Importance of Financial Planning
The Importance of Having a Financial Plan. Creating a
financial plan helps you see the big picture and set long and short-term life
goals, a crucial step in mapping out your financial future. When you have a
financial plan, it's easier to make financial decisions and stay on track to
meet your goals.
Fee ONLY Financial Planning
The key difference between a fee-only financial advisor and other types of
planners is in how they get paid.
A fee-only financial advisor is paid by their clients for the advice they give.
This might come in a the form of a monthly fee, an hourly rate, or a percentage
of investments managed. But in all cases it is a direct relationship between the
client and the planner.
Other financial advisors are paid at least in part by the companies whose
products they recommend. As an example, if you buy a mutual fund they suggest, a
percentage of your investment will be paid to the advisor as a commission for
selling that product to you. The same might be true of any stocks, insurance or
other products you buy through your relationship with that advisor.
It can sometimes be hard to figure out exactly how your financial advisor is
paid, so if you are unsure the best thing you can do is ask them directly
whether or not they are fee-only. If the answer is anything other than an
immediate yes, you will know that at least some of their payment comes in the
form of commissions.
What is a Certified Financial Planner, CFP®
Most people think all financial planners are "certified," but this is not true.
Just about anyone can use the title "financial planner." Only those who have
fulfilled CFP Board's rigorous requirements can call themselves a CFP®
professionals are held to strict ethical standards to ensure
financial planning recommendations are in your best interest. What's more, a CFP®
professional must acquire several years of experience related to delivering
financial planning services to clients and pass the comprehensive CFP®
Certification Exam before they can use the CFP®
Financial planning is a dynamic process. Your financial goals may evolve over
the years due to shifts in your lifestyle or circumstances such as an
inheritance, career change, marriage, house purchase or a growing family. As you
begin to consider how best to manage your financial future, you should feel
confident knowing that with a CFP®
professional, you are
receiving the highest standard of financial planning service.