Approach: Although they’re trained in many disciplines, not all CFP® professionals are comprehensive in their approach to wealth management. Unfortunately, not even all CFP® professionals take a holistic approach and focus only on insurance or investment products. In our view, only a comprehensive strategy and plan for investments, insurance, risk management, taxation and estate planning can properly address those areas that all inter-relate and affect one another. For example, they should know your entire tax situation, not just how to minimize taxes from investments but how you should take advantage of every legal tax reduction strategy for every type of tax a client might face. This involves real pro-active tax planning, more than properly reporting what your income was and how much tax you owe, which is important but you will benefit more from an integrated tax strategy that allows your CFP® and CPA professionals to collaborate on your behalf.
Competency: Remember that a CFP® professional will always have more training and retraining, as they also commit to continuing education. Mentorship, internship and corporate training all pave the way for many financial advisors but nothing replaces real life experience working with the clients over many years and dealing with a spectrum of personalities, situations and challenges. And while even the most experienced advisor is beholden to no one, CFP® professionals have a fiduciary duty to put clients first. Some CFP® professionals specialize in various areas and have core competencies in areas such as investments, taxation or estate planning. Some specialize by target market, working with small business owners, medical professionals, retirees or even certain ethnic groups. One of the most important capabilities to look for is whether they have the intentionality, discipline and patience to follow up on the execution of their financial planning recommendations. We ask permission to become our client’s accountability partners to make sure they implement to get the results their looking to achieve.
Business Model: Does the CFP® professional work in tandem as part of cohesive team supporting their clients with multi-faceted expertise and roles? Or are they a sole proprietor working alone with perhaps a secretary? If so, what’s their succession plan? With the increase in demands on time, client expectations, investment performance, technical capability, expertise and knowledge in many financial areas, regulatory requirements and others, I would contend that this model is going the way of the do-do. Also, do they have sufficient support structures and resources to solve a multitude of client needs? For example, do they have strategic partners in the areas of legal, insurance, qualified retirement plans? Even more importantly, do they collaborate and communicate proactively with your other professionals to ensure all their advice is consistent and appropriate?
All CFP® professionals are not equal, in hiring a wealth management team to oversee your family’s finances, knowing what to look for before engaging is paramount to having a positive experience.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.