What Does a Certified Financial Planner Do, Anyway?
Published 8.7.2024
Some people have their eyes on the wealth-building prize right from the jump: the people who’ve been on personal finance Reddit since high school; the business majors who leave undergrad with a business plan and a personal finance plan; the children of finance professionals who were taught the importance of financial planning from an early age.
But that still leaves out many of us wondering how we get from where we are to where we want to be, financially. Only about 50% of Americans are financially literate—and even those who have personal finance knowledge often aren’t taking advantage of it. (For example, according to a 2023 MarketWatch survey, 70% of Americans who know about 401(k)s don’t have one.)
For those of us who mostly understand personal finance basics like savings, earnings, and risk, it’s still hard to step back, zoom out, and examine our larger financial situation. That’s where the dedicated expertise of a financial adviser comes in handy. A lot of personal finance professionals fulfill very specific roles—like tax preparers or investment advisers—but Certified Financial Planners™ can assist and advise on a variety of personal financial topics, from estate planning to investment strategy to homebuying. (CFP® is a registered trademark to indicate that the person in question has undergone the rigorous training set by the CFP® Board of Standards.)
According to Matt Shapiro, a CFP® and Origin’s Product Strategist, “the main benefit” of working with a CFP®, is realizing “the blind spots” we aren’t aware of. These “come up all the time,” he says. Sometimes, it’s as simple as a CFP® realizing you filled out a form with less detail than you could have used, tweaking one or two data entries, and saving you a whole bunch of money by doing very little.
But CFP® expertise can cover a broad range of needs: “You can come to a CFP® and ask for a plan: Like, hey, I want to map out the cash flow for the rest of my life and figure out my retirement and putting my kids through college,” Shapiro says. Or maybe you just have a bunch of basic financial questions you’ve never gotten answers for, like: “I want to buy a house in five years, but I just don't understand the process. How does that work? How do you actually buy a house? How does your down payment get combined with a mortgage, and suddenly, you own a house. Like, how does that work?” It’s a CFP®’s job to answer
What to keep in mind when looking for a CFP®
The most important things to keep top of mind when deciding on a CFP® are fairly similar: Do they have expertise for dealing with your specific financial situation? (For example, if you have student loans and want to buy a house soon, you want to work with a CFP® who has experience with both of those subjects, rather than someone who, say, specializes in splitting assets.) And, do you feel comfortable with them? Money and finances are sensitive subjects that are often considered taboo to talk about; opening up on these topics may feel a little bit difficult, so trust and comfort are super important.
Remember, you’re meeting with a CFP® for yourself and to improve your life. You want this relationship to be fulfilling!
How much does a CFP® cost?
CFPs® aren’t free, but there are different ways they charge, some of which may fit your lifestyle better than others. The three main types of CFP® price models are:
The hourly rate model, where the CFP® charges a fixed hourly rate and bills the client on a pre-set basis, usually quarterly.
The asset-based model, where the CFP® charges a percentage of the client's assets under management (AUM).
The commission-based model, where the CFP® earns commissions from selling certain financial products to the client. (This one can be a bit tricky, as it does not necessarily put your interests first. There’s no definitive “good” or “bad” here, but that’s certainly something to keep in mind.)
Financial planning the Origin way
The way Origin handles CFPs® is unique in the financial planning space, because it’s part of our broader slate of core wealth-building tools. Most charge thousands, we charge just $119 a session.
Origin members have access to Origin’s pre-vetted list of on-staff CFPs®, and when you’re scheduling an appointment, we ask a few questions to make the best match. And if, as time goes on, you need a different CFP® because your situation changes, we’re good about reassigning you—say, for example, your new compensation package comes with employer equity and that’s not your existing CFP’s® area of expertise, just let us know, and we’ll match you with an equity pro.
Origin’s CFPs® cover a broad range of needs: “You can come to a CFP® and ask for a plan: Like, hey, I want to map out the cash flow for the rest of my life and figure out my retirement and putting my kids through college,” Shapiro says. Or maybe you just have a bunch of questions: “I want to buy a house in five years, but I just don't understand the process. How does that work? How do you actually buy a house? How does your down payment get combined with a mortgage, and suddenly, you own a house. Like, how does that work?”
Sitting down with a certified professional who can answer these questions is really beneficial. “And that applies to most things that involve money,” he added.