Should financial advice be free?

Question: I want to consult a financial planner. But I don’t know where to begin. What should I be looking for in a planner? Where should I look for one? Is someone who gives pure advice better than one who also sells financial products? Are there financial planners who give advice for free?—asked at “Ask a friend, ask Efren” free service available at www.personalfinance.ph and Facebook

Answer: If self-medication is prevalent, so is do-it-yourself (DIY) personal financial planning. But when it comes to health, people are more willing to pay for advice especially in life and death situations.

With personal finance, life and death situations are rare. Yet, when you are too late, no amount of financial planning can bring you out of the rut. There is a tendency to delay financial planning because of the perception that time is a resource that is in abundance. The truth is life can be cut short. Department of Health statistics showed that in 2013 the fifth leading cause of death is accidents.

This complacency leads people to not take financial planning seriously and to just focus on one financial planning aspect at a time even though retirement, education, house, life insurance, estate and even vacation planning are done in overlapping horizons.

Comprehensive and specific financial planning have to be conducted in the earliest time possible. Comprehensive financial planning covers all the aspects of cash, debt, risk and wealth management as they relate to the situation of the person who is planning. Specific financial planning focuses on just one or a few areas. Both have a shelf-life of two to three years as both factors internal and external to a person may and will change.

Financial planning can be a DIY activity. However, the objective point of view of a trained and well-experienced financial planner cannot be discounted. And, let’s face it, financial planning involves going through introspection and some painful decisions that a DIY activity might tend to gloss over or ignore. So if you don’t pull your own teeth, it would be advisable not to do your own comprehensive financial plan, at least at the start.

Trained financial planners are known through their certifications. In the Philippines, there are registered financial planners and associate financial planners. But more than just the certification, a financial planner must possess a wide range of knowledge and in-depth experience in personal finance. Both the knowledge and years of experience will be needed in analyzing a person’s financial situation and providing simple yet practical recommendations on how to navigate the maze that is the financial industry.

A financial planner worth his salt never rests on his laurels and always tries to improve his craft by attending continuing education programs, reading books and research papers and imbibing true-to-life lessons he gets every time he is engaged by clients. A true financial planner provides an objective plan without selling any financial product first, should he be licensed to sell. If the financial planner limits himself to objective advice without any selling of a financial product, he still should provide financial product options through which his client can execute the plan and disclose referral fees that he might earn, if any.

A plan that is objective and born out of in-depth knowledge and wealth of experience deserves a fee.

There are no set prices for the advice given by financial planners because they would really depend on the scope of work to be done from standalone consultations on budgeting and debt management to a full blown comprehensive financial plan. Some planners even offer continuing free consultations on the plans they made.

But regardless of the fee, the financial losses prevented by the implementation of the plan will likely be a lot larger than the cost of having that plan made.

Financial planners in the Philippines are now abundant and you can simply search for them on the Internet. Some key search words to use are personal finance adviser and financial planner. Always add “Philippines” at the end so you do not end up with results for planners outside of the country (not unless you are looking for one abroad like in the case of overseas Filipinos).

To know more about financial planning, visit our website at www.personalfinance.ph for the free tools. And if you want to learn more about the subject, attend our Financial Planner’s Training program. Details are in www.personalfinance.ph/fptraining.html.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, seasoned investment adviser and bestselling author. Questions about the article may be sent by SMS to 0917-505-0709 or e-mailed to [email protected]. To learn more about personal financial planning, attend FREE personal finance talk on Oct. 12, 7pm at PSE Center. For more details, inquire at [email protected] or text at 0917-9689774.)