Want to be a Certified Financial Planner™?

As I read many articles about how to select a financial advisor I frequently see mentioned the importance of working with a Certified Financial Planner™ (CFP®). But what does the designation mean, and how does a person become one?  Since I am in the middle of working on my designation, I thought I would provide some insight.

If you decide to become a CFP®, here’s the process you would face.  First, you must have a Bachelors degree from an accredited university and a minimum of three years of applicable work experience. I’ve got these requirements covered and am working on the next step, which is the educational work.  The courses are offered by numerous sources and follow the same general topics. I chose the College of Financial Planning for my coursework.

Each course listed below is similar to a college quarter of studies with approximately 1000 pages of reading and 500 pages of questions and casework.  Each course takes about 160 – 220 hours of study and has a final exam.  My program includes the below five courses, and starting in 2012 the college will add a sixth “capstone” course that will be casework on the entire program.

  • Financial planning process and insurance
  • Investment planning
  • Income tax planning
  • Retirement planning
  • Estate planning

When you finish your coursework, you can then sit for the comprehensive exam given by the CFP® board three times a year.  It’s a two day test of your knowledge, comprehension, and your ability to apply what you know to cases.  The approximate pass rate is 50% and it’s recommended to have an additional 250 hours of study for the exam.  The course, materials, testing fees and test prep can easily cost you $5000 – $7000.  After passing the exam there are ethics requirements and continuing education.  To see a complete listing of requirements and topics, visit www.cfp.net.

To become a CFP® is a rigorous and costly endeavor.  The process has helped me to do a better job advising my clients and I can see the value in the recommendation that people work with a CFP®.

Umbrella insurance – why it might be a good idea for you

Say it out loud: “Today I will schedule a time to talk with my insurance person about an umbrella insurance policy.”

Why?  Soaring healthcare costs and the lawsuit-crazy world we live in certainly can put you at risk of exceeding your liability limits on your home and auto policies.  An example: you are driving and slide on some ice and strike another vehicle and the driver of that vehicle suffers a broken arm.  You would think your auto policy liability coverage should be enough, but in this case the driver is a surgeon who can’t work for 18 months.  You could end up with liability above what your policy pays.  This is where the umbrella policy will step in and cover much higher limits. Typically, people will get coverage of $1-2 million, depending on their lifestyle.

Umbrella insurance policies are inexpensive assuming you have adequate limits on your existing policies.  It will be a good opportunity to review all your liability limits and make appropriate changes to protect your assets.   A competent insurance person can help guide you in determining the best coverage for your situation.

Schedule it today!