Straight Talk From a Top Financial Planner

1. What is the process to become a Certified Financial Planner?

Paul: Having a desire. The specific requirements are available at Requirements include a college BA degree, 8-10 course requirements (which can be taken at several colleges and universities around the country), passing the 11-hour CFP exam, having at least three years’ of full time financial planning experiance. The program was originally designed by a gentleman by the name of Lauren Dunton (known as the Father of Financial Planning) who was a friend and mentor to me and my family. He was a close friend of my father, Frank Ciccarelli. The program was designed to educate financial planners in all of the financial disciplines.

2. How do clients benefit by working with a CFP?

Paul: It is an indication that the individual has completed an educational process on financial planning. By itself, it is a great starting point on the fundamentals of financial planning. At CAS we have seven CFPs, three CLUs, three ChFCs, one CAP, and one MSFS in our firm. We make the CFP program a requirement for our associate planners as starting point to develop their knowledge base. We have three candidates for the CFP designation at this time. Experience, combined with the ongoing CFP CE requirements are what I would look for in a planner.

3. How soon should a person seek out a CFP? How does a person interested in building wealth work with a CFP, especially if their financial means are modest (e.g. someone in their 20s)?

Paul: If someone has the desire, they should do their homework on the basics of investing, tax planning and financial planning. A good start is to learn how to save 10% of every dollar that they earn and invest…pay yourself first. I would suggest that a person have developed some assets and can afford to pay a CFP to work for them. In our firm, our associate planners work with smaller clients with the idea that they will develop into larger clients as the associates move through the ranks to Senior adviser. Any relationship should make sense for all parties and in that way can develope into a meaningful long term relationship.

4. What are the pro’s and con’s of working as a fee-only financial planner?

Paul: The Pros: For the client…An assumed total objectivity brought to the table. For the planner: Less compliance and regulation vs. being FINRA-licensed as well as a registered investment advisor (RIA). Cons: Client, there is sometimes a disconnect between the plan which you pay a fee for and the implementation of the plan by a licensed individual. Also, a fee-only planner misses the experience and working knowledge of working with financial tools that require a FINRA or insurance license. For the planner: There are financial tools that are not available on a fee-only basis and therefore are not available to the fee-only planner.

Back in 1984, we decided to become an independent RIA so we would charge a fee and become a FINRA-licensed firm so we could utilize the full spectrum of financial tools to help our clients accomplish their financial planning goals. I like to think this as served our clients and CAS well.

5. How important is tax planning to building wealth?

Paul: I believe it is a very important peice of the financial planning puzzle. I believe all young people should be required to learn to do tax returns. Tax planning only becomes important when one begins to make money…especially if self-employed and have to write checks to pay your taxes. For those that have been successful in developing wealth, tax-planning can have a profound affect on wealth. This includes income tax-planning as well as estate tax- planning which can effect the finances for multiple generations. I feel all young people should take a course like the H&R; Block tax prep course to learn about income taxes.

6. What information does a CFP collect in order to help an individual or family build wealth?

Paul: We feel that taking a holistic approach to financial planning maximizes the benefits. Comprehensive financial planning includes many variables directly related to money as well as variables relative to the individual and their family. Two years of tax returns, financial account statements, insurance information, estate planning documents, real estate deeds and information, tax cost basis for all financial holdings, information about family members and the family’s attitudes towards money: all this information is necessary to the financial plan. Basically we are looking to paint a picture without any holes in the info provided. This is helpful in creating a plan that you can stick with to meet your objectives.

7. Why does a CFP need to know everything about the client’s finances and life?

Paul: To create a plan that works, and, in addition, to recognize opportunities that may assist the individual. All facets of finances are so intertwined that it is difficult to avoid mistakes if you are ignorant of the facts. Finance has become somewhat complex and to maximize benefits it helps to have a complete picture of an individuals finances in order to capture as many benefits as possible.

8. How does a CFP help an individual achieve their financial goals?

Paul: A CFP should be able to analize the information and recognize the Strengths, Weaknesses, Opportunities and Threats that make up the individuals financial situation and then organize and develope a plan to assist the individual in acheiving their dreams.

9. Is there a difference between a CFP working in an independent practice and a CFP working for a large broker-dealer?

Paul:Let me prefess this by saying there are real pros in both areas. The reason why we chose to become independents is that we wanted to be on the same side of the table as our clients. We did not want to be beholden to a company with quotas and proprietary products and be limited in the tools available in assisting our clients. You might want to review the current debate on “fiduciary” responsibility related to independent vs. brokerage advisers. Independent RIAs have always been required to place the clients interests first, ahead of the company. There has always been a conflict on this issue when you work for a brokerage company.

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