

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