Blog by 360 Financial, Big Picture Planning and Holistic Wealth Management
What Is a Financial Planner?
A financial planner is a professional who works with individuals or businesses to help manage financial affairs and create strategies that seek to optimize financial goals.
Anyone can work with a financial planner, but for high-net-worth individuals with substantial assets, working with a financial planner is highly recommended.
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What Does a Financial Planner Do?
Some financial planners may have additional designations or licenses which allow them to provide additional services beyond financial planning.
Typically, financial planners help clients address and pursue their financial goals by providing guidance across a range of services, including:
Tax planning for individuals and businesses
Investment advice
Retirement planning
Risk management strategies
Personal finance management for everyday financial decisions
By tailoring strategies to individual needs, financial planners support clients in working toward their overall financial well-being.
CFP® Designation Explained
The CFP designation is a professional designation given to financial planners by the Certified Financial Planner Board of Standards in the U.S. It’s a globally recognized designation requiring years of completing formal education, exams, and demonstrating good ethics.
A Certified Financial Planner (CFP®) designation is the gold standard for financial planners.
All CFPs are held to fiduciary duty. Working with a professional financial planner with a CFP designation means they’ve demonstrated clear abilities and competence in financial planning, making them a step up from non-designated financial planners.
CFPs can provide a broad range of financial planning services, but there are specific limitations on what they can offer based on their certification, licensing, and regulatory requirements. Here’s a clear breakdown:
Services a CFP Can Provide
Comprehensive Financial Planning – Creating detailed plans to address clients’ long-term financial goals.
Investment Advice – Providing guidance on investment portfolios, asset allocation, and investment strategies (if appropriately licensed).
Retirement Planning – Advising on retirement savings strategies, income planning, and Social Security timing.
Tax Planning – Offering strategies for tax efficiency, though not preparing tax returns (unless also a CPA or enrolled agent).
Risk Management and Insurance Planning – Analyzing insurance needs and recommending types of insurance (if licensed to sell specific insurance products).
Estate and Trust Planning – Assisting in estate planning strategies and collaborating with attorneys for trusts and wills.
Budgeting and Cash Flow Management – Helping clients create budgets and manage spending to meet their financial goals.
Education Funding Guidance – Planning for education expenses and helping clients choose investment options like 529 plans.
Debt Management – Advising on strategies to manage or reduce debt.
Services a CFP Cannot Provide Unless They Hold Additional Licenses or Designations
Direct Tax Preparation – CFPs can provide tax strategies but cannot prepare tax returns unless they are also licensed as a CPA or enrolled agent.
Legal Services – A CFP cannot draft legal documents (e.g., wills or trusts) or offer legal advice unless they are also a licensed attorney.
Real Estate Brokerage Services – They cannot act as real estate agents or brokers unless licensed in real estate.
Selling Insurance Without a License – CFPs must be properly licensed to sell insurance products.
Executing Trades Without Proper Licensing – CFPs cannot directly execute trades on behalf of clients without additional brokerage licensing (e.g., Series 7 or Series 65).
Accountancy Services – Providing certified financial statements or performing audits is restricted to licensed CPAs.
A CFP’s role is typically advisory, meaning they often work with other professionals (e.g., attorney or tax advisors) to deliver a well-rounded financial strategy while adhering to their scope of practice and licensing.
The Role of Financial Planners in Retirement Planning
Planning for retirement is important for anyone looking for financial security as they get older.
A financial planner can be a great resource when you want a professional to help you manage and supervise your retirement planning and investing.
Alongside creating a retirement plan, a financial planner can also help you pursue strategies to maximize retirement savings, whether that’s getting the most out of tax credits and deductions or carrying out investment portfolio management.
Are Financial Planners Fiduciaries?
Not all financial planners are fiduciaries, so if you want to work with a professional with your best interests at heart, it’s worth clarifying that the financial planner you’re talking to is a fiduciary.
Fiduciaries are legally and ethically bound to act in the best interests of their clients. This means that despite conflicting interests from themselves personally or the firm they work for, your financial goals will be kept as a priority throughout the entire working relationship.
To check whether your financial planner is a fiduciary, you can simply ask them to affirm their status with written documentation. Their credentials and registration will also be present with regulatory bodies in the U.S., like the U.S. Securities and Exchange Commission (SEC).
How to Choose the Right Financial Planner
Here are some tips to help you choose the right financial planner for your needs:
Evaluate their credentials. Can they back up experience with qualifications and designations?
