If you struggle to manage your finances, partnering with a financial advisor could be a great help. On anything from simple budgeting to complex estate planning, it can be tough figuring out who is the best fit for your needs.
There are countless financial professionals who may try to offer you financial guidance, so when considering financial advisors, you'll want to compare cost, expertise, experience, training, and credentials. Some financial professionals have the CFP designation. Here's what that means.
What is a CFP?
A Certified Financial Planner is a financial advisor who has earned the CFP certification. CFPs must complete certain education, training, and exam requirements and have thousands of hours of practical experience before they're permitted to use the CFP marks. The CFP Board of Standards administers and manages all initial and ongoing certification requirements.
The board is a nonprofit organization that sets and enforces CFP certification criteria. The board's goal is to ensure that all CFPs have both a solid understanding of the ever-changing financial industry and an ethical commitment to advise in their clients' best interest.
How to become a CFP?
The CFP board administers the CFP certification process. In order to complete the certification, all candidates must meet requirements known as the "four E's". They include:
Education - The CFP board requires all candidates to complete a college level course on financial planning or a similar course approved by the board. CFPs also must have a bachelor's degree or higher from an accredited college or university.
Examination - All candidates must pass the CFP Certification Examination once they complete their coursework. With this exam, the board evaluates the candidates ability to apply their financial knowledge to a wide range of situations.
Experience - The board also requires either 6,000 hours of qualifying experience in the field or 4,000 hours of experience as an apprentice. The aim is to make sure that applicants have put their knowledge to plenty of practice in everyday situations.
Ethics - CFP professionals must agree to uphold high standards for ethics and professional conduct as defined by the board. The standards emphasize integrity, fairness, professionalism, and diligence when working with clients. All CFPs agree to fiduciary standards to act in their clients' best interest.
Why consider working with a CFP?
Managing your finances often means a lot more than investing and budgeting. It can involve figuring out how all of the pieces of your finances must work together to help you achieve your financial goals for the short term and over the long haul.
Navigating all that can be challenging, so it's obvious that a professional is often times vital, but why look for an advisor with a CFP credential?
It's a practical starting point.
Narrowing down your choices for a financial adviser can be overwhelming, but you've got to start somewhere. BY limiting your search to CFPs, you'll at least know all your candidates have a bachelor's degree and enough understanding of finances to maintain the stringent standards of the CFP designation.
CFPs are trained in dozens of financial areas
You'll face many financial decisions throughout your life. Whether you're just starting out or starting to think further into the future, a CFP is trained in all the following core financial planning topics: investment, insurance, estate, tax, and retirement planning. As you can see, CFPs are required to have a very comprehensive understanding of the way every aspect of your financial health is intertwined. They're qualified to help you in anything from budgeting and tackling debt to helping you implement different tax and insurance strategies that will impact your financial trajectory exponentially.
You can check CFPs for red flags
The CFP board has a web page where you can look up CFPs to verify their certification status. This is another tactic the CFP board utilizes to hold Certified Financial Planners accountable for every decision or recommendation made while holding the CFP designation. You can find important information, like whether the CFP has filed for bankruptcy within the past 10 years, that helps paint the full picture of whether that specific CFP truly is qualified to advise you in your financial needs.
Ultimately, it's crucial that your financial future is in the hands of someone you know you can trust. Partnering with a CFP can give you peace of mind knowing that they've met certain education and competency requirements - and that they're committed as part of their certification to act in your best interest.
Legacy Financial Group is committed to education and empowering consumers to make wise financial decisions. Click Here to contact us about putting together a comprehensive financial plan.
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