One of my financial goals for this year is to meet with a Certified Financial Planner (CFP). So last week we sat down with a CFP that had been highly recommended. He was a swell guy. We connected personally and I appreciated his views on finances. Afterwards, though, I was still left with this question: do I need a CFP?
I have not answered the question for myself yet and your feedback would be much appreciated.
Here are the questions I am asking to determine if I need a CFP:
1. Do I have a firm understanding of my full financial picture? This includes savings, investments, insurance (home, car, health, long-term care), taxes, estate issues, and probably a few other things I am missing. If I don’t, I probably need a CFP.
2. Even if I do have a firm understanding of my financial picture, does it hurt to have a second pair of eyes? This is the hardest question for me. The individual who referred my to this CFP is a Personal Finance Professor with years of professional and teaching experience in the field. Surely if he needs a CFP, I do to, right?
3. Is it worth the cost? The cost on a yearly basis is about $350-m400. My guess is this on the low-end for most CFPs. There is also a one-time fee of 1/2, 1% of your total net worth. So for a net worth of $100,000 that would $500. Could this money be better put to use to educate myself rather than hire a CFP?
Sidenote: Here is how you can determine your net worth.
Question: What other questions should I be asking? Do you use a CFP? Why or why not?
If my net worth is negative, will the CFP pay me?
By the way (as if you needed more than my sarcastic comment), I’m enjoying your blog and learning. Thanks for posting and sorry I haven’t started reading until now.
Matt, thanks for checking out the blog. If your interested in guest blogging, let me know!
[...] Investors Are Jumping From Mutual Fund Mangers Into Low-Cost Funds: I am not a proponent for either having your funds managed or doing it on your own. That’s a decision you have to make based on your understand of your financial picture. A while back I was debating the use of Certified Financial Planner. [...]