What’s a CERTIFIED FINANCIAL PLANNER™ – and Do I Need One?

1. A CERTIFIED FINANCIAL PLANNER™ designates a financial planner that meets and maintains specific requirements set by the CFP® Board.
2. CERTIFIED FINANCIAL PLANNERS™ must act as fiduciaries.
3. CERTIFIED FINANCIAL PLANNERS™ offer various services and areas of expertise, but each has a foundational understanding of financial planning principles and situations.

Finding a financial planner means you’re likely awash in a world of acronyms and titles that, to the uninitiated, make little sense. However, the gold standard in financial planning services and advising is the CERTIFIED FINANCIAL PLANNER™ designation, which planners earn only after rigorous educational requirements, testing, and thousands of hours of hands-on work.

What is a CERTIFIED FINANCIAL PLANNER™?

Unlike many financial professionals (and “professionals”), a CERTIFIED FINANCIAL PLANNER™ designation means the advisor or planner met rigorous standards set and managed by the CFP® Board and remains in good standing with the organization. 

While the CFP® Board isn’t a governmental regulatory body, it does diligently vet, assess, and vouch for professionals meeting the qualifications to operate as a CERTIFIED FINANCIAL PLANNER™. 

Securing a CERTIFIED FINANCIAL PLANNER™ designation is demanding, with fewer than two-thirds passing the examination as a gateway to certification alongside practical experience. In other words, those intelligent and diligent enough to hold CERTIFIED FINANCIAL PLANNER™ credentials have the right blend of academic and hands-on experience that includes:

• Education requirements: Applicants must complete CFP® Board-approved coursework in financial planning or hold a four-year degree from an accredited university. 

• Examination: CERTIFIED FINANCIAL PLANNER™ designees pass an exhausting exam that includes three hours’ worth of questions across various broad and niche financial planning topics.

• Experience: Before becoming a full-fledged CERTIFIED FINANCIAL PLANNER™, applicants complete 4,000 hours of apprenticed financial planning work (direct client engagement) under a CERTIFIED FINANCIAL PLANNER™’s supervision OR 6,000 hours operating within one or more of the CFP® Board’s primary financial planning domains in a capacity that can include direct client engagement or some support operations.

• Ethics: CERTIFIED FINANCIAL PLANNER™ designees must adhere to and maintain a rigorous set of ethical standards, which includes always acting as a fiduciary. 

What Sets CERTIFIED FINANCIAL PLANNERS™ Apart?

Many financial planners and advisors, including CERTIFIED FINANCIAL PLANNERS™, have unique operational models and areas of emphasis. For example, some may target a narrow clientele subset, such as tech workers or even employees of a specific company, and others stake their business on following particular investment theses, such as value-based investing or a growth emphasis. 

However, what truly sets a CERTIFIED FINANCIAL PLANNER™ apart is the sheer breadth and scope of their underlying knowledge base – no matter what area they emphasize as part of their practice. Through mandatory education and examinations, all CERTIFIED FINANCIAL PLANNERS™ have a nuanced understanding of each of the below principles and domains. This means they can offer the most well-rounded assistance while navigating many of the most common (and even uncommon) scenarios clients may bring across their desk. 

1. Financial Planning

The backbone of a CERTIFIED FINANCIAL PLANNER’S™ education and experience, designees learn and are tested across a range of financial planning topics to help them address unique situations and contingencies while providing comprehensive financial planning services. Beyond the basics, a CERTIFIED FINANCIAL PLANNER’S™  additional areas of emphasis include:

• Helping clients manage cash flow (before and after retirement). 
• A nuanced understanding of complex financial statements and how to relay relevant information to clients in a digestible and easy-to-understand manner.
• How to manage debt – both good and bad.
• Planning for educational expenses, including specific education savings protocols.
• Maximizing gift and income tax strategies to the client’s benefit. 

Financial planning includes retirement planning and is one of our areas of emphasis. This includes efficiently maximizing tax-advantaged account opportunities while diligently planning for income post-retirement to help you manage the all-too-common retirement income gap to let you enjoy your retirement rather than simply living paycheck to paycheck in your golden years. 

2. Insurance Analysis and Strategies

Though most CERTIFIED FINANCIAL PLANNERS™ won’t sell insurance due to the inherent conflict of interest common across most products, they will help advise you on the best courses of action to manage existing and potential insurance opportunities while nesting them within your wider financial ecosystem.

Better yet, since the insurance industry is fraught with questionable products and bad actors, a CERTIFIED FINANCIAL PLANNER™ can serve as a common-sense sounding board, bound by fiduciary duty, to help objectively evaluate potential products. They also tend to have a high-quality network and can recommend insurance brokers they know will put your needs ahead of theirs. 

3. Investment Planning

As with core financial planning, prudent investment planning is a cornerstone in most CERTIFIED FINANCIAL PLANNERS’™ operational models. The CFP® Board tests candidates across the spectrum of complex investment analysis and portfolio management, including:

• How to understand investment risk.
• Risk management, diversification, and asset allocation.
• Bond and fixed-income investments.
• Alternative investments and liquidity management.

In practice, investment planning is one domain in which CERTIFIED FINANCIAL PLANNERS™ set themselves apart from their peers. For example, we emphasize value investing and data-driven decision-making while avoiding most alternative assets. 

