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A fee-only CFP® Financial Planner is a financial professional who is paid directly through their clients. Depending on the firm, fee-only financial planners charge based on a flat fee, hourly rate, fee schedule based on services, or a percentage of an individual’s managed assets. Fee-only advisors are focused on their clients’ needs, not on making commissions based on products.
The CFP® Financial Planner designation is one of the highest levels a financial professional can achieve. The CFP® certification process includes extensive training, and individuals who receive this designation must meet certain requirements.
They are committed to the highest ethical standards and are required to put their clients ahead of themselves always. CFP® professionals approach wealth management from a holistic standpoint, bringing together every piece of your financial puzzle.
Not all financial planners are certified. Anyone can use the title “financial planner,” but only those who fulfill the certification requirements of the CFP Board can use the CFP® Financial Planner trademarks.
The CFP® Financial Planner designation represents a high level of competency, ethics, and professionalism. However, not all financial professionals are held to these standards.
A fiduciary is an individual or organization designated to act on behalf of another person. A fiduciary financial advisor is upheld to the highest level of morality and is legally obligated to put the needs of their clients ahead of their own. Being a fiduciary requires a binding legal and ethical agreement between advisor and client.
A non-fiduciary financial professional can offer clients products and services that would generate commissions or bonuses. Sometimes these products can cost investors more or not even be the right product for them. This is why looking for the fiduciary designation when selecting a wealth manager is vital.
A fee-only financial planner generally has fewer conflicts of interest when working with clients. In fact, a fee-only advisor with the fiduciary designation is required by law to disclose any conflicts of interest should they arise while managing your wealth.
A fee-only advisor does not have additional incentives when advising their clients on investment products, services, and decisions. They are getting paid based on the fee schedule, rate, or percentage agreed upon in advance. Fee-only is not the same as fee-based. It is essential to understand that fee-based financial professionals can still earn income based on commissions and bonuses. Certainly, there are financial professionals out there who are not fee-only and provide sound advice to their clients. However, selecting a fee-only financial planner who is a fiduciary ensures that your wealth is in the right hands.