| What is a Certified Financial PlannerTM Professional? |
| Certified Financial PlannerTM Professionals are individuals who have met the education, examination, experience and ethics standards established by the Certified Financial Planner Board of Standards, Inc. (CFP Board). Only those who have fulfilled the certification and annual licensing requirements of the CFP Board can call themselves CFP® professionals and use the certification mark.
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| What is Financial Planning? |
| Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child’s education or planning for retirement. The financial planning process consists of six steps that help you take a "big picture" look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.
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| Why are the CFP® Certification Requirements Important? |
| Most people think that all financial planners are "certified," but this isn’t true. Anyone can call himself or herself a "financial planner." Only those who have fulfilled the certification and renewal requirements of CFP Board can display the CFP certification marks. When selecting a financial planner, you need to feel confident that the person you choose to help you plan for your future is competent and ethical.
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| How does CFP Board’s Code of Ethics Benefit me? |
| Through the Code of Ethics, CFP® practitioners agree to act fairly and diligently when providing you with financial planning advice and services, putting your interests first. The Code of Ethics states that CFP practitioners are to act with integrity, offering you professional services that are objective and based on your needs. They are required to provide you with information about their sources of compensation and conflicts of interest in writing.
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| What are the "4 E's" of Certified Financial Planners? |
| Education: CFP® professionals must develop their theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering a financial planning curriculum approved by CFP Board. Other options for satisfying the education component include submitting a transcript review or previous financial planning-related course work to CFP Board for review and credit, or showing the attainment of certain professional designations or academic degrees. Examination: CFP® practitioners must pass a comprehensive two-day, 10-hour CFP® Certification Examination that tests their ability to apply financial planning knowledge in an integrated format. Based on regular research of what planners do, the exam covers the financial planning process, tax planning, employee benefits and retirement planning, estate planning, investment management and insurance. Experience: CFP® professionals must have three years minimum experience in the financial planning process prior to earning the right to use the CFP certification marks. As a result, CFP practitioners possess financial counseling skills in addition to financial planning knowledge. Ethics: As a final step to certification, CFP® practitioners agree to abide by a strict code of professional conduct, known as CFP Board’s Code of Ethics and Professional Responsibility, that sets forth their ethical responsibilities to the public, clients and employers. CFP Board also performs a background check during this process, and each individual must disclose any investigations or legal proceedings related to their professional or business conduct.
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| Who can use the term "financial planner"? |
| The government does not regulate financial planners as financial planners; instead, it regulates planners as stock brokers, insurance agents or investment advisers, depending on the services they provide. As a result anybody can "hang out a shingle" and call himself or herself a financial planner. 10 Questions to Ask When Choosing a Financial Planner, can help you look for someone who is qualified to offer financial planning advice. The brochure contains questions to ask during an initial interview with a planner to help you determine if he or she is right for you.
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| What are the Benfits of Financial Planning? |
| Financial planning can provide direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more confident that your goals are on track.
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| Can You Do YOUR OWN Financial Planning? |
| Some personal finance software packages, magazines or self-help books can help you do your own financial planning. However, you may decide to seek help from a professional financial planner if: * you need expertise you don’t possess in certain areas of your finances. For example, a planner can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances. * you want to get a professional opinion about the financial plan you developed for yourself. * you don’t feel you have the time to spare to do your own financial planning. * you have an immediate need or unexpected life event such as a birth, inheritance or major illness. * you feel that a professional adviser could help you improve on how you are currently managing your finances. * you know that you need to improve your current financial situation but don’t know where to start.
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| What is the best age to start financial planning? |
| While it is true that the younger you start the more beneficial the process will be, financial planning is worthwhile at any age. Although younger people may have more decisions to make regarding their financial lives, changing laws and circumstances can lead middle-aged people and seniors to have to adjust their financial plans as well. Changes in tax law, for example, may require many people to revisit certain investments or estate plans, and adequate disability planning becomes more important as people age.
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| How are Financial Planners paid? |
| There is currently no uniform method by which financial planners are paid. A planner can be paid by a salary paid by the company for which the planner works; by fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income; by commissions paid by a third party from the products sold to you to carry out the financial planning recommendations; or by a combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. Be sure to ask the planner how he or she is paid.
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| Do I have to pay a financial planner for the first interview? How much does a planner typically charge? |
| Most financial planners will provide you with one free half-hour or hour meeting to talk about your reasons for wanting to work with them. During these initial interviews, the planners will also decide if they can help you and explain how they would work with you. Like other professionals, the rates financial planners charge depend on their experience, geographic location, level of services and your needs. Interview more than one planner to get an idea of the going rate for financial planning services.
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