Do You Need a Certified Financial Planner?

I recently interviewed my friend and Certified Financial Planner, Jeff Rose. Below Jeff answers some common questions regarding CFPs and working with an Independent Financial Advisor.

1. When would someone turn to a CFP® to help them manage their money?

I think someone needs a Certified Financial Planner™ professional when investing and retirement becomes a legitimate concern. Edit: You could do your retirement investing with an online stock broker or mutual fund company vs a CFP. If you’re not in the right mind set, it doesn’t make a lot of sense to hire a professional to help you sit down and map out your future. You first need to do some self discovery and figure out exactly where you are and get a sense of where you might want to be. Once you get a chance to analyze your own situation, and if you see some sudden shortfalls and you’re not sure where to turn, then hiring a CFP® might seem like a logical choice.

That being said, most people that come to me are in that mindset and need a game plan for a successful retirement. They rely on me to analyze their situation and develop a plan of attack that does two things: 1. Satisfies the goals they are trying to accomplish 2. Does so in a fashion that they understand and are completely comfortable with.

2. What does a typical client look like?

For me, a majority of my client base, I’m estimating 80% or greater, is of the baby boomer generation. Most of my clients have worked in some industry or trade for a number of years and now they’re inching closer to retirement. To make sure that they are imploring the right strategies to prevent them from outliving their income. That’s where my services come into play.

3. What’s the difference between a CFP® and a CPA?

A Certified Financial Planner™ professional encompasses more on the financial planning and investment process. While one of the modules does cover income tax planning, it’s much more general in nature. A CPA or Certified Public Accountant, in my mind, is the expert in all things encompassing tax planning. Even I have hired a CPA to help sort through the maze of all the tax codes and make sure that I’m doing everything that’s in my best interest for me, my family, and my business. That being said, it’s also helpful to have a CPA that I can bounce ideas off with specific client situations.

4. What’s one of the most common mistakes you see clients making with their money?

The most common mistakes I see is not having an understanding of what investments you have have and what their purpose is. Most people go through life and never truly understand what their investments are or what they’re doing. They just pick a few choices in their 401k and think they’re doing enough to save. Whether you putting money in a 401k or maxing out your Roth IRA, you have to have an understanding of what you’re actually putting your money into. In addition to that, you have to know what your goals are. If your goal is to retire at an earlier age, then maybe your investments should be more aggressive in nature. If you’ve got a good pension or other retirement income sources, then maybe you don’t need to be as aggressive and should look at something more conservative. If you’ve got investments and you’re not sure what’s the right, it may be time to hire a financial advisor.

5. How difficult was it to get your CFP®? What’s the best thing about having it?

The process that I went through to become a Certified Financial Planner™ professional was one of the hardest times of my life. My approach was unique in that I did a crash course that was able to cover all modules in just over 8 months. I then took a 2 day 10 hour exam following the 8 month period, and I remember walking out of there feeling beat down and not confident that I passed. I am thankful that I did, although I did not find out until a month and a half later!

Achieving the designation is of the prouder moments of my life. I enjoy having it because I feel that it shows to people that I’m serious about what I do and the financial planning process. Almost anyone in our industry can become a financial advisor, but taking the extra time and effort to become a CFP® has earned the respect from my peers and also my clients.

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6. I know about your website, Good Financial Sense, but what else are you involved in? What’s next for you?

The biggest thing that I’m really excited about is my book project that currently consumes almost all my spare time. This is a book idea that I’ve had for two years now, and it’s finally exciting to see some real progress. I don’t want to reveal too much quite yet, but what I can tell you is that the book is personal finance in nature, but I’m also using my military background to put an interesting spin on it. I look forward to sharing more in the near future.

Thanks to PT Money for the interview!

Jeff Rose is a Certified Financial Planner™ professional and independent financial advisor who co-founded Alliance Investment Planning Group. He also authors the blog Good Financial Cents and Tweets often @jeffrosecfp.

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  1. Kristin - San Francisco Financial Planner says:

    Nice interview.

    Jeff mentions that most people start working with a planner as they begin to think about retirement (and that may be the focus of his practice) but a planner can have even greater impact when you are younger. I specialize in young families and first went to a planner myself when I was just in my twenties. The decisions and numbers may seem a bit daunting when you are that young, but they are the reality, so meeting with a planner even if you don’t yet have much in the way of ‘finances’ is a great way to get head start on your financial life!