How do you choose a certified financial planner (CFP)?

POSTED BY Free Financial Calculators ON November 29, 2012 8:56 am COMMENTS (2)

This is a question that been troubling me for some time and I would like to share it here to see how others (investors) think about this:

 Say you want to take professional advice for your financial life and decide to go to to certified financial planner because a CFP is the highest professional qualification. You go to several websites and look at the fees. The fees range from Rs. 5000 to Rs. 20,000+.

Who will you choose? The cheapest like a term plan! After all the financial math is the same whether they are a CFP or not and irrespective of fees.

The CFPs with hefty fees talk about the “value” they offer. This can never be immediatly clear to anyone.  The ‘value’ part will become apparent down the line when your investments grow in line with your expectations but reviews are charged separately anyway and every plan comes with a disclaimer!. So how does one choose a CFP? It is naive to assume higher fee implies higher value!

2 replies on this article “How do you choose a certified financial planner (CFP)?”

  1. I am well aware of what a financial planner can do, the difference bet fee-based and fee-only planner etc (I have written about this in my website). The rather boring analogy with doctors etc. and the FPSB website.
    I am not in need of a planner as I am quite capable of handling my finances. I am quite clear about the value of a CFP. I have no issue with this.

    My question was intended to investors not planners. I have asked this to CFPs before and they have always avoided this with answers along the lines of yours.

    The question is not about paying fees but about the wide distribution of fees by CFPs for nearly the same services. (much of which I offer for free btw).

    The layman also has to consider people like Manish/Nandish who as per their NetworkFP profiles are still CFP students.but charge fees in line with CFPs and more than some.
    I have only admiration for then and have nothing against this but as options available it can be confusing.

    Then there are CFPs who are still LIC agents! Let not even start about this.

    I find it amusing every time I hear the argument: higher fee because of ‘value;

    I do agree with you it comes to choosing a planner instincts and trust matter and not a degree.
    Which is actually bad news for CFPs!
    A person with enterprise who runs a popular blog and earns the trust of readers before charging for services doesn’t need a CFP degree to get clients!

  2. Sridhar says:

    A financial adviser is someone who helps you with tailor made advise and solutions to your financial needs. If you want to approach a CFP you can visit and find one.
    Alternatively you can also get advise from investment experts, other financial advisers (non-CFP) or those with expertise in investing/financial planning with other equivalent qualification and experience.
    The only thing to avoid is stay away from people sell you products or bankers/insurers who work for a specific organization and may not be able to give you a tailor-made solution.
    If you find the fees very high think about the fees that you pay to a doctor or lawyer, where you dont even think about the amount, but trust them and feel its a good investment to solve your problems. Similarly consider the fee as an investment for a better future.
    If you are not interested in comprehensive financial planning you can go for specific ones like tax planning, investment planning, etc. Let me know if you have further queries.

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