There’s a popular misconception out there that a Certified Financial Planner’s (CFP®’s) job is simply to tell you what to do with your money. The truth is far more complex.
Your relationship with your CFP® should go beyond the transactional, and should be about education before it is about simple advice. First, you need to educate your CFP®, and then your CFP® can help educate you.
In order to give you the best advice possible, your CFP® needs to learn as much as they can about you, and what drives you in your personal and professional life. At the end of the day, money is a tool; it’s a resource, and its purpose is to afford you the ability to achieve your goals. Your CFP® needs to learn about those resources, your timeline, and your values in order to understand the big picture and the context in which they will be giving advice.
Remember, this is a junk-in, junk-out process. In other words, the quality of the advice you get will be directly correlated to the quality of the information you share with your CFP®. It is imperative that you be as open and honest as possible in order to help ensure you receive meaningful advice.
Once your CFP® has learned all about you and what matters to you, they will be in a better position to educate you about your options.
More than anything your CFP®’s job is to be an educator. First to educate you about your true financial position, and where you stand relative to where you may think you stand, and relative to where you need to be in order to achieve your goals. Many clients first come to a CFP® after amassing a lifetime of financial clutter, so this can be an eye opening part of the process.
Second, once you understand your financial position, your CFP® must educate you about your relevant options and the likely outcome of choosing one option over another.
Since everyone comes to a CFP® with a different level of financial literacy, you need to be very honest when you aren’t familiar with a word or topic. No CFP® is going to try to dazzle you with jargon, but sometimes they may assume a level of familiarity that doesn’t exist. This is your life and these are your goals, so you have a responsibility to ask for a topic to be re-framed, or for a word to be defined when you are unfamiliar.
Only once you have been fully educated about your options, and you and your CFP® have agreed on a course of action, is it time to discuss implementation. Your CFP® should be licensed in most areas and can likely give you access to everything from ongoing investment advice to insurance, and will refer to you other professionals who specialize in areas which may require a certain expertise, such as drafting estate planning documents
In all instances, think of your CFP® as a partner and educator, and not simply as a director. Your goals deserve it.
Stephen Kyne, CFP® is a Partner at Sterling Manor Financial in Saratoga Springs and Rhinebeck. Securities offered through Cadaret, Grant & Co., Inc. Member FINRA/SIPC. Advisory services offered through Sterling Manor Financial, LLC, or Cadaret Grant & Co., Inc., SEC registered investment advisors. Sterling Manor Financial and Cadaret Grant are separate entities.
