CFP vs. Financial Consulting

CFPs (advisors on the sell side) tend to give their clients general advice and recommendations. Even when they personalize the advice, they tend to use software that provides one-time recommendations.

As one of my colleagues says "CFP is showing the client a recipe. While what we do is give the client the recipe and show them how to cook it."

Financial consultants have the ability to pool all of their resources in order to provide the client with the best planning. That's a major distinction. Consultants also aren't promising any type of outrageous returns per year, because they focus more on the long term education. The CFPs...the short term performance. This minor difference separates one losing their clients billions and one keeping their assets safe. Where CFPs are loyal to the client, they tend to have some conflict of interest situations if they work for a discount broker. These brokers give them commission (this is where those hefty bonuses come from) for the profitable trades they make, at the time of the trade. And more times than none, commission is even higher if they use one of the broker's affiliated products. Ever wonder why right before the economic crash banks dished out the largest bonus ever? Financial planners/advisors were selling the riskiest investments in bulk and it collapsed on their heads a short time after. However, even with the hurting market they made their money.

This money that these scrupulous advisors made our now coming back around to attack them. President Obama has now endorsed a $9 billion tax bill, for banks, over the next 10 years that will severely hamper bonuses. For those of you that don't know about the bill, he wants the banks to repay the taxpayers for the TARP money that was dished out during the recession. Even banks that have paid back their part of the TARP will be on the raw end of the deal.

Moreover, the greed of some affected the outcome of all. And now all have to pay for it including the honest and responsible CFPs. Don’t get me wrong, I use CFPs and other financial advisors to refer my clients when they need more specific investment recommendations. However, that’s only because we at Cloud 9 are not authorized to give specific stocks and bonds advice to our clients. People across the world we see more financial consultants (counselors) rise up and capitalize on the public doubts of current CFPs.