When can I retire? How much will I need saved? What will be the tax impact of living off my retirement savings? How can I reduce my portfolio risk? Will my Social Security benefit be impacted by retirement distributions? Do I have the right investment allocation for my comfort level of risk?
These are a few of the nagging questions facing millions of Americans as they approach or are entering retirement.
According to a 2014 Wells Fargo survey on financial well-being, 42% of Americans have no type of detailed financial plan, or even a budget to help manage their spending. They are in a financial free-for-all, hoping everything will work out.
If you’ve started the process to gain control and understanding of your finances, congratulations! You’re ahead of the pack and starting is definitely the hardest part.
One of the most important retirement decisions you will make is finding the right financial adviser. There are many different elements you should look for when choosing an adviser: patient investing™, communication style, compensation, and chemistry to name a few. However, the very first criterion is to check the adviser’s professional credentials. The initials “CFP®” – for CERTIFIED FINANCIAL PLANNER® -- indicate that the adviser has achieved the industry’s gold standard by successfully completing the Certified Financial Planner Board of Standards initial and ongoing certification requirements. Most investors don’t realize that anyone can hang a shingle and call themselves a financial adviser. Therefore, in deciding where you get your financial advice, one of the first filters in qualifying your candidate is to make sure they are a CFP®. Otherwise, they may just be in the business of sales, ready to offer you an expensive product
You can find a CFP® by searching the Certified Financial Planner (CFP®) Board database.
So, why is the CFP® designation the gold standard in the financial industry?
- Educational Requirements: Unlike many financial services professionals, CFP® certificants must develop theoretical and practical knowledge by completing a comprehensive financial planning curriculum approved by the CFP® Board. Also, to retain their certification, CFP® Professionals must complete continuing education requirements, including courses on ethics.
- Examination: To obtain a CFP® certification, applicants are required to pass a ten-hour, two-day exam that tests comprehensive financial planning skills and their ability to apply that technical knowledge to real-life situations.
- Experience: CFP® professionals must have at least three years of financial planning experience.Clients can expect a realistic financial plan because of their hands-on experience requirements.
- Ethics: The CFP Board has a Code of Ethics and Rules of Conduct that uphold CFP® Professionals to the highest of standards. These documents address principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence. These agreements also require CFP professionals to act as a fiduciary at all times.
Were you already familiar with the CFP® designation? Who do you trust with your retirement and investment advice? What have your advisory experiences been?