Ep # 19: Do Credentials Matter When Seeking Financial Planning Advice?
Watch the full episode on YouTube:
Full Transcript:
Benjamin Haas:
Hi, everyone,and welcome to A/B conversations, where we will help you CFP your way out of it. A podcast where you get into the minds of a couple of Certified Financial Planners on how we think and feel about everyday financial planning questions, and what should really matter most to you. A healthier financial life starts...now.
Adam Werner:
Happy Friday.
Benjamin Haas:
Happy Friday to you good sir.
Adam Werner:
And happy whichever day you are listening or watching this at home, or at work or in your car. To those listening.
Benjamin Haas:
Right, or watching.
Adam Werner:
That's right. So, today, we have a, I'll say interesting topic. It was born out of some recent experiences that we've had. Dealing with a potential new client, and just how they go about going through the process of deciding whether to work with us. Interviewing other advisors, multiple different options. Maybe in this one circumstance, it was, they had worked with a firm for many years, and are now coming to us to help answer some questions. And just trying to guide him through that process of making a decision on where he should move next to help guide through that next phase of his life. And how do we as CFPs help play that role?
Benjamin Haas:
I think that's where we want to start. So as much as this is a podcast that we are clearly trying to share how we do things. What truly is a passion of ours is educating the public, I think on what they need to know, regardless of whether they're working with us or not. And I think we as an industry have made it very confusing to differentiate how advisors may do things different, what they call themselves. Truly, in the instance of this gentleman who was coming with really good questions on what he thinks he needed to have answers on, that we truly believe is the heart of financial planning. How am I going to accomplish these things? He didn't have any of the other background or knowledge on what are the questions I really should be asking to figure out if you're the right fit for me. And I think we take for granted that we know what those questions should be, that we take for granted on knowing what a Certified Financial Planner is. And we also acknowledge, it's not his fault. But our industry does a really, really, really bad job confusing people and misguiding them. So there's my little soapbox, I'll get off of it so that we can be productive in this podcast, but it's definitely something, it goes back to why we started this business. So that we could educate people on what we truly believe financial planning is. So let's just do that. CFP - what does it stand for? Why don't you give us maybe a little groundwork on Certified Financial Planner?
Adam Werner:
Yep. So you already took away answer number one, what does it stand for?
Benjamin Haas:
Okay,
Adam Werner:
CFP stands for Certified Financial Planner, and it is the highest designation available for those that do financial planning work. So, as our title suggests, you and I are both one of those things, we are each a CFP. And I think the statistic right now is that 83,000 CFPs, in the in the country. And that's among 300,000 or so financial advisors, quote unquote, financial advisors. We will kind of get into that titling of how people present themselves. Yeah, so about one in four, financial advisors are CFPs. But we'll go down that road, too. Not all CFPs are created equal. And I'll, I think I'll throw that back to you to kind of go through that.
Benjamin Haas:
CFP, then, to understand not just the numbers and the magnitude and what it stands for, you have to have a degree of experience behind that. You can't carry those credentials until you're at least three years experienced in the business. And as a credential, you have to go through a pretty rigorous educational and testing process. And then on top of that, you have to meet certain Continuing Education Requirements over and over again, every two years. Hours, hours and hours of education. So it's not just becoming a CFP, but it's maintaining it that I think is important to understand. I guess, why should that matter to people is the question, right? If we say we're CFPs and we think and we're going to say this, if you were trying to figure out whether you should be working with a CFP or not. The first question just needs to be "Do you want more than asset management or some sort of product"? Because if the answer that is yes, then to us it should be a non-starter. You need to go find one of these 83,000 people who can and are credentialed to do more, which is going to start in our world with just answering questions of what are you trying to achieve? And those that aren't CFPs, they may say they're financial planners, they're allowed to call themselves financial planners. they can't call themselves Certified Financial Planners. But there's a classic example of how our industry just messes this up. Somebody can call themselves a financial planner. And to me that sounds a lot like a Certified Financial Planner. Doesn't it?
Adam Werner:
It's only one word off.
Benjamin Haas:
Yeah, right. So close. There's a lot of that.
