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Certified financial planners

Updated on January 20, 2008

Certified financial planners (CFP), also called financial advisors, help their clients, individuals, business owners, and corporations, develop comprehensive financial plans. Their goal is to develop a plan that balances the client's desire for financial growth with their risk tolerance.

Becoming a certified financial planner requires the candidate to pass a certification exam known as the CFP (Certified Financial Planner) credential. This exam is made up of several parts, which cover topics like knowledge of investments, financial theory, professional ethics and other essential information. There are many courses available to help prepare for this exam. The exams test the candidate's knowledge of the financial planning process, insurance and risk management, employee benefits planning, taxes and retirement planning, investment, and estate planning. Candidates are also required to have a working knowledge of debt management, planning liability, emergency fund reserves, and statistical modeling.

In addition to mastering the knowledge areas mentioned above, a successful CFP also needs some key soft skills which include:

  1. Ability to match their client's needs with the investment that offers the best chance for the desired return with a minimal amount of risk.
  2. Excellent communication skills and a professional demeanor.
  3. Very strong interpersonal skills and the ability to attract new clients through word of mouth.

Financial planners are projected to grow by 41 percent from 2006 to 2016 according to Bureau of Labor Statistics. The reason for this increasing demand for this profession is multifaceted. First of all, more and more baby boomers are reaching their peak years of retirement savings. Secondly, many companies have replaced and more companies will replace their traditional pension plans with retirement saving programs. Thirdly, government has already foreseen the not-very- promising future of social security, while trying every effort to alleviate the potential adverse impact of insufficient social security benefit on personal lives in the future, government encourages individuals to save for their own retirement by promoting tax-advantaged saving plans such as traditional IRA, Roth IRA, and Roth 401K etc. The fourth reason is that people are living longer because of advancement in health care and they must plan to finance their longer retirement years. All these social and economic conditions dictate that personal investments are expected to increase, and more and more individuals have to financially plan their own retirements than in the past.

The last, but the most important, reason is that because of advancement in technology, all kinds of information are exploding. Financial information is not exceptional, is everywhere including TV ad, newspaper, and internet, which is in sharp contrast with people's lack of financial knowledge. This results in people's doubt about the credibility of all the information available to them. Consequently, people easily get confused when it comes to financial planning for their families, because they are afraid of losing what they have made through hard working. Therefore, more and more financial planners will be needed to assist them to clear their financial vision, set financial goals, and plan their financial futures. Meanwhile more and more people will turn to financial planners for expert advice.


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