What Is a Certified Financial Planner and How to Find One

Questions You Should Ask a CFP Professional

certified financial planner

Millions of Americans are well equipped to handle their own finances and do a great job of it. These are folks with a serious interest in money — and the time and knowledge to keep track of their portfolios. Most important, they can keep their emotions — fear, greed, jealousy — in check when making investment decisions. If that's not you, maybe it's time to get some professional help.

There are lots of professionals out there offering financial guidance. Stockbrokers, bankers, insurance agents — everybody claims to know how best to steer you to a golden retirement! But it’s important to work with someone with a quantified depth and breadth of training and experience. That’s why you should consider retaining a Certified Financial Planner if and when you go looking for guidance.

CFP certificants must complete a rigorous training and certification program that prepares them to address most every aspect of your financial life. They are all college graduates who have gone on to complete another college-level course of study in financial planning. A would-be Certified Financial Planner must pass a demanding certification test — a sort of bar exam for financial planners — and complete three years of work experience to earn the designation.

Certified Financial Planners are also required to abide by a stringent code of ethics that ensures they act as fiduciaries — always making decisions and recommendations that are in their client’s best interests, not their own.

The CFP professional’s holistic approach will cover the following:

  1. Analysis of your current situation and preparation of financial reports, such as your net worth.
  2. Insurance planning.
  3. Maximizing use of your employer’s retirement benefits program, i.e., your 401k.
  4. Investment planning.
  5. Income tax planning.
  6. Estate planning.

In my experience, early client meetings focus on the first point — getting a sense of where you are and where you want to go. In this phase, I like to help my clients develop a timeline for their various life goals. This helps determine a variety of things, such as how much the client needs to be saving and what type of assets should be included in his portfolio.

This typically leads to a conversation about fifth point — taxes, and how to minimize them. Insurance planning and maximizing the 401k are typically next on the agenda.

There are thousands of CFP professionals in the United States. With a bit of research, you will surely find the right CFP partner. First off, don’t accept that someone is a CFP professional just because they use the title. Only those certified by the CFP Board are truly accredited. CFP claims can be confirmed at the CFB Board’s website.

The CFP Board is also a good place to find a Certified Financial Planner. If you are looking for a fee-only planner, check with the National Association of Financial Planners.

Points to Keep in Mind

Here are some areas to explore when interviewing a potential advisor to handle your money:

  • How do you approach financial planning? Make sure the planner's investing philosophy isn't too aggressive or too conservative for your agenda and needs
  • Describe your client base. Some planners require a minimum net worth or have other parameters for prospective clients. Make sure you aren’t going to be an afterthought.
  • Tell me about your experience. Obviously, the more market cycles the CFP professional has seen, the better.
  • What are your qualifications? Ask about his credentials and try to determine if he really has a passion for finance.
  • Who will handle my account? Some CFP professionals handle all clients directly, while others work with a team. Ask to meet any other team members, and check out their credentials as well.
  • How do you get paid? Planners may receive commissions and/or fees. Make sure all this is detailed in your agreement. Fee-only CFP certificants (including me) are paid only by you — they don’t get commissions for selling you into various investment products.
  • How much do you charge? Get a clear estimate of hourly rates, late fees, or commission percentage.
  • Do you see any conflicts of interest? Again, CFP professionals must adhere to a strict code of conduct that requires them to put your needs ahead of all others.
  • Have you been the disciplined you for unethical or unlawful actions? The CFP Board, the Financial Industry Regulatory Authority (FINRA), and state insurance and securities regulators are good sources for this information.

Choose your Certified Financial Planner wisely, and you’ll have a partner for life, one who will help build your future and give you peace of mind today.