Q. How do you make money, Jason, if you don’t sell any products?
A. Your question is a good one that I get a lot, Rob—even from people in the industry. So let me explain.
Something that I like to reinforce frequently is that I do not sell any financial products. I feel this is an important point to clarify so people do not wonder if I have a conflict of interest when they read my advice in articles and interviews.
Some financial planners make money by selling products, like mutual funds or insurance. Those products may pay them upfront or ongoing commissions, or a combination of the two. Different products pay different commissions, and their advice may be influenced by the way they get paid. That is not to say their advice may not be good, but they may have conflicts of interest.
Many consumers do not understand the difference between a financial planner, a financial advisor, or the many other financial titles that companies and individuals use to describe their role. Quebec is the only province where you need credentials to call yourself a financial planner. In other provinces and territories, anybody can represent themselves as a financial planner. Ontario is in the process of changing that—and it’s a change I welcome, being based in Ontario myself.
I am a Certified Financial Planner, or CFP, which is the most recognized financial planning designation around the world. I would consider a financial planner to be more focused on the overall financial planning process—saving, debt repayment, tax and estate strategies, retirement—as opposed to a financial advisor specializing in just one aspect, like investments or insurance.
I refer to myself as a fee-only financial planner, Rob, because I am compensated only by fees paid by my clients. I do not accept referral fees or commissions from third parties; this is a choice, not a requirement. My clients pay a project fee, an hourly fee, or an annual fee. I focus mostly on retirement planning and overall financial planning strategies, but I do different things for different clients.
For example, this week, I have five client meetings: