A growing number of firms across the U.S. wealth management industry see hiring and developing talent with the certified financial planner (CFP) designation as an important part of their competitive strategy, especially as their clients demand deeper and more personalized planning experiences.
The approach makes a lot of sense, experts agree, as many in the public and in the industry view the CFP mark as one of the most important credentials a professional can attain when it comes to proving and maintaining their knowledge of the most important financial planning skills.
Advisors say that studying for the test and obtaining the CFP designation is a great way to obtain comprehensive planning knowledge that can then be applied toward building a practice or serving clients, depending on which area of the financial services profession one operates in.
In this sense, the focus on getting more CFPs in the door should come as no surprise, nor should the expanding efforts of firms to encourage their staffers to pursue the designation.
In fact, in the view of Penny Pennington, managing partner at Edward Jones, getting more CFP talent into the firm’s many branches is an essential strategy for the future, so much so that the firm has declared the goal of becoming the advisory organization with the most CFPs under one brand in the United States.
“We managed to get 600 CFPs through the program last year,” Pennington recently told ThinkAdvisor. “We have more than that are registered this year, and our goal is to have more than 4,000 CFPs on board by the end of the year.”
Pennington says she is particularly proud of the racial and gender diversity of the firm’s CFP talent, and she counts herself among the group of industry leaders who see the CFP Board’s efforts to improve the diversity of certificants as a critical initiative for the advisor industry as a whole.
“We all know from the pace of demographic change in our country that the next two generations of investors are going to be so much more diverse, and the advisory industry must change to reflect that,” Pennington says.
See the slideshow for information about eight firms that responded to an informal survey from ThinkAdvisor with information about their CFP representation. Rather than providing an apples-to-apples comparison, the list instead demonstrates the broad and deepening interest in the CFP designation among leading advisory shops.
The certificate is composed of 18 credits of masters-level graduate coursework with the primary goal of providing students with the education, training and skills necessary to be able to sit for the Certified Financial Planner (CFP) examination.
The curriculum is aligned with the CFP® Board’s Principal Knowledge subjects and covers principles and practices of essential areas of financial planning, including:
CFP students enjoy the opportunity to work with clients at the Low-Income Tax Clinic for graduate credit and CFP exam experience.
For more information about the CFP Graduate Certificate, including tuition and fee information, please email Justine Tydings, our Sr. Recruiting Coordinator.
The UW College of Business and the certified Financial Planning certificate program are nationally accredited by AACSB.
Students must take the following required courses to receive their certificate*:
View the full online certified financial planning certificate degree program curriculum.
*Accelerated path candidates — candidates who bypass the other education requirements — are only required to take FIN 5800: CFP Capstone.
As a CFP® professional, you can assist with developing and executing financial strategies for your clients. You will help others create financial goals based on existing financial conditions and risk tolerance. CFP®s can offer guidance on managing debt, picking investments, preparing for retirement and setting aside money for both short- and long-term goals.
Certified Financial Planner Careers
Here are just a few places our University of Wyoming alumni are making a difference with a certified Financial Planning certificate:
What is a CPA? And when might you need one? Although these accounting pros usually come to mind when it comes to filing income taxes, they can help with quite a few other things.
CPA stands for certified public accountant. It’s a credential an accounting professional can earn to demonstrate expertise in their field. Becoming a CPA requires passing an exam and fulfilling several education and experience requirements.
Internationally, accounting professionals with similar education and credentials are called CAs, or charted accountants.
To earn a CPA title, candidates must pass a 16-hour test called the Uniform CPA Examination. Before taking the exam, they must also meet an education requirement. Typically, that means completing 120 to 150 hours of credited coursework, with a minimum of 24 hours focused on accounting and 24 hours focused on business courses .
Becoming a CPA means meeting specific experience and ethics requirements, too. The state usually sets those parameters, but generally, you can’t officially be called a CPA until you’ve apprenticed under one for at least a year
Once an accountant has earned a CPA license, some work is required to maintain it. Many state boards ask certified public accountants to take additional courses throughout their careers to keep their skills sharp and up to date.
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The certified public accountant exam, formally called the Uniform CPA Examination, is a nationally administered test that sets the standards for the skills and knowledge CPAs must possess.
The exam has four sections: auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation. To pass, candidates must earn a score of at least 75 on each section.
People often think of CPAs when they think about tax preparation and filing, but these professionals can work in several industries, depending on their focus. This can include tax planning, financial reporting or working as an accountant for a private or public company.
CPAs are often the people who are called in to conduct audits — assessments of a business’s paperwork and financial statement. They can also hold chief controller or chief financial officer (CFO) positions, depending on their skill level and education.
Typically, an accountant is a person who has a degree in accounting from a higher education institution. However, this is not an official requirement because the general term “accountant” is largely unregulated in the U.S.
Accountants can provide similar services to a CPA, but CPAs are distinct from accountants in a few ways:
If you’re wondering how a CPA can assist you with taxes and whether you need one’s help in the first place, you can start by asking: Why do I need help, and what kind of help do I need?
If you’re not sure where to start when it comes to filing, many resources can walk you through how to file your taxes. Once you’ve got the basics down, you might find that quality tax software is often helpful enough to get your annual tax forms in — some taxpayers may even be able to do their taxes for free.
Calling in a tax-focused CPA could make sense if you’re struggling to figure something out about your tax life, have complex needs or have questions you could use extra guidance with. If you need to file for a tax extension, for example, because you need extra help with your paperwork, a tax pro can help you to get back on track.
Certain people, such as business owners and those who are self-employed, might find working with a CPA beneficial because CPAs can also provide small-business tax advisory services, aka big-picture tax and financial planning, that might be particularly helpful to these taxpayers.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Are you seeking assistance with your financial management? If so, you’re not alone. Many Americans could benefit from financial guidance. In fact, according to the National Financial Education Council, the average American incurs a cost of $1,200 per year due to a lack of personal finance knowledge.
Choosing a good financial advisor can help you avoid these costs and focus on your goals. Financial advisors aren’t just for rich people—working with a financial advisor is a great choice for anyone who wants to get their personal finances on track and set long-term objectives. To find the ideal financial advisor for your requirements, consider following our 5 key steps.
Before you speak to a financial advisor, decide which aspects of your financial life you need help with. When you first sit down with an advisor, you’ll want to be ready to explain your particular money management needs.
Keep in mind that financial advisors provide more than just investment advice. The best financial planner is the one who can help you chart a course for all your financial needs. This can cover investment advice for retirement plans, debt repayment, insurance product suggestions to protect yourself and your family and estate planning.
Depending on where you are in life, you may not need comprehensive financial planning. People whose financial lives are relatively straightforward, like young people without families of their own or significant debt, might only need help with retirement planning.
People with complex financial needs, however, may need extra assistance. They could be looking to establish college funds or trusts for their children, navigate aggressive debt payment situations or solve tricky tax problems. Not all types of financial advisors offer the same menu of services, so decide which services you need and let this guide your search.
There’s no federal law that regulates who can call themselves a financial advisor or provide financial advice. While many people call themselves financial advisors, not all have your best interest at heart. That’s why you have to carefully evaluate potential financial advisors and make sure they are good for you and your money.
Part of learning about the different types of advisors is understanding fiduciary duty. Some, but not all, financial advisors are bound by fiduciary duty, meaning that they are legally required to work in your financial best interest. Other people who call themselves advisors are only held to a suitability standard, meaning they only must suggest products that are suitable for you—even if they’re more expensive and earn them a higher commission. (The SEC is trying to regulate this, though, by limiting the use of “advisor” to those who hold themselves to a fiduciary standard.)
Regardless of which kind of advisor you choose, you should make sure you know how they earn money. This helps you determine if their recommendations are actually better for you—or for their wallets.
Here’s how to think about these four types of financial advisors:
Fee-only financial advisors earn money from the fees you pay for their services. These fees may be charged as a percentage of the assets they manage for you, as an hourly rate, or as a flat rate.
Almost all fee-only advisors are fiduciaries. Generally speaking, they have chosen to work under a fee-only model to reduce any potential conflicts of interest. Because their income is from clients, it’s in their best interest to make sure you end up with financial plans and financial products that work best for you.
Some financial advisors make money by earning sales commissions from third parties. Among financial advisors that earn sales commissions, some may advertise themselves as “free” financial advisors that do not charge you fees for advice. Others may charge fees, meaning they derive only part of their income from third-party commissions.
Either way, financial advisors who earn third-party sales commissions derive some or all of their income from selling you certain financial products. If you choose to work with a financial advisor who earns sales commissions, you need to take extra care.
