Is "Financial Planner" Becoming a Loaded Word?

More and more, the term "financial planner" is being overused and misunderstood. When is the last time you heard anyone introduce themselves as an insurance salesman, stockbroker, or annuity salesman? Those terms are increasingly rare because the individuals in those professions now refer to themselves as "financial advisors" or "financial planners." Yet, what financial planning do these people provide? If you speak to someone who generates their living from selling annuities, they are likely to suggest an annuity is perfect for you, regardless of your situation.

Consequently, the title "financial planner" has been diluted to the point that most consumers don't really know what a financial planner does. In fact, many "financial planners" don't even know what a true financial planner does.

Last night I attended a webinar hosted by a "financial planner" who promised his services were one-of-a-kind. This individual stated that 99.9% of financial planners spend 100% of their time managing their clients' portfolios, and that he was unique because not only did he manage investments, but he worked with clients to lower their costs of living. This individual promised he would examine ways to lower clients' insurance bills, taxes, and mortgage payments. He also promised he would educate his clients about opportunity costs, inflation, and retirement planning. Is the wide range of services offered by this individual beneficial? Absolutely.

However, the statement that 99.9% of financial planners spend all their time on investments is entirely false. I believe this individual was confusing the titles "financial planner" with "product salesman" or even "investment advisor." In fact, all true comprehensive financial planners provide the type of benefits discussed by this individual.

So how can you be sure who's doing what?

True financial planners help their clients determine where they are in relation to their financial goals, plot a strategy to help their clients obtain those goals, and monitor their clients progress to maximize their probability of success. This includes providing advice on all elements of a true financial plan: retirement planning, insurance coverage, estate planning, investment analysis, education planning, and other topics. Additionally, true financial planners educate their clients about the process of making wise financial choices and provide them with the tools to understand the implications of the decisions they make.

So what type of financial planner do you work with? First and foremost, do you have a financial plan? If not, how much planning can your advisor be providing? Also, if you meet with your advisor less than once per year, consider the possibility that he is more a product salesman than a financial planner. Additionally, research how your advisor is compensated - do you pay him directly to represent your best interests, or is he paid by the products he "recommends" to you. Finally, how much advice does your advisor actually provide? Does he simply recommend investments that should make you money, or does he help you identify your goals, teach you strong financial habits, and guide you towards the life you've imagined.

About the author

Lon Jefferies, CFP®, MBA

Lon Jefferies is an investment advisor representative with Net Worth Advisory Group, a fee-only financial planning firm in Salt Lake City, Utah. He is a Certified Financial Planner (CFP®) and a member of the National Association of Personal Financial Advisors (NAPFA). He possesses an MBA and bachelor's degrees in Finance and Marketing from the University of Utah. Lon writes articles for local magazines such as Utah CEO, Business Connect and Utah Business Magazine, and he consistently contributes articles to online magazines such as and (by The Wall Street Journal). Additionally, Lon is an expert author at Lon has been quoted nationally in publications such as the NY Times and Investment News.

Lon can be contacted at (801) 566-0740 or Learn more about Net Worth Advisory Group at and visit Lon's blog at

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