Annual CFP Roundtable 2017 | Kyle Mast and Danny Kenny
Episode 058
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Navigating Financial Independence: The Key Role of Certified Financial Planners
Achieving financial independence (FI) requires a strategic approach to planning, saving, and investing. Many individuals in the FI community embrace a do-it-yourself (DIY) mentality, fostering a sense of ownership over their financial futures. However, even the most knowledgeable investors can benefit from consulting with certified financial planners (CFPs). Here’s a guide to understanding how and when to engage with financial professionals, drawn from insights shared in a recent episode of ChooseFI featuring hosts Jonathan Mendonsa and Brad Barrett, along with CFPs Kyle Mast and Dominick Quartuccio.
Why Consult a Certified Financial Planner?
Even for DIY investors, collaborating with a CFP can provide invaluable perspectives on long-term financial strategies, tax management, and investment opportunities. Here are key reasons why engaging a financial planner can enhance your financial journey:
1. Expertise in Financial Planning
CFPs bring expertise in navigating complex financial matters. While you might be proficient in investing, a financial planner can synthesize various aspects of your life—such as tax implications, savings strategies, and estate planning—to create a holistic approach that aligns with your goals .
2. Objective Financial Check-Ups
Consulting a CFP serves as a financial check-up. They can identify opportunities you might miss by reviewing your goals and investments. A single consultation can even reveal long-term savings strategies that could make a massive difference over time .
3. Balancing Risk and Reward
Risk management is an essential aspect of financial planning. A CFP can help you establish clear risk tolerance levels for your investments, guiding you to make informed decisions during market volatility .
When Should You Consult a Financial Planner?
Not every situation necessitates a full-scale financial planning session, but there are distinct scenarios that indicate when consulting a CFP might be beneficial:
1. Significant Life Changes
Whenever you experience substantial life events, such as marriage, divorce, or becoming a parent, it's crucial to reassess your financial plan. A CFP can help align your financial strategies with new life goals and obligations .
2. Preparing for Retirement
The process of transitioning from accumulating wealth to drawing from it can be daunting. A financial planner can evaluate your income sources and recommend strategies to ensure you have adequate funds throughout retirement .
3. Tax Management
Navigating tax laws and strategies can be intricate, particularly when dealing with multiple income sources. A planner can identify strategies that minimize tax liability while maximizing savings .
Understanding Fee Structures for Financial Planners
One common concern among DIY investors is the cost associated with hiring a financial planner. Understanding various fee structures can help you make informed decisions:
1. Hourly or Project Fees
Some planners charge on an hourly basis or a flat project fee for specific tasks, such as financial reviews, which can range from $200 to $300 per hour. This model is particularly suitable for those who seek targeted advice without long-term commitment .
2. Retainer Fees
Engaging a planner on a retainer basis allows for more comprehensive support. Clients pay a fixed fee for ongoing advice, making it easier to manage changing financial circumstances over the year .
3. Assets Under Management (AUM)
Most traditional planners charge based on a percentage of the assets they manage. While this can be costly, it ensures that the planner's interests align with your own—encouraging growth in your investments .
Finding the Right Financial Planner
Identifying a qualified CFP with an understanding of the FI principles can be challenging. Here are steps to streamline the search:
1. Utilize Professional Organizations
Start your search by exploring resources like the CFP Board, XY Planning Network, or NAPFA (National Association of Personal Financial Advisors). These platforms allow you to filter planners by specialty and location .
2. Seek Community Recommendations
Leverage the FI community. Engage in discussions on social media or relevant forums to gather recommendations for planners who have experience supporting individuals with similar financial goals .
3. Evaluate Fiduciary Standards
Ensure that potential planners adhere to fiduciary standards. This means they are obliged to act in your best interest for all the services they provide .
The Role of Financial Check-Ups
An essential component of effective financial management is consistent check-ups. Schedule regular consultations with a planner to reevaluate your goals, especially after significant changes in your financial landscape.
1. Annual Planning Retreats
Consider organizing an annual planning retreat with your partner or family. Regularly reviewing financial goals and strategies not only solidifies your understanding but also fosters team involvement in achieving those goals .
Conclusion: Empowering Your Financial Journey
Navigating the realms of financial independence necessitates a well-thought-out plan—and the guidance of a certified financial planner can enrich this journey. Whether you are contemplating retirement, facing life changes, or evaluating investment strategies, investing time in professional advice can yield significant dividends. Establishing a healthy relationship with a CFP will empower you to make informed decisions and confidently stride toward your financial aspirations.
The pursuit of financial independence is inherently personal. Leverage the insights shared from experts to craft a financial strategy that embodies your aspirations, ensuring you remain informed and empowered on your path to wealth accumulation. Engage today with a CFP to unlock new opportunities and further solidify your financial future.
A roundtable discussion with two CFPs, Kyle Mast and Danny Kenny, on what financial planning looks like in practice, the importance of talking to a CFP and managing different types of risk.
[elementor-template id="143609"]On today’s episode we cover:
- Roundtable Q&A with two Certified Financial Planners
- Kyle and Danny’s backstory
- How they learned about FI
- Why you should use the services of a CFP
- How they act as an educator and therapist between spouses
- What financial planning looks like in practice
- The different CFP models
- Why everyone should talk to a CFP
- How to find a CFP
- Why it is important that your CFP is a fiduciary and how to make sure
- The changes with the new tax bill
- The steps between the accumulation and draw-down phase
- Biggest mistakes clients make
- How to get both spouses on the same page
- The importance of keeping records
- How to deal with people who panic
- Risk management outside of investments
- Why it’s worth getting long term disability insurance
- When should someone consider index funds
- Importance of mixing US and international investments
- Hotseat questions
Links from the show:
- CPF Board
- Napfa
- XY Planning Network
- Becoming Minimalist
- The Secret to Achieving your Dreams
- Danny’s info
- Kyle’s info
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