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Do you need a certified financial planner, CFP®?

Do you need a certified financial planner, CFP®?

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The CFP® Board and its many members have done a great job of promoting the benefits of working with a CFP® when seeking financial guidance … and with good reason.

The designation ensures that the wearer has completed a thorough training (7 courses usually require a year or more to complete), a rigorous and comprehensive examination (it has approximately a 60% pass rate), and at least 2 years full-time industry. experience.

A CFP® professional also has a fiduciary responsibility towards their clients. It is a flashy word that means a fiduciary must put your interests above their own.

Although it seems obvious and unnecessary to mention, the ‘standard of care’ is lower for many other financial professionals.

All of the above is far more than most financial advisors can claim. In fact, the titles of Financial Advisor / Planner / Coach can be claimed by anyone, whether they have credentials or not.

female CFP meeting with clients, husband and wife

Is all the rest sketchy?

This does not mean that financial professionals without the designation do not have valuable experience and credentials. There are bloggers, financial coaches and many professionals with excellent expertise and guidance to offer.

This post will compare a DIY approach and the CFP® designation because it is considered the gold standard, but there are others out there if you want to expand your search.

The DIY approach is supported by many books, magazines, podcasts and other resources for those with time and inclination.

What about me?

But the question remains. Do YOU do you have to work with a CFP®?

One of the most common reactions in personal finance is “it depends”, and that reaction is relevant here as well.

Because money affects every aspect of our lives, from early family experiences to the consideration of what to leave for our heirs, no answer fits everyone.

Guidelines

As a general rule, if you are young and near the beginning of your lifelong financial journey, chances are your financial considerations are simple, and the most critical areas of focus for you are:

This is not old news.

You have no doubt read about the need for an emergency fund, a reasonable budget and the STRONG proposal to live below your means.

Insurance is a less common and less sexy topic – but equally important. Although these terms and recommendations may seem hackneyed at this point, they are repeated for a reason.

They remain the basis of a solid financial life.

It may be that you are not so young, but that you have reached a point in your life where you are ready to pay attention to your financial well-being. The general rule above most likely applies to you as well.

For many people, this is something you can do on your own with a little research. The benefit of an advisor to you may be more accountability than guidance.

Here are some articles to get you started.

A personal journey

This post is easy to write because I lived it.

When I was a new college graduate starting my first real job, my financial training was limited to “retaining good credit,” which of course is good advice (thank you Mom!), But a little incomplete.

At a benefits meeting with a few other new employees, my boss carefully outlined the great benefits he was so proud to offer us.

I secretly read a book behind the brochures because I had no idea what he was talking about and therefore had no frame of reference for the discussion.

I felt more than a little embarrassed and ashamed. Fortunately, these feelings CAN be motivating.

A wake-up call

Thus began a lifelong training in all matters of personal finance.

I read every book, magazine and blog post I could get my hands on and developed a solid foundation to understand many aspects of financial well-being.

I managed my own finances, but because I also wondered, “Do I need a GVB?” I regularly met a CFP® to sign up (sometimes called validation) to make sure I was not missing anything important.

I soon started coaching friends and family and became a Registered Investment Advisor (RIA) by studying for a few months, passing an exam (mostly on Security Law and almost nothing on advising others), and at FINRA to register in my home state.

It is important to note that unless there are other specified qualifications, this examination and registration is the scope of preparation undertaken by most financial advisers.

As an RIA, I was technically able to advise others, but my study, experience and preparation are what qualified me.

I was able to help a large number of people make smart financial decisions and relax some deplorable decisions, which worked well for a while.

A 2nd Wake up call

A few years ago, I was asked by a CPA if I was interested in working with a couple who had assets of about $ 2 million, including some employer shares and stock options.

They had income from a salary position and income from self-employment, and since this was not their first marriage, they had some complicated estate planning challenges.

I knew right away that I did not have the skills and confidence to help them. It is common for complexity to increase as assets grow, and it has also had additional complexity.

I referred them to a CFP® that I knew would have the training needed to help.

My CFP® journey

This inability to serve a potential client was the motivation I needed to embark on a multi-year journey toward CFP® certification.

I realized I want to understand the universe of financial planning and ‘know what I do not know’.

This is essentially why I consulted a CFP® myself, because the complexity of our financial lives is such that it is easy to make mistakes when you are completely unaware of potential “gochas”.

Due to these complexities, even CFP® professionals are not experts in all financial matters. There are a growing number of subspecialties within the field.

What they do have is an excellent overview of our financial world and the ability to recognize when additional expertise is needed.

Back to school

The CFP® education component was much like obtaining a second master’s degree.

It included 7 courses covering the main topics of financial planning:

  • Investments
  • Insurance
  • Taxation
  • Estate planning
  • Retirement Planning
  • Personal behavior
  • Financial plan development

After the course work was another semester of exam preparation, which essentially amounted to the revision and deepening of the course material.

Then there was the exam itself. This is a 6-hour endurance test that is offered 3x a year and has about a 60% pass rate. This is no joke, and passing the exam remains one of my happiest moments.

There is also a requirement of a bachelor’s degree (the direction is not relevant), which I fortunately already possessed.

Experience

But the certification process does not end there. A significant experience requirement must be met to obtain the CFP® marks.

I will not go into the details of the two experience paths, as they are only relevant to applicants, but I must say that at least two years of full-time work with clients is required. And this work is usually done under the supervision of current CFP®s.

Finally, there is a thorough background check (including credit history) and then ongoing requirements for continuing education to maintain the certification.

Do I need a CFP®?

Let’s return to your initial question. Do you need a CFP®?

Maybe not if your financial life is pretty simple.

There is a lot of great information on this blog to inform and inspire, including this article to guide the ‘construction’ of your financial home. And the number of great books and podcasts about money continues to grow.

However, if you do not have time to invest in self-education or there are complexities or circumstances in your life that make you doubt whether guidance can be helpful, choosing support from the qualified professionals in the CFP® community will benefit you. serve.

Depending on your needs and the CFP®’s business model, you can obtain a holistic financial plan or advice on a specific topic of concern.

You may even find, as many do, that the fees you pay to a CFP® professional will be real SAVE your money in the short and long term. It’s money well spent!

You can search for one at CFP.net, NAPFA.org (fee advisors only) and the Garrett Planning Network (fee only with many that offer hourly services).

Next: Financial Fears: 17 General Money Concerns

Article written by guest contributor Carol Christie, a longtime financial coach and a candidate for CFP® certification. She pursued FIRE before FIRE was an acronym and loves the like-minded souls that make up that community. Carol works with individuals and couples on their path to financial freedom through her hourly coaching business Free to be Finance.

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