Commission-only advisors are not fiduciaries. They work as salespeople for investment and insurance brokerages and are only held to suitability standards. In contrast, some fee-based financial advisors are fiduciaries, though it’s important to determine if they’re always acting as fiduciaries or if they “pause” fiduciary duty when discussing certain types of products, like insurance.
Keep in mind, commissions aren’t bad in and of themselves. They’re not even necessarily red flags.
Some financial products are predominantly sold under a commission model. Take life insurance: A fee-based planner who receives compensation for helping you purchase a life insurance policy may still have your best interests at heart when advising on other financial products.
“To be clear, there’s nothing wrong with paying the commission for life insurance,” says Karen Van Voorhis, a fee-based certified financial planner (CFP) and Director of Financial Planning at Daniel J. Galli & Associates in Norwell, Mass. “That’s how the structure of that industry works.”
Purchasing financial products via financial advisors that earn commissions may be a matter of convenience, especially if someone will receive a commission regardless of where you buy the product. What’s important is understanding the difference. And if you work with a fee-based financial advisor, understand when they are acting as a fiduciary, especially when they help you purchase financial products.
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Registered Investment Advisors (RIAs) are companies that provide fiduciary financial advice. RIAs employ Investment Advisor Representatives (IARs), who are bound by fiduciary duty. An RIA may have one or hundreds of IARs working for it.
IARs may call themselves financial advisors and may be fee-only or fee-based. Some may have additional credentials, including the certified financial planner (CFP) designation.
“The certified financial planner designation is really the gold standard in the financial planning industry,” says Van Voorhis. A CFP designation indicates a financial advisor has passed rigorous industry exams covering real estate, investment, and insurance planning as well as has years of experience in their fields.
Because of their wide range of expertise, CFPs are well-suited to help you plan out every aspect of your financial life. They may be particularly helpful for those with complex financial situations, including managing large outstanding debts and will, trust and estate planning.
Robo advisors offer low-cost, automated investment advice. Most specialize in helping people invest for mid- and long-term goals, like retirement, through preconstructed diversified portfolios of exchange-traded funds (ETFs).
“For younger people who are really tech-savvy, a robo advisor just to manage retirement funds could be a perfect solution,” says Brian Behl, a CFP at Behl Wealth Management in Waukesha, Wisc. “I don’t think they’re going to get as in-depth advice on insurance and retirement and taxes.”
People with complex financial needs should probably choose a conventional financial advisor, although many robo advisors provide financial planning services a la carte or for higher net-worth clients.
“While the robo advisors have really disrupted the industry…I do think there’s still a place for human advisors right now,” says Corbin Blackwell, a CFP at robo advisor Betterment.
Betterment, for example, allows clients to purchase individual financial advising sessions, and Personal Capital, Wealthsimple, and Betterment provide regular financial planning for clients with higher account balances for a management fee.
Services offered by financial advisors vary from advisor to advisor, but they may provide financial advice on any of the following topics:
In addition to investment management and financial planning, financial advisors also offer emotional support and perspective during volatile economic times. During the beginning of the coronavirus pandemic in March of 2020, for instance, client demand for financial advisor contact increased by almost 50%.
“I think that during these times, we can be a source of reason,” says Blackwell. “We can weather the storm. We’ve built this portfolio for a reason.”
When choosing a financial advisor, make sure they offer the services you’re looking for in your financial and non-financial lives.
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It used to be that financial advisors charged fees that were a percentage of the assets they managed for you. Today advisors offer a wide variety of fee structures, which helps make their services accessible to clients of all levels of financial means.
Financial advice comes in many forms, and there are a variety of different kinds of financial professionals, so you need to do your homework. Make sure the advisor guiding your financial decisions is trustworthy and capable.
There are a few good ways to find a financial advisor. Ask friends, family and peers for recommendations when trying to find a financial advisor near you. Alternatively, look for financial advisors online. Many professional financial planning associations provide free databases of financial advisors:
When evaluating advisors, be sure to consider their credentials as well as research their backgrounds and fee structures. You can view disciplinary actions and complaints filed against financial advisors using FINRA’s BrokerCheck. And remember, just because someone is part of a financial planning association, that doesn’t mean they’re a fiduciary financial advisor.
