PFS? CFP? ChFC? What Do These Tell You About Financial Planners?
Q. In choosing a financial planner, how much weight should I place on his or her membership in professional associations? I’ve discovered that a planner I had intended to go to is not a member of the National Assn. of Personal Financial Advisors, or a CPA-PFS. Would you advise looking elsewhere?
A. Oops, you’re mixing associations and credentials.
NAPFA is a professional association for fee-only planners--those who do not take commissions for their recommendations and who are compensated solely by their clients. Its membership is quite small--only about 600 members--largely because most of the financial planning profession accepts commissions.
The PFS, or personal financial specialist, is a financial planning credential available only to certified public accountants who have met certain experience and knowledge requirements in financial planning. Although many CPA-PFS holders are fee-only, that is not a requirement of the designation.
It’s easy to get confused with the alphabet soup out there in financial planning today. Every profession and group insists that it’s the best or the only, but in fact there is no one golden standard.
The most common financial planning credential, and the first one I’d look for, is that of certified financial planner, or CFP. (In the interests of full disclosure: I completed the CFP training program two years ago.) The PFS is another good starter credential, as is the ChFC, which stands for chartered financial consultant.
Notice I said “first” and “starter.” Anyone who has finished the course work would admit that the training helps you know more, but it also shows you how much more you need to know. What’s even more important is what education and experience the planner has had since gaining the credential, what his or her ethical standards are and whether you and the planner are a good match.
Membership in certain professional organizations is a good sign, but, again, it can’t be considered a guarantee of excellence. CFPs who are members of the Institute of Certified Financial Planners, a membership organization, are required to maintain certain ethics standards and to continue their educations. Active CPAs and ChFCs have membership organizations with ethics and ongoing education requirements as well. You can check out these organizations on their Web sites: https://www.icfp.org, https://www.cpapfs.org or https://www.financialpro.org/sfsp. You’ll find NAPFA’s standards at https://www.napfa.org.
You also can check out all the free information we have for you at https://www.latimes.com/finplan before you get started looking for a planner. I also recommend Charles A. Jaffe’s book “The Right Way to Hire Financial Help.” You’re putting your financial future in someone else’s hands, so it pays to do some homework.
PC Bill-Paying Revisited
Q. I couldn’t believe the recent column in which you told your readers that paying bills by home computer doesn’t work well. You obviously are some kind of Luddite who still signs checks with a quill pen. I’ve been paying my bills this way for years, and love it. It’s convenient, it’s quick and I get to control which bills get paid when. The nominal cost ($5 a month) is about what I would pay for postage. In the same column, you fielded a letter from another reader whose credit card company claimed a payment hadn’t been received in time. That wouldn’t have happened had he paid by computer.
A. Oooo, my, you techies love your PC bill paying! I received several e-mails from readers outraged that I would suggest computer-based bill paying was not the best thing since sliced bread.
Sorry, kids. I’ve used it, I’ve followed the banking industry coverage, and my conclusion remains: The process needs to be cheaper, faster and more streamlined for computer bill-paying to catch on with the masses. Half the time, the bank winds up writing the check because the merchant on the other end isn’t equipped to handle electronic payments. So much for speedier service. The banking industry acknowledges this problem and is searching for a better solution, which may be Web-based.
As for the cost, why should you pay even $5 a month when you can get automatic payments deducted directly from a checking account for free? You say you like to choose when to make your payments, but how often are you going to blow off your monthly light bill?
Other readers wrote in to say they like the convenience of paying by phone, a service increasingly offered by credit card issuers and other vendors.
In that same batch of e-mails, by the way, I received one from a reader who says he was charged more than $600 in late fees and interest charges because a credit card company failed to accept a computerized bill payment. Such hassles may be rare, but they happen whatever bill paying medium you use. I must admit, even my quill clogs once in a while.
Liz Pulliam is a personal finance writer for The Times. She will answer questions submitted--or inspired--by readers on financial issues in this column. Questions can be sent to her at liz.pulliam@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053.