Check what services they offer. Typical services include retirement income planning, debt management, estate planning, investment management, and tax planning.
Ask them about the clients they’ve worked with in the past.
Check if they are a fiduciary.
The Difference Between a Financial Planner and a Financial Advisor
While a financial planner and a financial advisor might sound similar, some key differences set them apart.
Typically, financial advisors offer a broader range of services including creating and managing your investment portfolio. Financial planners mainly focus on creating personalized plans for their clients but may not be able to manage investment portfolios unless they are also financial advisors.
If you have substantial assets, your best bet is to work with a holistic wealth management firm that can help you with all aspects of your personal finances.
Do You Need a Financial Planner?
Whether you’ve just received sudden wealth or want to plan for your financial future, working with a financial planner can give you confidence that you’re on the right track.
Financial decisions can be difficult, especially when you have multiple dependents to consider or assets to manage. A financial planner can help you pursue your long-term financial goals more effectively than if you were to go it alone.
Common Questions about Working with a Financial Planner
Is it worth paying for a financial planner?
Yes, working with a financial planner is often worth the cost, especially if you have complex financial needs such as managing investments, retirement planning, or tax strategies.
Financial planners provide professional insights, customized advice, and structured plans, helping you pursue your financial goals. For high-income earners, a financial planner’s guidance may bring additional benefits like tax savings and skilled investment management.
What is the difference between a financial planner and a financial consultant?
A financial planner typically focuses on creating a comprehensive financial plan to address long-term goals like retirement, savings, and investment strategies.
In contrast, a financial consultant often provides specific guidance on targeted financial needs, such as business expansion or debt restructuring.
Why is it important to work with a fiduciary financial advisor?
Working with a fiduciary financial advisor is valuable because fiduciaries are legally obligated to act in a client’s best interests.
They seek to provide transparent advice, aiming to prioritize client needs over personal or company interests. This commitment to integrity offers clients confidence that recommendations are aligned with their objectives.
How do I know if my financial planner is a fiduciary?
To determine if your financial planner is a fiduciary, ask directly and request written documentation affirming their fiduciary status.
Professionals who are Certified Financial Planners (CFPs) or registered with the U.S. Securities and Exchange Commission (SEC) generally uphold fiduciary responsibilities.
Do I need a financial advisor or financial planner to help with my money?
While not everyone needs a financial advisor or planner, their assistance is beneficial if you’re working towards specific financial goals or facing complex financial decisions.
A wealth management firm can help address investment strategies, retirement planning, estate planning, and tax considerations. If you have $1M or more in investable assets, it may be wise to seek the guidance of a wealth advisor.
When should I hire a financial advisor?
Hiring a financial advisor is especially useful at key life stages, such as preparing for retirement, making career changes, getting married, or receiving an inheritance.
It's in these moments that experienced guidance can make a difference. Advisors can help you make sound financial choices and avoid costly mistakes.
When should I hire a financial planner?
A financial planner is valuable when you’re ready to establish a comprehensive strategy for goals like buying a home, saving for education, or planning for retirement.
Major life changes (starting a family or launching a business) are also good times to consider working with a financial planner.
Should I work with a robo advisor or a traditional financial advisor or planner?
Deciding between a robo-advisor and a traditional financial planner depends on your needs and preferences.
Robo-advisors offer automated financial planning services that may benefit those seeking a streamlined, cost-effective approach to managing basic investments.
However, a traditional financial planner provides personalized financial planning services, collaborating with you to address specific goals and complex needs. For individuals with evolving financial situations, a traditional planner’s insights and dedicated guidance will likely offer greater long-term benefits.
What is the role of registered investment advisors in financial planning?
Registered investment advisors (RIAs) manage investment portfolios and provide customized guidance.
As fiduciaries, RIAs are required to act in clients' best interests, making them valuable for those seeking professional strategies to pursue and address long-term financial goals. However, an investment advisor and a financial planner are not the same.
When you work with a holistic wealth management firm, they will help you with your financial planning, investment management, tax planning, retirement planning, and estate planning. If you have substantial assets, working with a wealth management firm may be the best option, as you will get all the services and guidance you require.
How does insurance coverage fit into a financial plan?
Insurance coverage supports financial stability by helping to mitigate risk.
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About 360 Financial
360 Financial is an independent wealth management firm with a team of specialized financial advisors and financial planners. As fiduciaries, 360 Financial’s advisors provide services to business owners, entrepreneurs, and professionals. We help investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
Headquartered in Minnesota, we serve investors across the US with online and in-person wealth management and financial planning services.
