The Ultimate Certified Financial Planners Quiz

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

In our volatile economy, many people need good advice on developing a solid financial plan. Perhaps its time for a certified financial planner, a well-trained professional, to help you design a personal financial plan. Test your knowledge about certified financial planners by taking this quiz.

Who actually needs the services of a certified financial planner (CFP)?

Among other things, a certified financial planner is for anyone with debt, saving for retirement or planning to own a home. A CFP can help people ensure that they are doing the best job handling their finances.

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A CFP can be a very good investment for anyone that:

A CFP can be a good investment for anyone that is unsure on how best to handle their finances. A CFP is trained to give professional advice and guidance to insure that you are managing your finances in the best way possible.

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How does a CFP decide the best way to help a client?

A CFP will examine all elements of your current finances and then help you to form the best financial strategy. Your CFP will tailor a plan to fit your unique circumstances.

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What can you expect from a CFP after the work of setting a financial plan is finished?

Expect a regular follow-up with your CFP to insure that your financial plan stays on track. During the follow-up you can discuss any necessary adjustments or changes.

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What is the purpose of the Certified Financial Planner Board of Standards in the United States?

The Certified Financial Planner Board of Standards ensures that CFPs have their clients’ best fiduciary interests in mind. Only financial planners that have met educational requirements and passed their tests can be use the title of CFP. Many other countries have similar bodies that certify financial planners.

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In order to be designated as a CFP, candidates must meet educational requirements and then pass:

CFPs have to pass a grueling 10-hour long nationwide test taken over two days. This test covers investments, insurance, retirement planning, taxation and other financial subjects.

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How many kinds of CFPs are there?

The two kinds of CFPs are categorized based on how they charge a client for their services. Either they charge their clients by assessing a fee or they are paid on a commission basis.

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If you hired a fee-only CFP, how would you be charged?

Fee-only CFPs have preset hourly fees that will be spelled out to you before any work is started. Shopping around and checking references can help you find a competent CFP with a fee that suits your budget.

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What is the typical range of hourly rates for a fee-only CFP in the United States?

Fee-only CFPs typically charge $125 to $350 per hour for their services. They do not earn commissions on any financial product that they recommend to you.

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What do financial experts recommend when it comes to hiring a CFP?

Financial experts recommend that you attempt to find a fee-only CFP before engaging one that works on commission. They feel that a fee-only CFP will give you the most objective advice.

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What can be a negative aspect when attempting to hire a fee-only CFP?

Fee-only CFPs tend to accept only wealthy clients who are seeking a long-term planner to manage their finances.

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What is a disadvantage of working with a commission-only CFP?

Since a commission-only CFP is usually on the payroll of a bank, insurance company or brokerage firm, there is a potential for a conflict of interest. They are usually experienced and knowledgeable, but may tend to recommend products that pay the best commission.

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Approximately how many CFPs are there in the United States?

According to the Board of Standards, there are currently more than 54,500 certified financial planners in the United States. Only those that are board certified can use the CFP title.

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If you hire a CFP based on a flat fee payment to produce a financial plan, what should you expect to pay?

According to Jay Mac Donald at Bankrate.com you should expect to pay from $2,000 to $5,000 for a flat fee financial plan. A flat fee option is worth consideration if you have many complicated assets and require extensive advice.

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Once you decide that you would like to hire a CFP, how do you find a reputable one?

Look for recommendations from people you trust such as family, friends and colleagues. You can also check with the Certified Financial Planner Board of Standards, as they should maintain a list of CFPs for your city.

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What else should you do before you select a CFP to work with you?

Compile a list of several possibilities and then make appointments to interview each one. When you interview your choices, make sure to ask many questions. You are seeking a CFP with excellent qualifications whom you will be comfortable working with.

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What piece of knowledge do you need when you head out to start your interviews?

Before you head out to interview your list of CFPs, you need to do a little more homework. You will want to decide what you need your CFP to help you achieve financially.

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What do you need to find out about your CFP if you require their advice on investment options?

The law requires that anyone who provides investment advice for a fee must be licensed. Just because a person is a CFP does not mean that they are licensed to give investment advice.

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You have done your homework and like a CFP that is based in a large office, what else do you need to know before you sign on?

You need to know if anyone else in the office will be doing work on your financial plan and ask to talk to everyone that will be involved. In addition, it is a good idea to find out the percentage of time your CFP will dedicate to your account.

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What should you do once you have finalized the services that will be provided and the associated fees that you will be paying?

Ask your new CFP to put the details of your agreement in writing with a signed copy that you can take with you. Make sure that the services to be performed are clearly spelled out along with the fees that you will be required to pay.

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