When meeting a financial advisor for the first time, it’s important to obtain the answers to these questions and ensure you’re satisfied with their responses:
Because of the ambiguity in the industry, you have to exercise caution to make sure you get the right financial advisor who meets your fiduciary and financial needs. That said, when you choose the right financial advisor for you, they can help you achieve your financial goals and financially protect your loved ones and their futures.
“So much of what I do in a life-centered approach to financial planning and wealth management is walk out life with people,” says Wes Brown, a CFP at CogentBlue Wealth Advisors in Knoxville, Tenn. “I think there’s value in an ongoing relationship where somebody can help you walk through the various waypoints you’re going to come to.
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Financial advisors are personal finance experts who provide you financial advice and manage your money. Some—but not all—are fiduciaries. A fiduciary acts only in your best financial interest.
“A financial advisor is like a coach,” says Matt Chancey, a certified financial planner (CFP) at Dempsey Lord Smith in Tampa, Fla. “It helps to have someone keep you accountable to your goals and make sure that you aren’t making any major missteps.”
A good financial investment advisor can evaluate your current situation and develop a comprehensive plan to guide you through your financial life.
“You don’t know what you don’t know,” says Marianela Collado, a CFP and certified public accountant (CPA) at Tobias Financial Advisors in Plantation, Fla. “By opening your finances up, a good financial adviser can suggest a wide range of opportunities that the client probably never thought of or wouldn’t even know to ask for.”
Though some people may think they don’t need a financial advisor until they’ve amassed at least $1 million, the amount of assets you hold shouldn’t be the sole determining factor. In fact, financial advisors work with clients of all tax brackets and backgrounds.
Financial advisor fees can vary widely. This is due to there being different methods for a financial advisor to generate their income. Some advisors are fee-only. Other advisors are commission-based. Some advisors even work on a hybrid model between the two.
It’s recommended that you research how the individual advisor you’re choosing generates their income before starting to work with them.
Financial advisors become most helpful when your financial life becomes complex. That might be when you get married, have children, get divorced, are managing many competing debts, come into an unexpected windfall or are navigating end-of-life financial decisions.
There are more than 200 designations and certifications available to financial professionals, comprising an alphabet soup of distinctions that confuse consumers and fellow professionals alike. If you are searching for a financial planner, know that quality is more important than quantity. Distinguishing between various distinctions, such as CFP® vs. CPA, is key to making sure you receive the best advice.
Two of the most recognizable financial credentials are the CPA license and CFP® certification. CPAs and CFP® professionals have different but complementary areas of expertise, and some professionals hold both credentials. When considering who to hire, it’s important to understand their roles individually and to know when it makes sense to work with an adviser who has both credentials.
To earn the CPA license, accountants must complete at least 150 hours of education, pass a rigorous four-part exam and meet experience requirements, according to the Association of International Certified Professional Accountants (AICPA). In a corporate setting, CPAs can offer financial statement audits and other attestation services to help inform investors about the financial health of organizations. Additionally, they often provide tax, financial reporting and advisory services to corporations, small businesses, nonprofit organizations, governments and individuals.
A CPA can be helpful in the realm of personal finance as well. A CPA is useful for individuals in tax preparation and for discussing an individual’s tax situation with the IRS. CPAs can also be useful to business owners for bookkeeping and tax matters associated with an individual’s business. Some CPAs even have additional training that may help with business valuation, or detecting fraud, which can be helpful to business owners.
CPAs complete rigorous training and are helpful in very specific circumstances. But most accountants do not feel comfortable advising on the various complexities inherent in personal finance or myriad other important financial decisions that may require advice from a specialized expert. To truly achieve your short- and long-term financial goals, you will likely benefit from working with a professional who is trained to take a more holistic and forward-looking approach to your personal finances.
In short, a financial planner is an individual who advises clients on their personal finances. The CERTIFIED FINANCIAL PLANNER™ certification is the standard of excellence in financial planning.
Much like the CPA license, the CFP® certification requires completing coursework, fulfilling relevant experience requirements, agreeing to adhere to a set of ethical mandates and passing the CFP® exam, which consists of two three-hour sessions over one day. The requirements for CFP® certification are just as rigorous as for the CPA license, and the education requirements include similar foundational topics, such as tax regulations and risk management.
The comprehensive education for CFP® professionals, however, expands into the general principles of financial planning and other personal finance subjects such as investments and retirement planning.
In recognition of the overlap between CPAs and CFP® professionals, the Certified Financial Planner Board of Standards, Inc. (CFP Board) provides an accelerated path for professionals with select credentials, including the CPA license, who are working toward CFP® certification.
