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What Is a CFP and Do You Need One?

A CFP (Certified Financial Planner) is the formal designation for individuals who have expertise to help clients cultivate a comprehensive strategy to meet their financial goals. The designation is awarded by the Certified Financial Planner Board of Standards, Inc. after the individual has completed their CFP Board exams. Ongoing education programs are required to maintain the certification.

CFP’s have extensive training to help you at all stages in life. Certain situations might prompt you to hire a CFP, from changes in marital status to a growing family, a change in employment to a large financial windfall. Their goal is to make financial decisions with your best interests at the forefront. No matter the situation, if you need assistance planning for your financial situation, it is time to consider a CFP.

What Does a CFP Do?

Practically speaking, CPFs focus on investments. This all-encompassing role can help guide you through any and all areas of financial guidance.

It is also not uncommon for CFP’s to help with tax planning, with some being certified and working as CPAs. The advantage of working with a CFP/CPA is that they will be fully abreast of your financial and tax situations, which helps maximize investments while creating a tax strategy that benefits your bottom line.

How To Become a Certified Financial Planner

To become a CFP, one must follow the certification requirements laid out by the Certified Financial Planner Board of Standards, Inc.

The process begins with educational requirements. To become a CFP, you must first hold a bachelor’s degree or higher from an accredited university or college. Financial planning coursework will then be required through a CFP Board Registered Program. CFP’s are not eligible to take the exam without completing the required program.

Secondly, you will work to take the CFP exam. This Board Registered exam will determine if you possess the knowledge and competency needed to become a Certified Financial Planner. The exam lasts 6 hours, broken up into two-hour sessions.

You will need then to start working on acquiring experience to serve clients and their financial needs. This step can be completed in tandem with your educational requirements. Prospective CFPs will need 6,000 hours of professional experience related to the financial planning process, or 4,000 hours as an apprentice to gain experience. Once these hours have been completed you will be prepared to work alone without supervision. No matter which option you choose, you will be prepared for a variety of real-world situations.

Once you have completed the aforementioned requirements, the final step is one of the most important ones on your path to CFP certification: committing to ethics. You will complete an application for CFP Certification that contains the Ethics Declaration, certifying that you will always act in the best interest of your client.

How To Choose a Financial Advisor (CFP)

Ready to get the most out of your finances? It is time to consider a CFP. But jumping in headfirst is not a viable option. Take time to do research to ensure the right advisor for your needs is selected.

Step 1: Decide How/When You Will Need a Financial Planner

Financial advisors that provide a wide range of services to help manage your money in different ways. The first step is to determine if you are ready for a financial planner. If you are currently living paycheck to paycheck, before you reach out to a CFP, you should start working on increasing your savings. A good rule of thumb to determine readiness is if you have the ability to set at least 20% of your income. If not, in the interim, it’s worth looking into robo-advisors to dip your toes in the investing pool. They’re a great option for new investors!

If you are ready to reach out to a CFP, it’s important to determine what you’re looking for. Besides determining how much to invest, it is important to choose a financial planner that ticks all the boxes for your needs. Do you need someone full-time? Or perhaps you just need someone with tax experience. Is your financial situation complex, or are you just looking for retirement planning?

After you have answered these questions, you can move on to the next step to finding the right CFP that fits your needs.

Step 2: Research Financial Planners

Now it is time to do some digging. Before you select a financial planner, you will want to ensure that you’re comfortable with your options.

Local Search

In this ever-growing digital age, there are various resources online that provide reviews for businesses and services – CFP’s included! Take a look through Google, Yelp, and LinkedIn reviews. You’ll be able to sort through recommendations or red flags from members of the community. This will help guide you to viable CFP options that meet your needs.

Ask Family or Friends

Another great course of action is to start with recommendations from family and friends. Consider reaching out to your connections who have similar financial situations to yours. Don’t be afraid to ask them to provide recommendations, they’ll likely be more than happy to help. Even after the recommendations, it’s not a bad idea to check back in with Google to ensure they have rave reviews.

Matching Tools

If you are still unsure of who to turn to, don’t worry. The tool at InvestmentFirms.com will match you to the right financial advisor based on your needs. After a series of questions, you will be matched to a vetted and verified CFP that fits your personal needs and best interest.

Step 3: Set up and Interview

Finally, don’t be afraid to set up interviews with a few professionals before you make your decision. While you might just choose a CFP based on reviews or a recommendation, you should always schedule a call or a virtual/in person interview before making your final decision.

CFP’s recognize that you will be trusting them with your finances. Ask questions to ensure they are the right professional to meet your unique financial needs.

 You should have a few questions prepared. A few suggested questions might be

  • How do you store and secure my personal information?
  • How long have you had your CFP license?
  • Do they provide a customized approach to individual needs, or do they require you fit into their model?
  • How do you measure success with each client?
  • How frequently will they communicate with you?

Step 4: Hiring a Financial Planner

Making your final decision can be a huge relief. Be sure to discuss the hiring decision with your accountant if you are hiring someone full time. Don’t forget to check in and hold your financial advisor accountable. Follow their mailing lists, follow up on important paperwork that might be needed, and ensure that your financial advisor is helping you meet your financial goals while protecting your financial future.

Final Thoughts: Do You Need A CFP?

When you’re ready to get the most out of your finances, begin your journey to find the perfect Certified Financial Planner for your needs. CFP’s are worth the investment, but it is important to remember that they are sworn to act in the best interest of you and your family. Work with a financial planner that makes you comfortable and is aligned with your goals. The power is in your hands to expand your financial future.

Ready to get started? Feel free to contact a financial advisor today.