The Value of a Certified Financial Planner: Quantifying the Benefits in Dollars

As people work towards securing their financial future, they often seek the help of financial professionals. While there are many financial advisors out there, a Certified Financial Planner (CFP) is a designation that sets an individual apart in terms of their knowledge, skills, and experience. In this article, we will explore the value of a CFP by quantifying the benefits in dollars.

Improved Investment Returns

One of the primary benefits of working with a CFP is improved investment returns. CFPs are trained to create customized financial plans that are tailored to their clients' unique needs and goals. This includes selecting investments that are best suited for each client's risk tolerance, time horizon, and financial objectives. On average, CFPs have been shown to increase clients' investment returns by 1-3%*. This might not sound like much, but over time, it can add up to a significant amount of money. For example, if a person has a $500,000 investment portfolio and a CFP increases their returns by 1%, they would have an additional $5,000 in their account after one year.

Reduced Taxes

Another benefit of working with a CFP is the reduction of taxes. CFPs have the knowledge and expertise to help clients make tax-efficient investment decisions, which can result in substantial tax savings over time. For example, if a CFP helps a client save $5,000 in taxes each year, over 20 years, they would have saved $100,000.

Avoidance of Costly Mistakes

One of the most valuable benefits of working with a CFP is the avoidance of costly financial mistakes. CFPs have the experience and knowledge to help clients avoid costly errors, such as buying high-cost investment products, not properly diversifying their portfolios, or not taking advantage of tax-saving opportunities. For example, if a CFP helps a client avoid a $10,000 mistake, the value of working with a CFP is immediately apparent.

Reduced Stress and Improved Peace of Mind

Finally, it's important to consider the intangible benefits of working with a CFP, such as reduced stress and improved peace of mind. When people have a financial plan in place, they are more confident in their financial future and less likely to worry about money. The stress and anxiety that come with financial uncertainty can have a significant impact on a person's overall well-being, and working with a CFP can help alleviate these concerns. While this benefit can't be quantified in dollars, it is nonetheless a valuable component of working with a CFP.

There is a great amount of stress that comes from not knowing how to monetarily reach your goals. A CFP helps set these worries aside so you can have confidence in your financial future. CFPs make sure every dollar you make is allocated towards accomplishing your goals. You can have peace of mind in knowing that you have a guide to help you every step of the way.

In conclusion, the value of a CFP is substantial and can be quantified in dollars. Improved investment returns, reduced taxes, avoidance of costly mistakes, and reduced stress and improved peace of mind are just a few of the benefits that come with working with a CFP. If you're looking to secure your financial future, consider working with a CFP.

While there may be an upfront cost associated with working with a CFP, the benefits that come with the guidance and expertise of a CFP can far outweigh the initial expense. In fact, studies have shown that working with a CFP can provide a return on investment of as much as 3-5 times the cost of their services*. This means that for every dollar spent on a CFP, clients can expect to see a return of $3-5 over the long term.

In addition to the financial benefits of working with a CFP, clients also have access to a wide range of financial planning services, including retirement planning, estate planning, tax planning, insurance planning, and more. CFPs can help clients make informed decisions about their finances, and provide ongoing support as their financial situation evolves over time.

In summary, the value of a CFP can be quantified in terms of dollars and cents, but it is also important to consider the intangible benefits of working with a financial professional. With improved investment returns, reduced taxes, avoidance of costly mistakes, and reduced stress and improved peace of mind, working with a CFP is an investment in your financial future that can pay dividends for years to come.

*www.aite-novarica.com Aite Group. (2019). The financial planning value of a financial advisor. Retrieved from https://www.cfp.net/-/media/files/cfp-board/research/2019-aite-group-study/2019-aite-group-study.pdf