Adam Werner:
So in my head, it's the difference between a specialist and a general practitioner, right in thinking about it from from a medical perspective. You go to your primary care physician, they're there, the general general practitioner, they are the, they know a lot about a lot of different things, but they may not be specialized in any one specific area. You need knee surgery, you're probably not going to your primary care physician to get that done. I don't know if this is an apt analogy or not. You'll tell me that it's not. But in our world if we are truly doing planning work, not just investment management. But let's look at someone's entire financial picture, then yes, we certainly believe wholeheartedly that if you want those types of questions answered, where we see it in around retirement. It's can I retire? What is it going to take for me to retire? What do I need to save? When should I elect social security? I have this pension. What should I do with it? If you want those questions answered with some data behind them, that has no focus necessarily on, "Well should I be owning 10% in this large cap growth fund? Or should I be owning 5%"? Completely unrelated?
Benjamin Haas:
And that's what really against things about our industry? Because I think we've done a horrible job presenting this as that's what planning is, it's answering really important questions. That, by the way, is not a conflict of interest to lead you to some sort of product or investment solution. And we get very frustrated when somebody calls themselves a financial planner and says, Well, I do that for free. Like, I'll give you a financial plan. Well, what's behind that? Like, what is the what's the conflict, then that's leading you to actually caring about the solution that I'm going to need. If you are a Certified Financial Planner, you have to be a fiduciary. We don't like that word. Because people don't (understand it). It's another buzzword in the industry.
Adam Werner:
Yeah, what does it mean?
Benjamin Haas:
Let's use the the analogy of the butcher and the dietician. It's our favorite way to describe this. If, if you go to the butcher, because you want to go get some meat, you go in there expecting that the butcher is going to sell you a piece of meat. And maybe he knows more about meat than anybody else. So you trust him to tell you what is the best meat for what you're looking for? Is the is the butcher gonna look at you? Do a chart, do all your labs and go, you know what, Adam? A little big in the waist right now?
Adam Werner:
Ouch.
Benjamin Haas:
Hey, maybe, you need to go down the street and buy some fish. That's probably what is in your best interest. Hey, by the way, maybe you should be pairing this with some more fruits and vegetables. Your cholesterol is a little high. The Butcher is not going to do that. If you truly want ojective advice around what is best for your situation, i.e. - the financial planning questions that you have to reach your goals, don't you need a dietitian? And that's the point. The Butcher could say, yeah, I'll give you diet advice. No problem. Are they qualified to do that.
Adam Werner:
This is where I have to speak up and say, I am the son of a butcher. So Hi, dad. He was a butcher for 30 years.
Benjamin Haas:
This is nothing against butchers.
Adam Werner:
No, but it's the perfect, it's the best analogy that we have to kind of try to compare what may be an investment manager versus a financial planner. The financial planner, being the dietician that is truly looking at your whole situation, and trying to give you objective advice, i your best interest. No necessarily just plugging product into a potentia solution
Benjamin Haas:
And again, I'm gonna blame our industry a little bit, right? Because for how many years, If you asked a question to a potential financial planner, financial advisor, whatever the heck they call themselves, if you just ask the question, how do you get paid? The answer was through our products and services. Do people really want to pay consulting fees, financial planning fees? Maybe not. But that's why you should ask the question. Because I think it leads to, again, trying to avoid conflicts of interest. A fiduciary, that whole idea of the dietitian is, I'm going to put your interests before mine, and I'm compensated to give you the suitable advice. I'm not compensated by the transaction. By you choosi g a pork chop or a steak. That's not how I'm compensated. And I t ink that's where the industry n eds to admit that they have ade planning seem more like, w 're gonna, dig a big hole, w 're gonna throw you in it, w 're gonna save you from that h le, we've got the tools to pull you back out of it with all his smart and sophisticated st ff. And by the way, is just to ead to some sort of solution tha we can put in front of you that you can
Adam Werner:
Here's the invoice for getting you out of that hole.
Benjamin Haas:
Yeah. It's somewhere along the line, you could go one step further and say, if I'm truly working with a Certified Financial Planner, then their values and how they're compensated should actually be tied to my success and getting to where I want to get to. And by the way, that's going to be answering questions, like you said, that may have nothing to do with investments.
Adam Werner:
I'm glad you said that, because that's exactly where my mind went. Next of. Okay, so we explained all of that back story of that. But let's say someone is sitting in front of multiple different advisors going through that process of trying to decide who they work with. One of the key points for us is, what kind of questions are you being asked. And that can be a bit of a tell when it comes to what may come out of that process? It's we've said it before and we don't want to belittle it, but the actual number crunching and that financial planning part is not complicated.
Benjamin Haas:
And it shouldn't be.
