Three Letters That Can Tell You A Lot
I’m often asked, “What exactly is a CERTIFIED FINANCIAL PLANNER™ practitioner and do I need one?” There is no right answer to the second part of that question, because at the end of the day you need to be comfortable with the approach and relationship you have with your financial advisor. But the Certified Financial Planner™ designation does indicate that an advisor has the training and experience to build a financial plan for you and your family. The CFP® is not easy to obtain. It requires a minimum of three years industry experience, a national board certification which includes a very long two-day exam, and ongoing educational requirements.
Disclosure: I am a CFP® practitioner…and, you will see me add practitioner or professional every time I use those three letters, as technically required by the CFP® board.
Here are some ways a CFP® professional can help you:
Training for a CFP® certification allows the advisor to provide an accurate snapshot of your current finances and explain in detail what it will take to achieve your particular money goals. Think of it as a type of financial roadmap that takes all your goals into consideration, including: current income, savings rate, expected retirement income, expected rate of return, the effects of inflation, your tax bracket, etc.
2. Investment Planning
Once you’ve established your goals, it’s time to choose the best investment tools for your purposes. There are a lot of options here – mutual funds, ETFs, stocks, bonds, etc. A CFP® can explain the pros and cons of each investment vehicle in plain English and make recommendations tailored to your particular circumstances.
3. Insurance Planning
Insurance gets a bad rap because there are a lot of fancy products out there with high fees and convoluted purposes. But term life insurance can be the lowest cost, highest impact way to protect your family’s financial future. Disability insurance can also make a huge difference for those with young families and long time horizons. A good CFP® professional will be able to evaluate your family’s insurance needs.
4. Retirement Plans
If you work for a big company, you may be eligible to participate in a retirement savings plan. A CFP® practitioner can take a look at your plan options and help find an allocation model that meets your needs. If you’re a business owner, you have to make decisions about which plan to implement for you and your employees. A CFP® practitioner can help you evaluate the options, including the costs associated with each plan, investment choices, contribution limits and plan administration.
It’s not what you earn… it’s what you keep. A CFP® professional can provide investment advice and information to maximize your take home pay and keep more of your investment returns in your own pocket; legally, of course.
6. Estate Planning
A CFP® professional can help ensure that your estate winds up where you intended. He can guide you through the process, from the basics — adding beneficiaries to your IRAs – to making sure your assets will be passed on according to your wishes.
So, do you need a CFP® professional? Only you can make that decision, but knowing what’s behind those three letters should help you evaluate your options.
Wes Moss is a certified financial planner and is the Chief Investment Strategist at Capital Investment Advisors in Atlanta. Moss is also the host of “Money Matters” on AM 750 and now 95.5 FM News Talk WSB on Sundays from 9 a.m.-11 a.m. An author, “Apprentice” alumni, husband and father, Moss is committed to helping Atlanta’s citizens with financial health.