As you research various personal finance topics you will quickly realize, the finance industry overuses acronyms. It can be pretty overwhelming, so let’s break down one of them.

What Is A CFP and How Can They Help You?

A CFP also known as a CERTIFIED FINANCIAL PLANNER™, is an expert in comprehensive financial planning. You may be thinking, “Isn’t financial planning something you figure out when you retire?” The answer is: No, it is so much more! Financial planning and CFPs are incredibly useful during all life stages. They help people with cash flow analysis and budgeting, goal planning, debt management, insurance and risk management to protect your income and dependants, employer contributory pension plan or group RSP allocations, estate planning, taxes, career, life planning, college and university funding, buying a home, retirement projections and anything else that comes along. No magic, just math supported by broad experience. Sometimes, they are simply answering, “Do I (we) have enough”?

An experienced planner should make it very clear that it is the comprehensive financial planning that will lead any relationship. CFPs will charge fees for this advice and expertise just like any consultant in a specialized field. Advice for a Fee based on a specific area of expertise. CFPs coach, manage and guide you. They get paid based on the advice and the guidance and help in controlling your emotions. It is essential to know that financial planning is not investment planning and is very important in its own right.

But I Want To Start Investing- How Does a CFP Help Me?

It gets confusing because most financial planners also help with client’s investment management to some degree. Although it is not mandatory that they use their financial planner as their investment manager, it does make sense and is often the best value. Since the planner has the most intimate understanding of their personal finances, they can provide them with investment advice and management that fits with their overall strategy. But again this is a separate area not covered in the basic financial planning and should be treated as such.

Investment management should not be commenced without financial planning. It is unfortunate that it is investment management and the selection of investment managers drives most relationships between clients and advisors. Clients incorrectly focus on making more money on their investments. In fact, various studies and publications have proposed that it is not investment/manager selection that has the greatest impact on retirement portfolios; it is making more intelligent financial planning decisions.

Whether you are developing a budget, trying to manage your debt or looking into investing, speaking with a CFP can help ease your mind and get you on the right track no matter where you are in life.

XY Planning Network

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