6 Benefits of Working With a CERTIFIED FINANCIAL PLANNER®

Working with a trusted financial professional is one of the most important partnerships you can make. But did you know anyone can call themselves a financial planner, even if they don’t have any financial education or certifications? This is why it’s so important to carefully vet the financial professionals you’re thinking of working with. 

One of the easiest ways to start the vetting process is to ask a potential advisor about their financial certifications. Oftentimes, you can tell if they’re certified or licensed by the letters that come after their name. Learning about the different types of financial certifications can help you discover the best advisor for your situation and ensure they have the education, experience, and ethical standards necessary to help you make good financial plans and decisions.

One of the most well-known certifications for financial advisors is the CERTIFIED FINANCIAL PLANNER® (CFP®) designation, which holds advisors to high educational, experience, and ethical standards. Below, we describe 6 benefits of working with a CFP® professional and why we believe you can benefit most from partnering with a CFP® over other types of financial advisors.

1. Fiduciary Standard

Simply put, a fiduciary is a professional who holds a legally or ethically bound relationship of trust with their clients. Fiduciaries are always required to act in their clients’ best interests, which should be a top priority when you’re looking for your own financial advisor. You want to be assured that the financial advice you’re receiving is in your best interest, rather than your advisor’s. 

So when might an advisor be motivated to act in their best interest at the expense of your own? Unfortunately, some advisors who sell financial products (like annuities or life insurance policies) on behalf of a single firm experience conflicts of interest. They are often held accountable to sales quotas – and the commissions from these sales can be substantial – so some advisors who sell these products may promote them even when they’re not right for a client’s financial interests. 

All financial advisors who have earned the CFP® designation are required to act as fiduciaries for their clients. In most cases, CFP® professionals are not beholden to a single financial firm’s investment options or proprietary financial products. When you work with a fiduciary, you can be assured that your advisor’s best interest is aligned with your best interest. 

2. Demonstrated Expertise

CFP® professionals must demonstrate their financial knowledge and competence by completing educational requirements and passing the standardized CFP® exam from the CFP® Board. In addition to a bachelor’s degree (in any discipline), aspiring CFP® professionals must complete an approved CFP® program from an accredited college or university. During the program, students will learn about the following areas of financial planning:

• Professional Conduct and Regulation
• General Principles of Financial Planning
• Education Planning
• Risk Management and Insurance Planning
• Investment Planning
• Tax Planning
• Retirement Savings and Income Planning 
• Estate Planning
• Financial Plan Development

Once they’ve completed the program, professionals can then sit for the exam. The CFP® exam consists of 170 multiple choice questions and is completed in two three-hour sessions over the course of one day. The questions include standalone questions, scenario-based questions, and case study questions to ensure the professional is able to apply their knowledge to real-world situations. 

With these educational standards, you can be confident that your financial partner is knowledgeable in a variety of financial planning topics. 

3. Demonstrated Experience

However, educational achievements aren’t enough for CFP® professionals to proudly display their designation letters. They must also demonstrate their experience in the personal financial planning industry before they can call themselves a CFP®. There are several options to complete the experience requirement, and CFP® advisors can include relevant experience that was completed before taking the exam if the experience was gained within 10 years prior. 

Ultimately, aspiring CFP® advisors have to complete 6,000 hours of financial planning experience on their own or 4,000 hours of apprenticeship experience while meeting additional requirements. If they opt for the first choice, this is equal to almost 3 years of experience. Therefore, you can rest assured that your CFP® advisor has been working in the field for a fairly long period of time.

4. Ethical Standards

We’ve already discussed that a CFP® is required to act as a fiduciary for their clients. But the CFP® Board also holds their professionals to strict and clearly stated ethical standards that expand upon the fiduciary duty. If a CFP® is found to have violated these standards, they may be stripped of their certification. 

To become a CFP® advisor, the professional must sign the Board’s Ethics Declaration and pass a background check. The Ethics Declaration includes a Code of Ethics and Standards of Conduct, which can be viewed in full here. These ethical standards provide even more evidence that CFP® professionals are some of the most trustworthy financial professionals in the industry.

5. Comprehensive Wealth Management

Because CFP® professionals have completed education that requires competence in nearly all areas of personal finance, most CFP® advisors offer comprehensive wealth management and financial planning services. This means they are not solely focused on your investment allocations and returns. Instead, they help you create financial plans and retirement strategies that encompass all aspects of your financial life.

When your investment allocations align with your tax strategies, and when your estate plans align with your insurance protection, you don’t have to worry that one part of your financial life is detracting from the plans you have for another. Additionally, you don’t have to piece together advice from multiple financial professionals. With a CFP®, you’ll be able to ask a single person about your most pressing financial questions and concerns. 

6. The Numbers Say It All

However, don’t just take our word for it. There are compelling statistics that show both advisors with the CFP® designation and their clients are happier with their partnerships than other types of advisors. According to the CFP® Board, 96% of people who partner with a CFP® are satisfied with the advice and wealth management services they receive.

Additionally, research shows that financial firms with CFP® professionals are more productive and are able to better serve their clients’ financial needs than firms without CFP® professionals. It makes sense that if we’re happier with our firms, our work, and the problem-solving solutions we can provide, our clients will be happier as well.

At Caviness Wealth Management, We’re CFP® Professionals

Our firm was founded on the principle that you deserve the highest quality of care in the financial advice and wealth management you receive. That’s why we’ve dedicated ourselves to the standards held by the CFP® Board, including the ongoing expectations for continuing education regarding changing laws, evolving strategies, and the introduction of new financial products.