While CPAs can assist with examining past financial information to reduce taxable liability retrospectively, financial planners consider a wide range of opportunities to grow and protect your wealth through careful planning. CFP® professionals focus heavily on strategic financial management and maintain a strong interest in budgeting, savings, insurance and estate planning. CFP® professionals closely review your current financial standing and, based on your financial goals, develop an investment and financial plan to help you accumulate wealth.
Although both CFP® professionals and CPAs can help clients maximize their incomes by reducing taxable liability, financial planners are also looking ahead to find new ways to grow their clients’ net wealth.
CFP® professionals are continuously looking for new ways to strengthen and deepen client relations at different touchpoints throughout the year. CFP® professionals understand that discussing your financial future can be emotional and stressful. That is why CFP Board recently added a new section to its exam topics, the Psychology of Financial Planning, to teach the emotional and interpersonal aspects of financial planning. This subject prepares CFP® professionals — and CPAs who complete the accelerated path program — to counsel clients who are experiencing monetary conflict or financial stress, helping them to move forward holistically.
If you are looking for a professional to help you evaluate your past financial statements and solve some portion of your tax situation, a CPA may be helpful, especially if you have complicated income streams.
However, if you’re looking to begin a relationship with someone who can provide ongoing, forward-looking advice as well as financial peace of mind, a CFP® professional could be a better fit. Whether you’re looking to save for retirement, establish an estate plan or make strategic investments, a CFP® professional will typically be better equipped to evaluate and navigate the best route for you.
There are quite a few misconceptions when it comes to working with a financial planner. For one, you might think that financial planners only work with the rich. Or, you may expect that they're just developing investment strategies for clients. However, financial planners are actually versatile in their offerings and, no, you don't already need to have millions of dollars to work with one.
Anyone can benefit from speaking with a financial planner. And in fact, getting advice from a financial planner sooner rather than later can make a huge difference.
According to Loper, certified financial planners (CFP's, for short) can typically help with a variety of concerns.
"CFP's can help people who need a strategy to pay off loans or need ways to generate income," he said. "They can also help young families settling down, mid-life individuals who need help maximizing their retirement savings and those who need assistance with tax planning and estate planning."
But their services don't stop there. Here are some other areas where a certified financial planner can be of assistance:
Loper also asserts that CFP's can play a role in providing guidance with what's known as "triggering events," — events that can result in significant changes in income or wealth. Triggering events can include, but aren't limited to, large inheritances, divorce and death.
There are a few ways to go about finding a financial planner. You might want to start by finding out if your employer offers financial planning services as an employee benefit. This could be a good, non-intimidating place to start working with a financial professional. Plus, depending on the company's terms, the service may be complimentary through your employer.
If you already have a specific issue that you need help with, you can try searching for a financial planner using Zoe Financial, which can match you with a list of professionals who specialize in your concerns.
Another option is to use PlannerSearch.org to find a professional in your state. It'll provide you a list of CFP's near you, and you can also filter by specialties such as employee benefits, getting married, getting divorced, bankruptcy, home buying and more.
Working with a financial planner can be a big and exciting step. Although, not everyone needs to have an ongoing, regular relationship with a financial planner, there are some instances where it might make sense to get a professional's input.
"I don't know that everyone should hire a financial advisor, but everyone could benefit from consulting one upfront to see which services may apply to them," Loper said. "Most planners offer free consults. Until you actually sit down and have an initial conversation you're just guessing what your next step should be."
Maybe you already have an idea of what your next move should be, or how to best manage the rest of your finances. Or, maybe money management just feels really confusing and overwhelming. If you aren't totally confident or wonder if there are better next steps for you to take, you might consider consulting a financial planner. Their expertise may be able to provide an option you haven't yet considered. After taking a bird's eye view of your financial profile they may be able to tell you if there's something else you should be prioritizing.
Loper does caution, however, that sometimes the best next move a person can make with their finances is to do nothing and maintain their current actions. A CFP would be able to clarify if this is really the best thing for their client.
Triggering events, such as marriage, death, divorce and receiving a large inheritance, can have a large impact on how you manage your money — and sometimes even the progress you're making toward your financial goals.
