A Certified Financial PlannerTM is someone who has gone to school and received certification to assist others with their financial planning. A Certified Financial PlannerTM has received training in budgeting, accounting, and investing, among other areas of financial planning. He then assists people in organizing their financial lives in order to achieve their objectives.
Certified Financial PlannersTM can work for firms that specialize in financial planning and wealth management. They can work for investment firms or brokerage firms. A Certified Financial PlannerTM can also work for himself, providing financial planning and wealth management services to individuals he meets through relationship marketing, word of mouth, networking, and advertising.
When a client consults with a Certified Financial PlannerTM, the planner will first gather information about the client’s financial situation. This entails examining the client’s income, debts, investments, real estate holdings, and anything else that contributes to their net worth. The planner will also discuss the client’s objectives, assisting the client in developing a list of financial objectives such as purchasing a home, sending a child to college, and planning for retirement.
Once the client and the Certified Financial PlannerTM have agreed on a set of objectives, the planner assists the client in allocating his funds to meet those objectives. Typically, this entails assisting the client in determining how much money he needs to save or invest in order to achieve his objectives. The planner and client then devise a strategy for determining how much the investor should contribute each month in order to achieve his objectives.
Following the decision on how much to invest, the planner and client must decide on how to allocate the funds. This could include deciding whether to invest in stocks, bonds, Treasury bills, real estate, or other assets. This can also imply examining an investor’s investment portfolio to see if he is properly diversified, or if he has the right mix of stocks and bonds to meet his financial objectives while remaining reasonably risk-free.
The types of investments that are appropriate for each individual vary. A risk-averse investor, for example, will invest differently than someone who is primarily concerned with asset growth. Given a client’s risk tolerance and financial goals, a Certified Financial PlannerTM must assist him in making the best investment decisions possible.