Certified Financial Planners Hold Higher Standards – Business Journal Daily
By Jonathan Lapine, Director, W3 Wealth Management
YOUNGSTOWN, Ohio – Financial planning is more than just an investment. There are many moving parts to your life, and a financial planner can help you put them together into a cohesive plan. The process to achieve this is dynamic and continuous. Whether it’s planning for retirement or answering questions about your first mortgage, your planner can help you navigate uncertainty at any stage of life.
A financial planner can give you peace of mind and clarity in the face of an uncertain future. They can make it easier to make short- and long-term decisions while keeping you on track to achieve your goals.
What is a CFP? How do they differ from other financial planners?
Just about anyone can call themselves a financial planner, but a CFP, or Certified Financial Planner, is required to a higher standard. A professional who has the CFP after his or her name has met the extensive education and experience requirements set by the CFP Board for certification. In addition, they engage in continuing education to keep their title. CFPs are kept abreast of changes in the financial climate and are able to inform and guide you.
CFP professionals must adhere to high ethical standards and act in the best interests of their clients, not theirs. They will work with you to educate you on all of your options and the pros and cons of each.
What is a fiduciary?
A trustee has a duty to act in the best interests of the client when providing financial advice. This puts a buffer between the client and the planner’s own best interests, ensuring that the client is not taken advantage of. Teaming up with a planner who is not a trustee opens up the possibility of paying excessive fees and commissions and receiving substandard advice.
Finding and partnering with a CFP will ensure you choose a financial professional who is a fiduciary, as this is one of the many standards they are held to. Choosing someone who is not tied to this code could result in a less than optimal outcome for you and your financial plan.
What does the financial planning process look like?
The process begins when you and your organizer get to know each other and agree to the terms of your engagement. Just as a doctor wouldn’t prescribe medication for a patient without knowing their health issues and medical history, neither should a financial planner create a plan without understanding your financial situation, history, and goals.
Your planner will then analyze this information and develop a personalized and adaptable plan to help you achieve your goals. This plan is a living document and will require regular attention and adjustments to remain relevant and complete. The success of the plan requires that it be reviewed and that you and your planner are in regular communication so that they remain informed about the evolution of your life and your financial situation.
Your financial plan affects many aspects of your life, and some parts will require the expertise of outside professionals, such as CPAs or lawyers. Your financial planner can coordinate and communicate directly with these professionals to ensure that your plan is executed correctly according to your needs.
How do I know my plan will be successful?
Ultimately, the client is responsible for their finances and the decisions they choose to make. It’s your life and your money. Your financial planner is there to educate you and empower you to know your options and be equipped to make the best decision possible.
There are some things you can do to increase the chances of your plan being successful. Some may think that they will not be able to benefit from a financial planner until later in life, when they are ready to retire. But this is not the case. Starting a relationship with a financial planner as soon as possible is helpful in developing good financial planning habits, such as saving, investing, and working towards your goals.
You will also be able to build a trusting relationship with your planner over time, as this type of relationship requires a lot. For this reason, it is wise to find a planner that you connect with in order to more easily build that trust.
Setting realistic goals can save you frustration in the planning process. It doesn’t mean that you have to sacrifice your dream of traveling the world. But that can mean you’ll have to spend a little less on a new car. By helping you assess your goals and educating you on how to achieve them, your planner can make the money you worked for work for you.
Are you stock pickers?
Financial planners shouldn’t just focus on outperforming the market. Seeking only to outperform the market is unsustainable, unrealistic and can sometimes expose your portfolio to unclear risks. Your investment strategy should be tailored to your needs and focused on achieving your long-term goals.
By getting to know yourself, your financial life and your goals, your financial planner can help you strategically invest your assets to give you the growth you need while mitigating risk and volatility. Your age and risk tolerance should definitely play a role in your investment portfolio. Your planner will be doing you a disservice by investing your money in ways that are too risky for your constitution or position in life.
Can you help me reduce my taxes?
The short answer is maybe. Each person’s situation is unique, which has unique tax implications. Certified financial planners have the knowledge and skills to help you organize your assets in a tax-efficient manner and use investments that can ultimately reduce your tax burden. They can help you develop an optimal and tax-efficient strategy for earning income from your nest egg upon retirement.
For any nuanced tax scenario you might find yourself in, your financial planner can work closely with a trusted tax professional to work toward an ideal outcome.
Who really owns my money?
If a financial professional asks you to write a check in their name, run as far as you can in the opposite direction and don’t look back! This is a highly unethical practice.
Your financial planner should never personally own your assets. They should only be held through a third party, such as an investment company or on a brokerage account. This creates another layer of distance between your money and someone else’s self-interest.
Your wealth is what allows you to do the things you love with the people you love, so it’s important to protect it.
The opinions expressed in this article are those of the author and should not be construed as specific investment advice. All information is believed to come from reliable sources. However, no representation is made as to its completeness or accuracy. There are risks involved in investing, including the potential loss of capital. No investment strategy can guarantee a profit or protect against loss in times of falling values.
The prudent investor is sponsored content produced by W3 Wealth Management. The company operates
offices in Warren, Akron, Beachwood, Westlake and Columbus.
Call 330 836 3805.
Copyright 2021 The Business Journal, Youngstown, Ohio.