Adam Werner:
It's some pretty basic fundamentals that you check some boxes. It's fairly straightforward and simple. However, the difficult part is making sure that we are asking the right questions. So in their case, that the adviser is asking them those probing questions to really get to the heart of what are they looking to accomplish? What is important to them? And then let's find that strategy that actually fits them specifically. This is not a one size fits all type of thing.
Benjamin Haas:
So those questions like what is financial planning? It's not, "What's your security going to be"? Or what's in that pension account? It needs to be the hard and tough questions of "Why does this matter to you"? At the end of the day, what are you really looking to accomplish? And we know, and we're trying to get better at this. Life planning and goal planning is the hard part. It's because sometimes people don't know exactly what they want. And that's okay. But then I think it's a Certified Financial Planner's job to be asking those tough questions to get to those answers. Because again, any advice that we give is irrelevant, if it's not motivating people to take the right actions, and do the right things. And I think that really has to be the end goal for anybody that's truly in this industry for the right reasons. To guide people to where they want to get to.
Adam Werner:
Right.
Benjamin Haas:
And, look, we can make this a little plug for ourselves. That's why we put our money where our mouth is. You're a Certified Financial Planner. I am too. Holly's getting there. And even Devon, she's, my gosh, a master's in supply chain management and logistics. You want to talk about getting from A to B and having a process to do it. You know, we're lucky to have her on the team. And that's the point. It's supposed to be a support system for clients that's not just push this product, alright, next person through the door. If you're truly doing financial planning, that probably requires an ongoing relationship, which means you need a team of people that can help you through it.
Adam Werner:
Absolutely. I got nothing to add to that.
Benjamin Haas:
All right, well, then we must have done our job. I guess I'd go once one step further. Certified Financial Planners are not all created equal too. So let's acknowledge that there are some people in this industry that were doing the right thing, I think by going and getting their Certified Financial Planner designation. But that may not mean that they're doing financial planning. Because they may be able to answer that one question that you may ask, Are you a CFP? Or are you a fiduciary? But if they still have a business model or still have the conflict of using that as a means to push you into some sort of process, that's not what's best for you. They're still able to do that.
Adam Werner:
I would hope that would be the minority of of the 80,000 or 83,000 CFPs. But yeah, there are certainly examples of it is a marketing tool for some more than it is the way that they actually do business with clients.
Benjamin Haas:
So our suggestion, to our listening audience and trying to give them some tools here, if you're in the search for financial planning, and it's a good start to look up Certified Financial Planners, I think the follow up question can be what is your core competency? What is your experience in doing this? And experiences isn't, well, I've been in the business for 30 years. How many at bats do they have actually getting somebody through retirement?
Adam Werner:
It hit me. I read an article a couple years ago, and it has stuck with me ever since. It was somebody writing in to an investment piece, and it was, "should I hire a financial advisor to help me go through this retirement process"? And of course, the person answering the article was also a CFP. And they said unequivocally - Yes. Because if you put yourself in the consumer shoes, they are going to make that retirement decision, hopefully one time. Us as advisors have gone through it multiple times. We know the nuances, we've led people through that experience. We have the experience of going through that and knowing the the tips, the tricks, the pitfalls that exist. But so to your point, it's not necessarily just years in the business, but how often have you actually done this specific task? And what is your experience that I as the consumer, can rely on to help avoid some of those negative items?
Benjamin Haas:
So I think that is the key thing and why it's okay for people to ask that follow up question, right? How do you get paid? What are your conflicts of interest? What are your core competencies? And what is your experience in doing what I'm asking you to do? Which is getting me from A to B? And answering some specific questions around life transitions. I know we usually lean towards retirement but it's loss of a spouse. It's creating an estate plan. It's young accumulators, trying to get things in order for their kids or you know, building their wealth, whatever it is, what is your core competency and experience in doing what I need done? That is a fair question to ask on the front end.
Adam Werner:
Yeah.
Benjamin Haas:
All right. Anything else? CFPs - Certified Financial Planners. Seek them out. Ask the questions.
Adam Werner:
Yeah. And see what questions they ask you.
Benjamin Haas:
Yeah, that can be telling.
Adam Werner:
Absolutely.
Benjamin Haas:
Thank you, sir. Appreciate your time. Go be a CFP. Hey, everyone out and I really appreciate you tuning in. Please note that the opinions we voiced in this show are for general information only, and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you. Consult with your attorney, your accountant and financial advisor or tax advisor prior to making any decisions or investing. Thanks for listening!
1-05107190
