How to Choose a Certified Financial Planner (CFP®) who is Right for You


Certified financial planners play a critical role working with you to plan your financial goals.  Financial planning isn’t just for the wealthy. It’s for everyone. Whether you are looking for a variety of options to invest your money or how to work towards a particular financial goal, a CFP® can help you make sense of your money and gain a deeper understanding and appreciation of the financial planning process. If you are looking for a serious financial planner, held to a higher standard, then make sure you find one who has a CFP® designation.

Certified Financial planners play a critical role working with you to plan your financial goals

To be a Certified Financial Planner, professionals:

  • Must have a bachelor’s degree or higher and undergo financial training and certification by the Certified Financial Planner Board.
  • Take the certification exam: a rigorous two-day 10-hour exam administered by the CFP® Board. It includes topics such as tax planning, employee benefits and retirement planning, estate planning, investment management and insurance.
  • Are required to have proven experience in financial planning before being authorized to use the CFP® marks.
  • Agree to a strict code of conduct known as CFP® Board’s Code of Ethics and Professional Responsibility which outlines ethical responsibilities to the public, clients and employers.
  • Must undergo a background check with full disclosure of any investigations or legal proceedings related to their business conduct.

A CFP® designation is a good sign this person has attained a high level of expertise in financial management and is highly capable of working with you to help you attain your financial goals.

You’ll want to find a CFP® who is a good fit; a qualified certified financial planner who will be right for your needs. Here are some tips to keep in mind when choosing a suitable certified financial planner who will work to meet your money management needs:

Look at their Experience
Some certified financial planners can offer you professional consulting on a wide range of financial matters while others might specialize in specific areas such as retirement planning, wealth management, education planning and others. When picking a CFP®, keep in mind your financial objectives and the kind of talent that you are looking for.

Ask about areas of specialization and their specific experience in these areas.:

  • Do they have experience in handling your type of financial requirements?
  • How long have they been offering professional financial planning services? Long industry experience is generally a positive sign. The professional will have amassed considerable expertise in handling financial matters in different scenarios and can, therefore, offer you sound professional assistance within the shortest time possible.
  • Ask for references and work history. These will give you an indication on the CFP®s strong points and track record.

Fees and Compensation
Factor in fees and the compensation structure. The mode of compensation can either be commission-based or a certain percentage of your overall assets or a combination of both. Ultimately, you should choose a compensation structure that you feel comfortable with. Options include:

  • Fee-Only Structure: A fee-only compensation plan can take many forms including hourly fees, flat fees, fixed fees, performance-based fee or a percentage based fee structure.
  • Commissiononly:  In this case, the compensation comes in the form of a percentage of sales or purchase transactions for a particular product or service recommended by the certificate such as mutual funds, annuities, insurance products and many others.
  • Fees and Commissions: There are cases where the CFP professional’s compensation structure may include both fees and commissions on transactions for their professional services.

When hiring a CFP® professional, request a complete disclosure of all fees and commissions that they expect to earn in the course of their service.  If a CFP® professional has some business affiliations with the companies behind some of the products or services that they are recommending, professional ethics demand that they fully disclose this to the client.

Will they act as a fiduciary?
The CFP® professional must be a fiduciary and pledge to work in your best interest all the time. If a certified financial planner is not a fiduciary, it means that anything they sell you merely has to be suitable for you, not ideal or in your best interest.  This can be a red flag for personalized long-term investment decisions.

Carry Out a Background Check
Before hiring a CFP professional, take time to do a little background check on their past and work history. For example, have they had disputes with past clients? Have they been involved in crime or some malpractices? Have they ever been put under investigations over professional misconduct? The point is, that if a certified financial planner has not been able to hold themselves up to a high ethical and professional standard in their past dealings, what is the guarantee that they will do so when managing your financial affairs?

Do they have any professional affiliations?
Affiliation with professional associations in the industry such as the National Association of Personal Financial Advisors is generally a good sign that someone is doing something right. Besides, these professional associations also have their own sets of ethical and professional standards that are often very rigorous.

Do they have a process?
A professional CFP® have experienced processes for mapping out your financial requirements and developing custom financial advice and solutions to help you meet your objectives. Before hiring, talk to them and ask them to elaborate their process of identifying and addressing your financial or investment objectives.

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