Why you need a CFP® Professional
By Rick Imhoff, CFP®
More and more individuals and families have turned to professional help to guide them in this uncertain financial and economic environment. Here are some reasons why you should seriously consider seeking the advice of a CERTIFIED FINANCIAL PLANNER™ professional.
Financial planning is about more than money. At its core, financial planning is about effectively managing financial resources so that individuals can lead happier, more fulfilling lives today and tomorrow. One of the very first steps in a financial planning relationship is to help you define your life goals. Do you want to start your own company, have more time to volunteer, change careers, live somewhere else? How do you balance competing goals, such as saving for retirement while putting children through college and helping with elderly parents?
Take the example of the CFP® professional in Texas who asks all her new clients, “If you could create a perfect world, what would it be?” When she asked that question of a local university professor, a man known for his sour, depressed mood, he told her he wanted to live on a farm, far from where he was teaching. The more he talked about it, the more excited he got, and the more that he, his wife, and the CFP® professional realized it was a dream he could make a reality. Within a year and a half, they were happily settled on a farm in Iowa.
In a good financial planning relationship, you and the CFP® professional periodically reassess your goals and strategies already in place to achieve those goals, especially as life circumstances change. No financial planning or investment software program can effectively come up with those kinds of questions – let alone provide the right answers.
Financial planning sees the whole, not just the parts. Many financial specialists provide valuable services to people for a special financial need, such as buying property and casualty insurance or drafting a will. However, a CFP® professional typically provides the overview to make sure the various parts are working in harmony and not against each other. For example, one professional’s strategy to save income taxes may undermine another professional’s investment strategy. A computer might provide investment advice (though usually not well tailored to your individual needs), but a CFP® professional can help you find ways to free up additional money for investing. It also is the CFP® professional who might discover that your computer-designed investment plan could be seriously undermined by a costly medical crisis because you don’t have adequate disability insurance or health care coverage.
CFP® professionals motivate. Sure, you probably know you need a will, better insurance, a budget, a better handle on your investments and assessment of a host of other financial issues. Perhaps you could do some of it adequately on your own. But there is nothing like going to a CFP® professional to motivate you to finally take the actions you have been procrastinating. For example, some studies on retirement found that people who planned more thoroughly for their retirement experienced fewer financial “surprises” when they did retire.
CFP® professionals provide checks and balances. Beyond the financial expertise and the motivation to act, the CFP® professional can provide a much-needed objective perspective. Numerous studies show that investors who work with a qualified financial professional trade less often and average better returns that those who invest on their own. CFP® professionals can filter out the financial “noise” that so often clouds financial judgment and help to reduce emotional decision-making. This independent perspective is especially critical when a family is under stress such as from a job loss, divorce, or major market decline.
Ideally, it is better to create a financial plan before a crisis occurs. One of the greatest benefits of financial planning is its ability to prepare you to better handle the inevitable financial roadblocks thrown up in life that can detour you from achieving your life goals.