What is Fee Only?

Fee Only means complete disclosure of all fees prior to engagement and no commissions, payments or compensation contingent upon the purchase or sale of financial products or plans – in short, unbiased advice without conflicts of interest. The advisor works for you and only you, in your best interest.

What is a Fiduciary?

A person entrusted with caring for the property of another party and in whose best interests the fiduciary is expected to act when holding, investing, or otherwise caring for that party's property. The fiduciary manages the assets for the benefit of the client rather than for his or her own profits. Most financial planners are not fiduciaries and many companies have gone to great lengths to avoid the responsibility and liability that comes with being a fiduciary. 

The Seven Uniform Fiduciary Standards of Care:

    1.   Diversify assets to the specific risk/return profile of the client.
    2.   Use prudent experts & investments and document the due diligence.
    3.   Control and account for investment and management expenses.
    4.   Prepare an investment policy statement.
    5.   Monitor the activities of prudent experts.
    6.   Avoid conflicts of interest and prohibited transactions.
    7.   Know the standards, laws, and trust provisions.

What is a CERTIFIED FINANCIAL PLANNER®  professional?

Many people think that all financial planners are “certified,” but this isn’t true. Anyone can call himself or herself a “financial planner.” Only those who have fulfilled the certification and renewal requirements of the CFP Board can display the CFP® certification marks. When selecting a financial planner, you need to feel confident that the person you choose to help you plan for your future is competent and ethical. Only those who meet the following requirements have the right to use the CFP® certification marks.

CFP® professional certification requirements:

EDUCATION:  CFP® professionals must develop their theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering a financial planning curriculum approved by the CFP Board.

EXAMINATION:   CFP® professionals must pass a comprehensive two-day, 10-hour CFP® Certification Examination that tests their ability to apply financial planning knowledge in an integrated format. Based on regular research of what planners do, the exam covers the financial planning process, tax planning, employee benefits and retirement planning, estate planning, investment management and insurance.

EXPERIENCE:   CFP® professionals must have three years minimum experience in the financial planning process prior to earning the right to use the CFP® certification marks. As a result, CFP® professionals possess financial counseling skills in addition to financial planning knowledge.

ETHICS:   As a final step to certification, CFP® professionals agree to abide by a strict code of pro­fessional conduct, known as the CFP Board’s Code of Ethics and Professional Responsibility, that sets forth their ethical responsibilities to the public, clients and employers. The CFP Board also performs a background check during this process, and each individual must disclose any investigations or legal proceedings related to their professional or business conduct.

Ongoing certification requirements:

Once certified, CFP® professionals are required to maintain technical competence and fulfill ethical obligations. Every two years, they must complete a minimum 30 hours of continuing education to stay current with developments in the financial planning profession and better serve clients. Two of these hours are spent studying or discussing the CFP Board’s Code of Ethics or Practice Standards. In addition to the biennial continuing education requirement, all CFP® professionals voluntarily disclose as part of the renewal process any public, civil, criminal or disciplinary actions that may have been taken against them during the previous two years.

What to expect when working with a CFP® professional

When you work with a CFP® professional, you are the focus of the financial planning relationship and your needs drive the financial planner’s recommendations. CFP® professionals follow certain standards — called Financial Planning Practice Standards — when providing financial planning. These standards are based on the six-step financial planning process described below. This broad-based approach to financial advice distinguishes financial planning professionals from other professional advisers who typically focus on only one area of a person’s financial life.

• Establishing and defining the client-planner relationship

• Gathering client data including goals

•Analyzing and evaluating the client’s financial status

•Developing and presenting financial planning recommendations and/or alternatives

•Implementing the financial planning recommendations

•Monitoring the financial planning recommendations

When providing financial planning, a CFP® professional agrees to define the scope of the work she or he will do with you, explain and document the services she or he will provide, discuss the method of compensation and relay any other relevant information. CFP® professionals are also required to work with you to determine your personal and financial goals, your tolerance for financial risk, and your time frame for achieving results. Practice Standards also require a CFP® professional to gather all necessary financial information about you when developing your personal financial plan.

How much will it cost?

CFP® professionals can work in several settings including small financial planning practices, large financial services firms, credit unions, banks and other financial institutions. Planners are compensated for the services they provide in different ways, as well. Some are paid through commissions, and others through fees or a combination of both. While all CFP® professionals are trained to provide you with comprehensive financial planning services, some specialize in one or more areas, or work with specific types of clients. Be sure to ask the planner how he or she is paid and interview several candidates to choose the one with whom you feel most comfortable and who best meets your needs.

What else should I remember when selecting a planner?

As more people call themselves “financial planners,” finding the right professional to address your financial planning needs isn’t always easy. It’s important to take your time when choosing a financial planner, and before making a decision, become familiar with the planner’s business style and understand the level of services he or she provides. Look for a measure of the planner’s commitment to ethical behavior and adherence to high professional standards. Look for a financial planner who will put you and your needs at the center of every financial planning engagement. Most importantly, look for the CFP® or Certified Financial Planner™ marks.

Check to see if your planner is a CFP® certificant

To verify that your planner is authorized by the CFP Board to use the CFP® certification marks, call toll-free 1-888-CFP-MARK (888-237-6275) or visit the CFP Board’s Web site at www.CFP.net/search.