What is a CERTIFIED FINANCIAL PLANNER™ professional? | Is a CFP® professional a Fiduciary?
When you are searching for a professional to help with your finances, you undoubtedly will encounter endless titles and certifications. But what do they all mean and how do you know which one is important for you?
Understanding what a CFP® professional is compared to a CPA, or a CRPC® is important so you can make an informed decision about the best support needed for your financial journey. Here we explore the specifics of a CERTIFIED FINANCIAL PLANNER™ professional (CFP®) and what you can expect when working with one.
What is a CERTIFIED FINANCIAL PLANNER™ professional?
A CERTIFIED FINANCIAL PLANNER™ professional is a formal position held by financial advisors that have passed the incredibly rigorous nationwide test set out by the Certified Financial Planner Board of Standards. The CFP® Board created this test to set a high standard nationwide for individuals in pursuit of the CERTIFIED FINANCIAL PLANNER™ Certification.
To achieve the status of CFP® professional, you must first pass a rigorous set of requirements. According to the CFP® Board, the list of requirements is extensive.
- Possess a bachelor’s degree and pass the CFP® Board registered program and exam.
- Complete thousands of hours of experience in giving financial advice to the public independently.
- Finally, the CFP® Board has an ethics requirement before finalizing their certification as a financial planner. The ethics requirement is an essential piece in becoming a CFP® professional as it is when a financial planner commits to being a fiduciary.
Once someone has completed all these requirements, they are officially a CERTIFIED FINANCIAL PLANNER™ professional!
What is a CERTIFIED FINANCIAL PLANNER™ professional?
A CERTIFIED FINANCIAL PLANNER™ professional is a formal position held by financial advisors that have passed the incredibly rigorous nationwide test set out by the Certified Financial Planner Board of Standards. The CFP® Board created this test to set a high standard nationwide for individuals in pursuit of the CERTIFIED FINANCIAL PLANNER™ designation.
To achieve the status of CFP® professional, you must first pass a rigorous set of requirements. According to the CFP® Board, the list of requirements is extensive.
- Possess a bachelor’s degree and pass the CFP® Board registered program and exam.
- Complete thousands of hours of experience in giving financial advice to the public independently.
- Finally, the CFP® Board has an ethics requirement before finalizing their certification as a financial planner. The ethics requirement is an essential piece in becoming a CFP® professional as it is when a financial planner commits to being a fiduciary.
Once someone has completed all these requirements, they are officially a CERTIFIED FINANCIAL PLANNER™ professional!
Is a CFP® professional a Fiduciary?
A fiduciary is a term used in finance to describe individuals acting on behalf of another individual in their best interest, even if they may benefit further by acting in their own interests. Not every financial advisor rises to this standard of acting in your best interest. Like a salesperson who works on commission, some financial advisors may try to sell you a product that benefits their bottom line but may not be the right fit for you.
When you work with a CFP® professional, you are working with a financial professional who must act in your best interest. This means they cannot sell you a financial product that won’t work for you just because it may result in a payout for them personally. They have a duty to you, an obligation to do what is right for you above everything else.
What Can a CFP® Professional Do For Me? Why Do I Need a CFP® Professional?
The work of a CERTIFIED FINANCIAL PLANNER™ professional is diverse, ranging from simple debt consolidation to more extensive investments and portfolio management. No matter the CFP® professional you sit down with, there are a few common things that can be expected:
- Your CFP® professional will create a unique plan that is best suited for your needs, wants, and goals. The more upfront and honest clients are about their current financial situation, the better this plan will be. A CFP® professional typically spends a lot of time getting to know their clients. The goal is to develop a strong relationship where both client and CFP® professional talk openly about the next steps in life, from planning for retirement to looking at new ways to manage everyday spending.
- Financial Planner, Wealth Manager, Financial Advisor – No matter what you call your financial professional, their general purpose is to help individuals and families with their financial needs and goals. The biggest difference is how they are paid. Yes, financial advice costs money but just how much? The average fee for a financial planner or advisor, CFP® professional or not, is around 1% of the assets being managed.1 There are also different fee structures such as commission-based, hourly, fee-only, or asset-based.
References
1 — Investopedia
What Can a CFP® Professional Do For Me? Why Do I Need a CFP® Professional?
The work of a CERTIFIED FINANCIAL PLANNER™ professional is diverse, ranging from simple debt consolidation to more extensive investments and portfolio management. No matter the CFP® professional you sit down with, there are a few common things that can be expected:
- Your CFP® professional will create a unique plan that is best suited for your needs, wants, and goals. The more upfront and honest clients are about their current financial situation, the better this plan will be. A CFP® professional typically spends a lot of time getting to know their clients. The goal is to develop a strong relationship where both client and CFP® professional talk openly about the next steps in life, from planning for retirement to looking at new ways to manage everyday spending.
- Financial Planner, Wealth Manager, Financial Advisor – No matter what you call your financial professional, their general purpose is to help individuals and families with their financial needs and goals. The biggest difference is how they are paid. Yes, financial advice costs money but just how much? The average fee for a financial planner or advisor, CFP® professional or not, is around 1% of the assets being managed.1 There are also different fee structures such as commission-based, hourly, fee-only, or asset-based.
References
1 — Investopedia
Certified Financial Planner™ Professional – What is a CFP® Professional?
If you find yourself looking for financial advice from an experienced financial professional, a CFP® professional could be the right option for you. Their training is rigorous and their standards are high, leaving their clients with a feeling of trust and integrity.
They aren’t just for your corporate bigwigs or billionaires. CERTIFIED FINANCIAL PLANNERS™ professional aim to help everyone find the most solid financial footing possible. An experienced CFP® professional can help plan for you and your family’s financial future. With various tools and programs at their disposal, they can show projections of potential future earnings on investment products to find the right plan for your unique financial scenario.
No matter your age or situation, if you are ready to start investing and planning for your retirement contact The Retirement Planning Group today! We are able to help you every step along the way: from wealth management to tax advice, all the way to estate planning. We look forward to helping you build the retirement plan of your dreams.