1. Emerging Role of a Financial Planner Chapter 1: Introduction1

2.  Changing Family Patterns ◦ Decline growth of married households with children ◦ Increase in growth of single person household ◦ Growing number of adult children caring for elderly parents.  Reality of the American Dream ◦ Recipe for debt (Byerly)  Must have new car; house to “grow” into etc Chapter 1: Introduction2

3.  Reality of Retirement ◦ Social Security cannot keep pace with inflation  We are all aware of the challenges with the viability of SS ◦ Inflation and longer lives puts pressure on the ideas of what life in the golden years should be  Summary View: ◦ Individuals must accept responsibility for their own financial wellbeing. ◦ Professional financial planners can serve as invaluable partners in planning for clients’ financial future. Chapter 1: Introduction3

4.  Certified Financial Planning Board of Standards defines financial planning as follows: “‘Personal financial planning’ or ‘financial planning’ denotes the process of determining whether and how an individual can meet life goals through the proper management of financial resources. Chapter 1: Introduction4

5.  Certified Financial Planning Board of Standards defines the financial planning process as: “…the process which typically includes, but is not limited to, some or all of the six steps:  Establishing and defining the client-planner relationship  Gathering client data including goals  Analyzing and evaluating the client’s current financial status  Developing and presenting recommendations and/or alternatives  Implementing the recommendations  Monitoring the recommendations” Chapter 1: Introduction5

6.  Risk Management and Insurance  Cash Management, Savings, Credit and Debt Planning  Educational Planning  Investment Planning  Income Tax Planning  Retirement Planning  Estate Planning Chapter 1: Introduction 6

7.  “Science” of Financial Planning ◦ Technical competencies ◦ Practical knowledge and experience  “Art” of Financial Planning ◦ Interpersonal communication skills ◦ Client-planner relationship Chapter 1: Introduction7

8.  The Emerging Client  The Common Denominators ◦ Life Concerns  Fear of running out of money  Fear of dying too young  Fear of becoming disabled  Caregivers for parents  Poor financial education  Excessive debt Chapter 1: Introduction8

9.  The Common Denominators ◦ Economic Life Cycle  Accumulation stage  Consolidation stage  Spending and gifting stage Chapter 1: Introduction9

10. ◦ Special Situations  Divorce  Loss of spouse (widow or widower)  Non-traditional families  Single parenting  Dependents with special needs  Dependent elderly parents  Permanent disability  Terminal illness  Loss of job or job change  Planning for military families  Monetary windfalls (i.e., “sudden money”) Chapter 1: Introduction10

11.  Clients must feel that the planner is ◦ Accountable for all planning-related actions ◦ Both caring and committed for the long- term ◦ Competent, both academically and experientially  “People don’t care how much you know until they know how much you care!!!” Chapter 1: Introduction11

12.  Communication is an element that is found in every single aspect of the process.  Should not feel like you are imposing when you are asking for information (both client and planner).  Planners need to create an environment where asking questions is very easy and free. People are intimidated.  Frequently clients feel like they are bothering the planning with all their questions. Not true! We need to talk frequently. Chapter 1: Introduction12

13.  Attorney  Accountant  Portfolio Manager  Insurance Counselor  Other Professionals  Rarely does a person have all the skills necessary to handle all aspects of a plan. Chapter 1: Introduction13

14.  Financial planners work in two basic models ◦ Planner as project manager  Develops the plan and then micro-manages the implementation by utilizing  Attorneys, accountants, portfolio managers, insurance counselors, and other professionals  Summing up and monitoring the process ◦ Planner performs one or more components and out-sources the remainder  Probably the more prevalent model  Perform the tasks you are trained for and outsource the rest Chapter 1: Introduction14

15.  Academic Degrees  For licensure most financial service licenses only require GED  Insurance and securities  Some product lines in some states may require degrees  Credentials ◦ CFP, ChFC, PFS, RFP ◦ CLU ◦ CFA ◦ Licensing  Securities  Insurance  Law (if an attorney) Chapter 1: Introduction15

16.  Experience  Continuing Education ◦ Annually ◦ For certifications and licenses  Usually they overlap  Summing Up: A qualified financial planner should: ◦ Earn appropriate degrees in financial planning ◦ Possess appropriate professional certification ◦ Meet continuing education requirements Chapter 1: Introduction16

17. ◦ Have a desire to DO THE RIGHT THING (Byerly)  Unfortunately this is where the consumer runs into trouble.  Some people are just not good people.  Not acting in a “fiduciary” manner  A lack of understanding of the fundamentals of the process can lead to the acceptance of bad advice. Chapter 1: Introduction17

18.  Standard Definition of Ethics Not Useful  CFP Board Developed Code of Ethics and Professional Responsibility  Professional Financial Planners Should be:  E: Efficient  T: Trustworthy  H: Honest  I: Ingenious  C: Caring  S: Sincere Chapter 1: Introduction18

19. Chapter 1: Introduction19 Elements of a Financial Plan  Plan should include ◦ Results of goals and objectives interview  Be sure to remind the client why they said they want to plan for the future. ◦ Key recommendations ◦ Trip Tick  Action plan of how to achieve the goals ◦ Comprehensive plan  Overall summary of the plan components and how it fits together with other parts.