A Certified Financial Planner™ is an individual who has gone to school and received certification to help other individuals plan their finances. A Certified Financial Planner™ is educated in various facets of financial planning, including budgeting, accounting and investing. He then helps people structure their financial lives to achieve their goals.
Certified Financial Planners™ can work for companies that offer financial planning or wealth management services. They can work for brokerage firms or investment firms. A Certified Financial Planner™ may also work as his own boss, offering financial planning and wealth management services to private clients he finds through relationship marketing, word of mouth, networking and advertising.
When a client goes to a Certified Financial Planner™, the planner will first work with the client to get an idea of the client's financial picture. This involves looking at income, debts, investments, real estate holdings and anything else that makes up the client's net worth. The planner will also discuss the client's goals, helping the client formulate a list of financial goals such as owning a home, sending a child to college and securing retirement.
Once the client and the Certified Financial Planner™ have an established list of goals, the planner helps the client allocate his funds to achieve those goals. Usually, this takes the form of helping the client realize how much money he must save or invest to reach the goals. The planner and client then come up with a plan for how much the investor should contribute each month to ensure he can meet his goals.
After the planner and client have determined how much to invest, they next determine how to allocate the investments. This can mean determining whether to invest in stocks, bonds, Treasury bills, real estate or other forms of investment. This can also mean reviewing an investment portfolio to determine whether the investor is properly diversified, or has the right mix of stocks and bonds to achieve his financial goals and be reasonably protected from risk.
The appropriate types of investments differ by individual person. For example, a more risk-averse investor will invest differently than someone who is primarily concerned with growing his assets. A Certified Financial Planner™ must help a client make the best investment decisions given his risk tolerance and financial goals.
