Like most people, you have a financial vision or do you? Have you really thought about your long term hopes, dreams and life goals not only for yourself but for family as well? If not, then it is high time you did so. And you should read our other chapters on how best to set those goals that will help you achieve what you really want out of life. And what is that?
Freedom from worrying about how you will pay your bills, how you will live once you can no longer work, freedom to travel and see the world. A financial planner can help you achieve this freedom, but it takes work. It takes crafting a plan that meets your complicated and unique financial situation and adhering to that plan, meeting the benchmarks set by your financial planner as you make your way toward financial freedom. Now, obviously freedom can be narrowed down. In fact, many ideas of financial freedom are the same ideas held by others. In fact, chances are you goals are something you will in common with many others.
We will assume your financial goals, once you have arrived at them, might include buying a home or business, saving for college education for your children, perhaps taking a dream vacation, looking into reducing taxes and finally, retiring comfortably. Financial planning is the process of sagely managing your finances so that you can achieve all these dreams and goals and at the same time help you prepare to handle the financial barriers that inevitably arise in the curving twists and turns of the road called life. There are few things you need to understand first. Managing your personal finances is ultimately your responsibility. Ultimately, that never changes. However, you don't have to do it alone. You can get help and that is where a financial planner comes into play. However, the responsibility for your own money never really transfers. It is still your money and you need to do due diligence in finding a financial planner that is right for you.
A qualified financial planner, such as a Certified Financial Planner professional, can help you make decisions that make the most of your financial resources and keep you on the road to prosperity. What can a certified financial planner do exactly? A lot of things in a lot of different areas.
A good financial planner can help you accomplish many of the following critical tasks:
- Setting realistic financial and personal goals and make them attainable,
- Assess your current financial health by thoroughly examining your assets, liabilities, income, insurance, taxes, investments and estate planning needs.
- Developing a realistic and broad plan to meet your financial goals by identifying financial weaknesses and focusing your energies on your unique financial strengths.
- Implementation of your plan. See it in action; tweak it when necessary and its progress. A good plan is evolutionary in nature. As you grow, your goals may grow as well and therefore a different strategy may be needed. A good financial planner will realize this fact.
- Keep you on track to meet changing goals, changing personal circumstances, the vicissitudes of life so to speak, new products, bear and bull markets, and burdensome tax laws.
Did we leave anything out? The point is simply that a CFP can accomplish a lot. They're trained to do so and with the CFP designation you can rest assured they're prepared to help lead the way.
Aren’t all financial planners the same?
Financial planners are not created equal, some aren’t certified. That doesn’t mean they don’t know what they are doing, but you would be wise to keep in mind that people who call themselves financial planners but appear more interested in pushing specific financial products might not have your best interest at heart. These products they push oftentimes come at the expense of your real needs and goals.
A genuine financial planner can help you address a variety of financial needs, not just investments, insurance or taxes but all sorts of areas encompassing your finances. Again, we repeat, not every financial planner is a “Certified Financial Planner” professional and so buyer bewares when you consider the qualifications of the person you are entrusting to your family’s nest egg.
CFP professionals maintain an ethical commitment as well as legal obligation to act in your interest and not in their own self interest. Still, when financial planners span the role of investment planners, those ethical boundaries can quickly venture into gray areas. Gray areas are never good when mixed with the color of money.
Aren’t financial planners regulated?
People who call themselves financial planners may not currently be regulated as financial planners by either state or federal government. Many financial planners are regulated by states through subsets of financial planning, such as insurance and taxes, but not for their overall financial planning activities. In a sense, almost anyone can act as a financial planner. Much like anyone can call themselves an artist.
Thankfully, the Securities and Exchange Commission (SEC) as well as most States have requirements for people in the business of dispensing investment advice. This includes many financial planners. You are strongly encouraged to question your potential financial planner about whether they are a registered investment adviser or an agent of a company that is registered. In either case, this relationship needs to be fully disclosed to you. It is unethical to do so otherwise.
Without a doubt, CFP practitioners are certified and regulated by The Certified Financial Planner Board of Standards, otherwise known as the CFP Board. By virtue of a member’s certification, only granted by The CFP Board, CFP professionals are held accountable to CFP Board's code of ethics for their financial planning activities.
Why a CFP professional?
It is advisable to seek out a CFP certification in a financial planner because CFP professionals are committed to using the financial planning process to help advance the financial goals of individuals, families and businesses. It should come as no surprise that many CFP professionals also have earned a four-year college degree in an area of finance-related matters. Moreover, they will have completed a course of study in financial planning approved by CFP Board. Yes, such a designation in a financial planner means they will be more expensive than one that has not achieved this designation, but trust us, money spent here is money well spent. You don’t need a financial planner to tell you that.
In fact, to earn the acclaimed CFP certification and to remain certified as a CFP professional, individuals must meet stringent requirements in several primary areas.
A CFP must successfully complete The CFP Board's comprehensive certification examination process and this isn’t easy. The Board tests the individual’s knowledge on various key aspects of financial planning.
A CFP must have three years of financial planning-related experience under their belt before receiving the right to advertise services with the CFP trademarks.
The CFP voluntarily ascribes to CFP Board’s code of ethics and other requirements mandated. CFP practitioners who violate the code agree to be subject to disciplinary action, which can include the loss of the right to use the CFP marks.
They must complete 30 hours of continuing education every two years to stay abreast of current trends and methods in financial planning knowledge; this also goes for financial planning ethical standards.
It is important that CFPs maintain compliance in these four all-important areas. This assures you that an individual who holds the CFP certification is well prepared. They are qualified to give you sound, professional advice. Still, that doesn’t mean you can’t find a bad egg. You always need to remember whose money it is. A CFP designation is a layer of protection.
Rest assured, as a result of the recognition and credibility of the CFP designation as a symbol of educational achievement and commitment to excellence in financial planning, we would recommend the use of a CFP professional as the ideal choice for professional management and attainment of your financial goals.
How to choose the right financial planner
Choosing a financial planner is as important as choosing a doctor or lawyer. Working with a financial planner is a very personal relationship and you need to feel comfortable with the planner you ultimately choose. In addition to competency, a financial planner should have integrity, trust and a commitment to ethical behavior and high professional standards. Then again, shouldn’t we all? That is not asking too much is it? You want a planner who will put your needs and interests first and that is of paramount importance and this is where you need to trust your instincts a bit. If you don’t feel comfortable with the financial planner, you probably will never feel comfortable with them handling your money.
Be aware that many planners specialize in working with certain types of clients, such as small-business owners, executives or retirees and this may or may not be good for you. Many have minimum income and asset requirements to consider as well. Some specialize in certain areas of planning such as retirement, or if you just got a divorce and in other areas of asset management. Our recommendation is that you interview at least three planners to find the right one to serve your needs. Get one that is certified and one that you are comfortable with. You also need references from satisfied clients.
Get evidence that they helped others achieved their dreams before you put yours in their hands.
How to look for a planner
You might be surprised how close you are to a financial planner in your own immediate social network. Studies of social networks have shown that you can be connected to nearly anyone in the world with about 7 ties. That is you are merely 7 people away from anyone in the world. Now, we don’t know where that great financial planner might lie from the first person to the seventh but we think it is closer to the first.
As a starting point, ask for names from friends or business associates who may have used a financial planner. Attorneys, accountants, insurance agents, bankers and other financial specialists also can be great sources because financial planners often work with them to carry out a client’s plan.
And finally, FinancialPlanners.com. After all, that is what we are all about: helping you get the financial planning that you need.
Are you looking for Financial Planner? Contact a local Financial Planner in your area today!