There are “financial planners” that hold themselves out as “money manager” or “wealth managers” or “Certified Financial Planner Professionals” or the like. You say po-TAY-to, I say po-TAH-to. All these titles mean the same thing, though, right?
Find out what services are really being offered
One of the bigger issues in the financial services world these days is whether someone who handles money for another or gives or sells advice to another or sells someone a financial product should be held to a fiduciary standard. There are different licenses to hold, different regulatory bodies, different ways of doing business, and the list goes on. This is what makes it so hard for the government to provide uniform regulation (not to mention the power of the lobbyists) and hard for consumers to find their way.
In the mortgage business, clients learned to ask, “What is it that you do, how do you do it, and how do you make your money?” We answer their questions. The same is true in the financial services business. Clients need to learn to ask, “What is it that you do, how do you do it, and how do you make your money?”
Because a money manager often just manages money. By that, I mean, this person takes a lump sum of money and keeps an eye on it and makes sure that it’s invested within the confines of the client’s needs and goals. But that person doesn’t necessary explore what the client’s needs and goals are. That might be a different person. A money manager often will also not provide a comprehensive look at a client’s overall financial situation and make recommendations outside managing money—for instance, the advice to get one’s estate plan done.
A wealth manager sometimes just calls him or herself that because it’s a fancy way of saying that he or she only takes clients of a certain net worth. This person might only specialize in managing money, but often has a group of advisors that do tax and legal strategies for the client in concert with the money management services. Yet, young people who are on their way to being wealthy may require very similar services.
By the way, everyone it seems calls him or herself a financial planner—whether they are securities licensed with no CFP® designation or are simply licensed to sell insurance. It’s a widely abused term, just as “mortgage broker” was a few years ago until the regulatory agencies said a licensee could not use that term unless he or she actually had a broker’s license. The same will happen with the term financial planner. Someday.
In the meantime, get into the habit: What is it that you do? How do you do it? How do you make your money?
