Over my 20-plus year career as a CFP® professional, I cannot remember a single time when I could answer a client’s question with a just a word or two. But clients often seemed to hope that I could. 

They would ask their questions, similar to those listed below, looking for just a “Yes” or “No” answer. 

  • Can we retire at age 62?

  • Can we afford a bigger home?

  • Should I use a 529 plan for college funding?

  • Are ETFs better than index mutual funds? 

To indulge their desire for simplicity and directness, I would start off with just two words: “It depends….”  I would then take a deep breath and begin digging through their personal and financial information. An hour or two and many hundreds of words later, we might begin to get close to an answer.

Sound financial advice is not like the Ten Commandments or traffic laws. It does not exist independently of the people to whom it applies. What’s financially right for one person may be entirely wrong for another. Not until a financial planner has thoroughly explored a person’s financial situation, and their goals, attitudes, and behaviors, can the best advice be given.

Consider, for example, the near-universal belief that it is always a good idea to contribute to your employer’s 401(k) or 403(b) program. Who would quarrel with that advice? Well, a good financial professional might, having determined, for example, that an individual is in a very low income tax bracket, or has significant unpaid debt that is compounding at a high rate of interest, and or has not established an adequate reserve fund. Details, details … We planning professionals love to get our hands (and minds) into the details.

An adequately trained financial professional should be able to claim multiple areas of expertise, and should have the capacity to advise individuals on a number of financial issues, such as: 

  • Cash flow

  • Investments

  • Risk Management

  • Tax

  • Retirement

  • And, estate planning

 “Comprehensive” can also refer to the peripheral vision so often used by a competent financial planner.  When asked for advice about an investment, for example, he or she will not just think about the investment’s returns and risks, but will look all around the issue to consider the impact that taxes, retirement planning, and cash flow may have on the advice.

On further reflection, I can think of one question that as a CFP® professional I can always answer with just one word.  Unfortunately, it’s one that few consumers think to ask a professional advisor. The question is:  “Do you practice as a fiduciary?”  Put another way, “Do you put the interests of your client ahead of your own?” The CFP Board Code of Ethics requires that a CFP® professional answers “Yes.” In this case, a single word can tell you exactly what you need to know.