When you’re trying to figure out how to make the most of your money—whether you’re several years from retirement or already living your golden years—consulting with a certified financial planner can help you create a roadmap to reach your goals. With the right financial professional, you can potentially budget better and learn about investments that can help you outlive your money.
What Is a CFP?
A certified financial planner (CFP) is a financial professional who has received a specific designation from the Certified Financial Planner Board of Standards, Inc. This is a private entity that owns the right to designate CFPs based on experience, educational courses, and exams completed. To maintain CFP status, a financial professional must engage in ongoing education.
What Do CFPs Do?
A certified financial planner evaluates your current situation and helps you figure out what tools are available and actions you can take to put you on track for reaching your financial goals.
Your CFP can usually help you figure out how to manage your money in a way that lets you maximize its potential. This usually involves helping identify actions you can take in the short, medium, and long terms. These actions can include creating a debt management or repayment plan and putting together an investment plan to help you grow your wealth.
With help from a CFP, you can determine how much you should be setting aside for retirement so that you’re taken care of later while at the same time helping you pay for your children’s college. In many cases, a CFP can also help you evaluate how insurance can protect your assets and the tax consequences that come with different types of accounts.
Who Should Hire a CFP?
If you’re unsure how to start creating a sustainable financial plan for your future, a CFP might be able to help. In addition to looking at your finances holistically, CFPs can help you narrow your focus to tackle specific problems.
When you don’t know where to start when determining how much money you need in retirement—or how to build an investment portfolio to support your retirement lifestyle—a CFP can help. You can also get help deciding what to do with your assets after you pass or how to ensure your mortgage is paid off before you retire.
Sometimes, you might need someone to help you get an overview of your finances and provide you with a course of action. This can be a worthwhile exercise to get some direction as you transition from one phase of life to another.
What Do CFPs Charge for Their Services?
How much you pay for a certified financial planner depends on how they charge and the types of services you’re looking for. Different CFPs have different ways of structuring their services and payments, so what you end up paying will likely be determined by what you’re looking for and what the CFP you choose offers.
If you just want someone to create a plan for you, you can expect to pay between $1,000 and $3,000, depending on how detailed the plan is.
Perhaps you want to meet with a CFP regularly. In that case, it’s common to pay an hourly fee of $200 to $400.
Some CFPs work on an annual retainer basis. Depending on how many meetings you want and how often they adjust your plan or help you stay on track, you could pay $2,000 to $7,500 per year.
Finally, some CFPs also help you manage your money, including your investments. You might pay up to 1% of your assets under management each year for these types of advisors.
How to Find a CFP
Once you’re ready to use a CFP, you can search for someone compatible with your needs and budget. The Certified Financial Planner Board of Standards maintains a searchable database of CFPs. You can also use National Association for Personal Finance Advisors, XY Planning Network, and Garrett Planning Network to search for CFPs in your area.
Recommendations from friends and family are always helpful. Before you use someone, you find locally, or through your network, a search on the Board of Standards website will verify they are up to date on their certification.
Many CFPs offer a free initial consultation so you can get a feel for whether you’re compatible. When you feel comfortable, you can discuss their payment structures and plan availability to ensure your CFP is within your budget. Plan to compare three to five certified financial planners before making your final selection.
Seniority is published by Finance of America Reverse LLC. The views expressed in this publication are those of the author alone and do not necessarily reflect the views and opinions of Finance of America Companies. This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.
