ST. CROIX INSIGHTS
Certified Financial Planner & Fiduciary – What’s the difference
BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
What is a Certified Financial Planner?
First of all, I have a financial planner, but they are certified? Secondly, what does it mean to be a fiduciary? Honestly, I’m just trying to find someone who can help me make good financial decisions. As of now, the differences between the variety of advisors are confusing to me. Moving forward, I want to know what I should look for and focus on.
So are all financial advisors, financial coaches, financial planners, wealth advisors, and brokers CERTIFIED? Well, the answer is no.
Only CFP’s (Certified Financial Planners) are certified. Furthermore, CFPs have an entire education process to complete. Moreover, rigorous exams and ongoing education requirements are part of the gig. Also, it can take a year or two of education to obtain this designation. Certainly, it doesn’t happen overnight. Correspondingly, the requirements are not the same throughout the industry. Provided, some titles require less time and energy to obtain. Personally, if I’m searching for a financial advisor, I want to understand the different designations. Additionally, I want to know what was actually required to obtain that designation.
Nowadays, many brokers, representatives, and advisors have to only meet a ‘suitability’ standard. Namely, the investment must be suitable to make today. Again, CFPs have a more ongoing duty to their clients.
A fiduciary has a higher standard to meet. It’s an ongoing standard. They have to ensure that your investments are hitting certain targets on a regular basis. It just doesn’t stop after the service is sold.
Also, fiduciaries document everything. For instance, they outline how they work, their processes, and how they get compensated. Realistically, Besides, I’d only work with someone who is a fiduciary. Most of all, I want to know someone has my back and is held to a high standard.
Not all planners are created equally.
There are many different types of financial firms or companies. Some are compensated through commission, while others are hourly or fixed-rate. Most financial advisors are not fiduciaries nor Certified Financial Planners. Don’t be afraid to have meaningful conversations and ask questions. It’s important to understand the differences between all these types of ‘advisors.’
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Ask yourself- can my portfolio support my lifestyle in my retirement?