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Before you entrust your finances to a professional planner

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Financial planning, as a profession, has something of an identity problem. As Christopher Croft found out when he met a former high school friend for the first time in years. ''What are you doing now?'' the friend asked.

''I've become a financial planner,'' replied Mr. Croft, executive vice-president at Bailard, Biehl & Kaiser Inc., of San Mateo, Calif.

''So have I,'' said the friend; ''I'm selling insurance.''

For a lot of people ''financial planning'' sounds like a fancy term for coming to grips with their bank statement, or for going onto a rigorous savings program that is the budgetary equivalent of the dry-toast-and-grapefruit diet. And at its worst, ''financial planning'' is seen as a euphemism for a high-powered sales pitch.

Trendiness has confused the issue further. As Thomas McFarland of the New England Financial Planning Group in Burlington, Mass., puts it, ''Two years ago, people would say, 'A financial planner? What's that?'

''Now they say, 'I don't know what a financial planner is, but I think I need one.' ''

Strictly speaking, financial planning is a very specific process whereby the planner analyzes the client's resources, helps him or her articulate goals, and then hammers out a strategy whereby the resources will be used to reach those goals. Financial planning should be long term and comprehensive. Although the planner may not be directly involved in executing those plans, they do get pretty specific. A client may be told to put $10,000 into growth-oriented mutual funds, for example, or to set up a Clifford trust for the children's education.

Financial planning considers the client's earnings (current and aspired to), tax situation, insurance coverage, investments, retirement plans, and estate planning. The planner is a generalist rather than a specialist, and usually has a background in a specific area of the financial industry - accounting, insurance, securities, tax law, or banking - but is conversant with the other specialties.

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