In all our interactions with clients and potential clients, we are always repeating the line “find a qualified profession to work with”, but how do you go about finding the right person?
In the past, you would find someone in your area, meet face to face, and decide if you want to do business. Now, with everything online, and being able to easily work with professionals all over the United States, you have much more of a choice when it comes to picking your financial advisor.
It can be exhausting and overwhelming to sort through the thousands of options. One way to narrow it down is to make sure you are working with a CFP® professional.
Retirement Income: Choosing your Advisor
What is a CFP® professional?
Many people think all financial planners are certified and have to follow certain guidelines and rules, but this is not true. While almost anyone can use the term financial planner, you want to make sure you find one that adheres to a higher standard of practice, which can be found in a CFP® professional.
A CFP® professional, or a Certified Financial Planner™, is someone who has met education and experience requirements, passed an exam, and promised to adhere to ethical standards, allowing them to receive certification from the CFP® board.
The Certified Financial Planner™ title is one of the most highly respected designations in the financial world.
A CFP® professional is trained to not only look at your money and investments, but understand your goals and provide a roadmap to meet them.
Some CFP® professionals focus their practice in certain areas or have specific expertise in dealing with different situations, such as retirees, military families, families with special needs, etc.
Some CFP® professionals only provide financial advice, while others offer financial planning.
No matter the CFP® professional you choose, they must adhere to the same standards and code of ethics.
The CFP® Code of Ethics
All CFP® professionals must commit to following the code of ethics. This code benefits and protects the public, provides standards for delivering financial planning, and advanced financial planning as a valuable profession.
1. Act with honesty, integrity, competence, and diligence.
2. Act in the client’s best interests.
3. Exercise due care.
4. Avoid or disclose and manage conflicts of interest.
5. Maintain the confidentiality and protect the privacy of client information.
6. Act in a manner that reflects positively on the financial planning profession and CFP® certification.
Listen to learn more about the CFP® designation:
What is the fiduciary standard?
All CFP® professionals, in accordance with the code of ethics, must adhere to the fiduciary standard.
Being a fiduciary requires CFP® professionals to make decisions with their clients best interest in mind, not their own.
Fiduciaries are also required to disclose all conflicts of interest to the clients. For example, in our practice, when we are recommending an insurance product to a client, we must disclose if we are going to get something out of the deal, such as a commission payment.
As fiduciaries though, we cannot pick a product because it is better for us, it has to be better for the client.
Financial planners who are not CFP® professionals are not required to adhere to this same standard, and instead, adhere to the suitability rule.
Financial professionals who follow the suitability rule are simply required to give advice or product recommendations that are suitable for their client. Their recommendations cannot be clearly bad for clients, but they do not have to be the best.
An example between someone who is a fiduciary versus someone who follows the suitability rule can be seen in car salesperson.
Say you go to a dealership, meet with a salesperson, and describe exactly what you and your family need in a new car. Something reliable, affordable, and can move your whole family from place to place.
A fiduciary would recommend an SUV or a van that would be safe and meet all your requirements for the best value. If they didn’t have the vehicle that met your needs, they would recommend you to someone who did.
A salesperson adhering to the suitability rule would be able to sell you a car that day, even if it wasn’t the best fit for you and your family. They are allowed to put their want for a sale over your needs, as long as the car they sell you roughly fits what you describe.
As you can see, it is going to be highly beneficial for you and your wallet to choose an advisor who falls under the fiduciary standard.
While you don’t need to purchase every single financial product from a CFP® professional, understanding how financial professionals operate and what standards they adhere to is crucial in reaching your retirement goals.
At Cardinal, we have multiple CFP® professionals all working as a team. With all our client interactions, from Medicare Supplement sales to life insurance to turning IRAs into income, we make sure our clients best interest comes first.