What Does a Financial Planner Do?

First, let’s define what a Financial Planner Is

Via the CFP® Board: A Financial Planner takes part in “a collaborative process that helps maximize a Client’s potential for meeting life goals through Financial Advice that integrates relevant elements of the Client’s personal and financial circumstances.”

What is a CFP® and why choose one?

  • A CFP® is a Certified Financial Planner™.
  • Most people think all financial planners are “certified,” but this isn’t 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® professional.
  • CFP® professionals are held to strict ethical standards. 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 call themselves a CFP® professional.

What Does a Financial Planner Do (in very simplified terms…)

  • Retirement Planning – For clients in the “accumulation” phase of their life, helps clients figure out how much they need to be saving and into what vehicles. For those in the “withdrawal” phase (i.e. retirement), provides recommendations on retirement income strategies, coordination of income sources, and maximization of tax-efficiency.
  • Risk Management – Involves checking for “blind spots” in a financial plan; includes analysis (or recommendation, if needed) of life insurance, disability insurance, health insurance, home & auto insurance, and various estate planning documents.
  • Estate Planning – Reviews or recommends different types of estate documents to meet clients’ legacy goals and end-of-life objectives. May involve executing Wills, Powers of Attorney, Trusts, Charitable Vehicles, etc.
  • Tax Analysis – Carefully analyzes tax returns for tax-savings opportunities and works closely with a client’s accountant to coordinate tax-efficient planning strategies.
  • Employee Benefits – Works closely with client to determine current benefits which they may be eligible for as well as deciphering which options are best for their situation. This can run the gamut from insurance all the way to stock options and executive compensation.
  • Investments – Based on a comprehensive understanding of all of the above, provides recommendations on investments for clients; investments will be chosen based on the client’s risk profile, time horizon, and planning objectives. Diversification will not only be from an investment perspective, but also from a tax perspective (also known as “asset location optimization.”)
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