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Why Hire a Certified Financial Planner?

Financial PlannerWhen it comes to your finances, any advice you follow can greatly affect your future life circumstances. It is therefore imperative to know that you have the best help possible, to ensure financial security. There may be some excellent financial advisors out there without a certification, but hiring a certified financial planner does have certain benefits. In the end, however, you will also need to trust your gut on whether the person sitting in front of you during the first meeting is someone you could work with.

What Is the Difference Between a CFP and Other Financial Advisors?
Before the CFP board will grant a certification, the financial planner first has to go through a certain set of steps. A certified financial planner has to have relevant education and complete a specific set of courses that cover financial planning. Many CFPs are also attorneys. After acquiring the relevant education, a candidate needs to pass a ten-hour exam that tests their knowledge on financial planning and work a minimum of three years in the profession. A CFP also has to agree to a certain set of ethics required by the board and act accordingly to be able to keep the certification.

What Does Financial Planning Involve?
Financial planning is a process you follow whereby you identify your financial goals for the future and create an understanding of when and how you may need to make use of your money. Once you have an overview of your financial situation, you can start creating a plan of action in order to reach your financial goals. This can be done independently or with the help of a financial advisor.

How Can a CFP Help?
Although you can get very valuable financial advice online from websites such asĀ, a CFP can help to assess your specific situation and create a tailor-made plan. A certified financial advisor should have the necessary education and experience to guide you, giving you a broader perspective over your finances and help you to create a more effective plan. A CFP will also have more knowledge on the different options you have, such as the type of retirement accounts you should use, which mortgage would be the best for you, how you can do things differently to improve your financial situation, how you should handle your taxes, and how to handle your properties. Some, but not all CFPs, help with investment planning.

Questions to Ask Your CFP
When hiring a CFP, you need to know that it is a person in whom you can trust, who is not going to confuse you with technical jargon and won’t try to force decisions onto you. The first question you could ask is what type of clients this CFP usually deals with, to determine whether their specialization is suited to your situation. Secondly, their experience is important, so you can ask how many years they have been practicing. Lastly, you may want to ask them to explain a financial concept to you in order to determine their knowledge and capability to explain things clearly. It is also important to discuss compensation so you know how much their services will cost you.


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