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Not everyone knows the ins and outs of planning their personal finances. With the economic world getting more and more complex, people are drowning in a sea of financial choices: What do I want to achieve through financial planning? When do I want to achieve it? What are my present and future resources? What is my risk? What factors will limit my ability to achieve my financial goals? Where do I even begin?
All of these questions and more flood the banks and overflow into an overwhelming sea of confusion for most of us. That's why a financial planner is pertinent for anyone wishing to get a handle on his or her financial future. For example, a financial planner targets potential problems that may hinder a client from achieving their financial goals. They are adept at helping clients understand what stands between them and the achievement of their ultimate financial goals.
Choosing a financial planner may be one of the most important decisions you make for yourself and your loved ones. They can provide you and your family with guidance over your lifetime and can play a central role in helping you meet your life goals and attain financial well being. Don't be left out in the cold when it comes time to choose a financial planner. Find the one that's right for you.
CFP-What Does It Mean?
When the time comes to seek professional assistance with your financial planning, don't just settle for anyone with a quick tongue and a lot of advice. It's important to know that your financial planner is someone you can trust-someone who has proven his or her ability to successfully manage your financial future.
CFP (a registered certification mark) and CFP PRACTICIONER (federal certification mark pending) are marks which help you identify financial planners who are committed to competent and ethical behavior when providing financial planning services. Each CFP Practitioner licensee has taken the extra step to demonstrate his or her professionalism by voluntarily submitting to the rigorous CFP certification process. This is no small feat. In addition to significant education and experience requirements, a CFP Practitioner must pass a comprehensive two-day, ten hour exam that tests his or her personal financial planning knowledge and skills, as well as agreeing to continually update his or her abilities and abide by a strict code of ethics.
Ethical Concerns: What Should I Look For?
Ethical concerns are no laughing matter when it comes to choosing the right financial planner. After all, you're trusting your financial future to a person you hope will steer you in the right direction. That's why it's important to look for a certified CFP Practitioner. A CFP Practitioner agrees to abide by a strict code of professional conduct, known as the CFP Board's Code of Ethics and Professional Responsibility (Code of Ethics), that sets forth a CFP Practitioner's ethical responsibilities to the public, to clients and to employers.
Through the Code of Ethics, every CFP Practitioner agrees to act fairly and diligently when providing you with financial planning advice and services, always putting your interests first. They are to act with integrity and must keep within standards of confidentiality.
The Financial Planning Process: What Should I Expect?
How does a financial planner differ from others who offer financial advice? Aren't they all the same thing? The answer is no. A CFP is different from those who may be adept at financial planning but are not certified. A CFP will clearly define the scope of the work he or she will do with you, will explain and document the services he or she will provide, and will explain the method of compensation and other relevant information. They will work with you, not take over, and help you to determine your personal and financial goals, needs and priorities. They will also be sensitive to your time frame for achieving results and discuss any risks that may be out there. As more and more people call themselves "financial planners" it is especially crucial to be sure you are working with someone who has your best financial interests in the forefront.
To help you understand what to expect from the financial planning process, a CFP Practitioner follows certain standards when planning advice. These standards are based on a six-step process described below.
- Establishing and defining the client-planner relationship.
- Gathering client data, including goals.
- Analyzing and evaluating the client's financial status.
- Developing and presenting financial planning recommendations and/or alternatives.
- Implementing the financial planning recommendations.
- Monitoring the financial planning recommendations.
What Questions Should I Ask When Choosing a CFP?
Always ask the questions that are most pertinent to your own sense of financial stability, however, if you're unsure what to ask, there are a few good guidelines to follow:
1. What experience do you have?
Find out how long the planner has been in practice. Ask them to briefly describe their work experience. Choose a planner with a minimum of three years experience counseling individuals on their financial needs.2. What are your qualifications?
Ask the planner if they are a Certified Financial Planner. Don't settle for someone who says they are a financial planner but can't back it up with solid proof.3. What services do you offer?
The services a financial planner offers depend on a number of factors including credentials, licenses and areas of expertise. Financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses. They also cannot give investment advice unless registered with state or Federal authorities.4. Will you be the only person working with me?
The financial planner may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, etc.) get a list of their names to check on their backgrounds. It's worth the time to go the extra mile.5. How will I pay for your services?
As part of your financial planning agreement, the planner should clearly tell you in writing how he or she will be paid for the services to be provided. Planners can be paid in any number of ways such as salary, fees based on an hourly rate, commissions, or a combination of fees and commissions. Be sure you are clear on what the financial planner charges before hiring him or her for services.These are just a few questions designed to get you well on the way to choosing a financial planner that works for you. Each individual will have questions based on their own financial situation. However, never be afraid to ask the questions listed above. It can only benefit you in your quest to find the Certified Financial Planner that will work best for you.