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According to the Certified Financial Planner Board’s website, only about 200 CFP® professionals also give legal advice nationally. As one of 16 practicing Texas attorneys with the CFP® designation, I know the value that this designation has had for many of my clients. Whether in a divorce, corporate, retirement planning, or estate planning setting, the knowledge, insight, and thoroughness gained by obtaining the designation has been invaluable to my clients.
Dozens of professional credentials exist in the financial planning and retirement planning areas. In the maze of all the alphabet soup, you may have heard about and wondered what the CFP® or Certified Financial Planner™ designation is. How can a professional with this designation serve you better? This blog entry seeks to explain exactly what the designation means and why you should be using a professional that holds the title.
What is a Certified Financial Planner™ Professional?
A professional or a practitioner that meets the requirements established by the Certified Financial Planner Board of Standards, Inc. Only those individuals who demonstrate the requisite experience, education, and ethical standards are awarded the CFP® mark.
What Are the Requirements to Become a Certified Financial Planner™ Professional?
There are four general requirements to becoming a CFP®. They are commonly known by the moniker the “4 – E’s of Certification.” The four E’s are EDUCATION, EXAMINATION, EXPERIENCE, and ETHICS. A brief summary of each of the four main elements is included below.
- Education – Hold a bachelor’s degree (or higher) from an accredited college or university and the degree program must include the following areas of study:
- General principals of financial planning;
- Insurance planning;
- Investment planning;
- Income tax planning;
- Retirement planning;
- Estate planning;
- Interpersonal communication;
- Professional conduct and fiduciary responsibility; AND
- Financial plan development (capstone) course
- Examination – Pass the 10-hour CFP® certification examination
- Experience – 3 years full time qualifying experience, or the equivalent of 6,000 hours, is required to satisfy the 3 year Experience Requirement
- Ethics – Pass a professional fitness standards and background check
Once appointed, a CFP® professional must complete 30 hours of continuing education every two years in order to maintain the certification.
What Does a Certified Financial Planner™ Do?
A CFP® professional is trained to develop and implement comprehensive financial plans for individuals, business, and organizations. He or he possesses the knowledge and skills to objectively assess your current financial status, identify potential problem areas, and recommend appropriate solutions. You’re also working with someone who’s demonstrated expertise in multiple areas of financial planning, including income and estate tax, investment planning, risk management, and retirement planning.
How is a CFP® Professional Compensated?
In general, financial planners earn their living either from commissions or by charging hourly or flat rates for their services. Additionally, a combination fee-and-commission structure may be used in which you pay a fee for development of a financial plan or for other services provided by the CFP® professional, who also receives a commission from selling you products. A commission is a fee paid whenever someone buys or sells a stock or other investment, or when someone buys insurance (such as health, life, or long-term care insurance) or annuities.
How Can a CFP® Professional Help You?
A CFP® professional can help you create a personal budget, control expenses, and develop and implement plans for retirement, education, and/or wealth protection. A CFP® professional can offer expertise in risk management, including strategies involving life and long-term care insurance, health insurance, and liability coverage. He or she can often help with your tax planning or manage your asset portfolio based on your goals.
Is a CFP® Professional Right For You?
The financial world has become a very complex place. Even if you are used to handling your own financial affairs, the time may be right to consult a CFP® professional who can review your financial health and offer a second opinion or suggestions that may help you reach your financial goals.
For example, are you familiar with all the different investment opportunities that might be available to you? Are you properly budgeting your income so that you are living within your means? Are you on track to save enough for your child’s education? Are you taking advantage of IRS tax deductions to the fullest extent permitted by law? Are you protecting your assets against risks and lawsuits? A CFP® professional can help offer the analysis you need to help address these issues and other important financial questions.
For more information, please call Sean Green at Green Law, PLLC – (806) 548-2953 or send an email to email@example.com.