We all like to think that we are above average in most things when it comes to financial planning. But statistically, that clearly cannot be the case!
There are two major omissions that I see time and time again when I’m supporting paraplanners and planners to become CFP professionals; the most common omission is the ability to think critically.
It’s not our fault! When CII was awarded privy council permissions for chartered financial planner, the way exams were set, workbooks created, and expectations of candidates started to change. Other exam bodies followed suit and things changed at Ofqual, the vocational exam governing body.
This all meant that most exams only examine based on the workbook, and you could pass an exam by doing no reading around the subject.
Add into that the rise of development of cashflow software tools meant that we rarely needed to create any manual cashflows in Excel or think through the basics of what information we are plugging in. We assume that the software is correct.
Time and time again, planners and paraplanners say things like, “The software gives me the RIGHT answer.” But that’s just spurious accuracy! But if we think this through a little bit, we realise that it gives us an answer based on a raft of assumptions. Why those assumptions? Why those numbers? Why not slightly different ones? Do you know how to change the assumptions in your software? Do you know if those assumptions are in real or nominal terms? Do you understand the implications of real and nominal returns on your cashflow?
CFP forces you to think assumptions, amongst many other things, through. It helps you gain clarification on the structure of your financial plans and helps provide a robust and repeatable process that you can follow forever! Well, maybe not forever, but for the time you are creating financial plans for clients.
Can you really interrogate your cashflow software? I mean really. Or do you concentrate on putting the correct client information into the system, believing that what comes out must be the answer?
The FCA Retirement Income Review cashflow findings showed that a significant number of firms do just that. They do not interrogate their cashflow outputs. Add into that the lack of robust and defensible assumptions setting process, mixing real and nominal returns in cashflows for clients, this all leads me to worry that we are losing our ability to think critically.
Maybe we are getting lazy. Maybe we are naturally looking for the easy path to make efficiencies and believe that we are doing the right thing by our clients.
Well, why not test that? Take CFP and train your brain to think more critically. Plug those gaps in your business that you probably don’t really know are even there, and increase clarity of service and your client experience along the way.
Here are some of the quotes I’ve received from people once they’ve been though the process and become a CFP professional:
“Without doubt it has made me a better financial planner.”
“The closest independent assessment to what I do in my day job!”
“The overall process made me appreciate how the right financial software in the right hands can enhance client outcomes.”
“I have improved my client service proposition because of it!”
So, what are you waiting for? Register with CISI and establish your eligibility today.
Good luck.
BTW, the second most common omission is lack of estate planning knowledge!! More on that in another article.