Investment principles and philosophy are some of the most widely varied options when selecting a CERTIFIED FINANCIAL PLANNER™, so be sure to ask plenty of questions about their thought process behind investing your capital before committing to ensure their philosophy aligns with yours. 

4. Tax Planning

Though you won’t often find a CERTIFIED FINANCIAL PLANNER™ filling out your annual tax return, having a high-level understanding of the tax code and its implications is important to effective portfolio management and financial planning. That foundational understanding is key to maximizing your overall efficiency and keeping as much cash in your pocket after retirement. 

For example, we work with a close network of high-quality tax consultants to strategize your overall financial ecosystem. They also help prepare our client returns and ensure we’re maximizing local clients’ tax benefits and opportunities unique to Pittsburgh. Even if you have a trusted tax professional in your corner, we’re happy to loop them into our process to make our efforts work best for you.

5. Estate Planning

One of the most overlooked aspects of financial planning tends to be your estate – it’s usually something we don’t want to consider, and, frankly speaking, the field is complex and littered with legalese and complex structuring. CERTIFIED FINANCIAL PLANNERS™ have academic and practical experience in planning for an estate, helping save time and hassle while preventing catastrophic family circumstances in the event of your passing or incapacitation (think tough decisions, probate court, and more – all while under tremendous pressure and stress). 

As with tax planning, a CERTIFIED FINANCIAL PLANNER™ will usually have a trusted network of legal professionals and work closely with them to tie your financial ecosystem into a well-developed and comprehensive estate plan to protect your legacy and help ensure your family’s well-being. The importance of having a networked CERTIFIED FINANCIAL PLANNER™ and legal team cannot be understated when it comes to estate planning, especially since requirements and laws vary from region to region – which is why our Pittsburgh financial planning practice knows the ins and outs of Pennsylvania estate law in conjunction with our partners. 

6. Psychological Management

Even for those well-versed in personal financial management and investing, psychological management can derail even the most well-developed, self-directed plan. It’s hard to remain objective when your cash is at play, especially during volatile marketing cycles. CERTIFIED FINANCIAL PLANNERS™ introduce an element of calm and even-headedness into a third-party perspective to help you stay on the path and stick to the plan even when things seem dire. 

Psychological management is important but ultimately tough to quantify – but research suggests that it may be the most valuable asset a CERTIFIED FINANCIAL PLANNER™ brings to the table. A study from Vanguard (The Value of Personalized Advice) uses advanced modeling to quantify the importance of a CERTIFIED FINANCIAL PLANNER’S™ emotional management benefits across 10,000 scenarios. In one notable scenario, the advisor added 1.86% to the theoretical client’s annual gains through effective behavioral management that included:

• Encouraging diversification (the modeled client trended toward FOMO and chasing momentum stocks).
• Avoiding “performance chasing and panic selling” (closely related to the first point).
• Helping the client clear their mental hurdle around saving and preventing lifestyle creep as they advanced in their career.

Conclusion: Do I Need a CERTIFIED FINANCIAL PLANNER™?

By now, it’s clear that CERTIFIED FINANCIAL PLANNERS™ have a unique set of academic and practical experiences alongside validation by an independent governing body that sets them apart from the many less-than-qualified actors in the financial planning landscape. 

Even if you’re a pro at portfolio management or diligently budget for your household, chances are a CERTIFIED FINANCIAL PLANNER™ can help deliver unique, clear-headed advice and assistance to optimize your overall position and even cover gaps you didn’t know existed, like estate or tax planning.

Moreover, so many of us simply don’t have the time to tweak asset allocations or monitor market cycles – especially as we near and enter retirement age. Do you really want to spend your time, after decades of hard work and building wealth, stressing over money and how to manage it? As with emotional and psychological management, buying back time is one of the biggest benefits to finding a financial planner – and the high mark of a quality financial planner is the CERTIFIED FINANCIAL PLANNER™ designation.

Ready to see how a CERTIFIED FINANCIAL PLANNER™ can optimize your financial position and prepare for retirement? Looking for a local Pittsburgh financial planner? Have a few more questions before you’re ready to commit?

No matter what you need, we’re here – contact us today.

Frequently Asked Questions about CFP® Professionals

1. How much does a CERTIFIED FINANCIAL PLANNER™ cost?

Cost structures vary, but nearly all CERTIFIED FINANCIAL PLANNERS™ operate under a fee-only model as part of their fiduciary duty, meaning they don’t accept a commission or other payment in exchange for selling or recommending financial products.

2. How do I find a CERTIFIED FINANCIAL PLANNER™?

The CFP® Board has a free resource to search for a CERTIFIED FINANCIAL PLANNER™ aligned with your needs. They also offer a search function to validate that the planner you’re working with holds the CERTIFIED FINANCIAL PLANNER™ designation. 

3. Are Financial Advisors/Planners and CERTIFIED FINANCIAL PLANNERS™ the Same Thing?

CERTIFIED FINANCIAL PLANNERS™ operate as financial planners and advisors, but not all planners or advisors are CERTIFIED FINANCIAL PLANNERS™. The financial industry tends to have a problem with titling (nearly everyone can legally call themselves a financial planner with minimal requirements). This is why organizations like the CFP® Board exist to validate knowledge and ensure members act in a client’s best interest.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.