As these events occur, you may think about getting a professional's opinion on how an influx or a decrease in your wealth can impact what your next financial move should be. Plus, according to Loper, as you move through different phases of life, you start to focus on different areas of your finances.
For example, maybe you go through a divorce right as your kids are about to begin college — a financial planner can help you create a plan for funding your kid's tuition.
Of course, you can also see a financial planner if you need help getting started with saving for retirement. But if you're going to retire soon, it could be helpful to check in with a professional to make a plan for how you're going to make your money last the rest of your life. This can feel like a weight off your shoulders even if you've been using a robo-advisor like Wealthfront or Betterment to make investments that are just right for your risk tolerance and goals. A CFP can help you better analyze your lifestyle expenses and your savings so you can decide on a safe amount of money to withdraw each year.
A financial planner can also help you spot any holes in your retirement plan. Like, maybe you'll need to save a little extra money — which could mean having to remain in the workforce for an extra few years.
While not everyone needs an ongoing relationship with a certified financial planner, pretty much everyone can benefit from having a consultation — and some initial input — with a CFP. Especially since there are a variety of concerns that a financial professional can assist with.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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David Muhlbaum: At Kiplinger, we talk to a lot of Certified Financial Planners. They provide us guidance on the best practices they’re using for their clients, and other insights into personal finance. But today, we’re going to talk to the woman who is, in a way, in charge of all of them, and how she’s working to make CFPs a more diverse group. Also, ways to file your taxes for free, all on this episode of Your Money’s Worth. Stick around.
David Muhlbaum: Welcome to Your Money’s Worth. I’m kiplinger.com senior editor David Muhlbaum, joined by my cohost, senior editor Sandy Block. How are you doing, Sandy?
Sandy Block: I’m doing great. I’m feeling flush. I just opened a letter from someone who says they’re willing to buy our house as is. And I’m not going to say how much they’re offering, but it was well more than I thought our house was worth, especially given all of the dog hair that is within.
David Muhlbaum: Good for you. But it was an genuine someone, like an individual, or an investment fund. Can you tell?
Sandy Block: No, I can’t tell. Actually, it read like a letter from a guy, like a guy named Tom or something. But who knows? Maybe Tom is representing an investment firm. It’s hard to tell who the source is.
David Muhlbaum: That’s interesting for sure. I mean, I get plenty of refi offers, but generally the kind of mail like that, or what you’re talking about, too, it goes right to the recycling bin. So if I got something like that, I probably missed it. But we should get back to this when we talk with contributing writer Daniel Bortz, about home sales, which we’ll do in a couple of weeks. But not right now, because we’re like a month from the April tax filing deadline, so this is probably our last chance to take a swing at taxes. And last year, we did an entire episode on how to file your taxes for free. Good for us. We don’t necessarily have to do that all again, but let’s touch on this question from a 2022 point of view because a few things have changed. Right?
Sandy Block: Right. And the main thing, or one thing, because we really like to encourage people to check out IRS Free File because you really can file for free, your federal taxes, and in some cases, your state taxes too. And this year, in order to use IRS Free File, you need an adjusted gross income of $73,000. That’s up from $72,000 in 2021.
David Muhlbaum: Okay. Well, that’s not exactly keeping up with inflation.
Sandy Block: No. And really, what is? But keep in mind, it’s the adjusted gross income, so it doesn’t mean that you made $73,000 last year, with salary and side hustle or whatever. It’s those things minus things like contributions to an IRA, student loan interest, what we call above the line deductions. But it covers a lot of people.
David Muhlbaum: Okay. I’m going to keep pushing. It’s $73,000 whether you’re single or filing jointly.
Sandy Block: Yes, as far as free file is concerned, the marriage penalty is still in place.
David Muhlbaum: Okay. So it’s $73,000 either way. Okay. Well, all right, and I noticed you were good about the mantra, “IRS Free File” because: those words in that order. I mean, we’re going to link to the IRS Free File site. But Sandy, explain again why say, a conventional web search for filing my taxes for free or something like that, why that’s fraught, what the risks are.
Sandy Block: It’s very fraught because there are a lot of so-called free programs out there from some big names like TurboTax and H&R Block, but they have all these caveats. Even if you think your filing is really simple, just something as simple as making a contribution to a health savings account would bump you up into a paid program. And what really catches people is they’ll start typing in all their numbers thinking they’re going to file for free, and then all of a sudden they find out, no, sorry, you’re going to have to pay 40 bucks.
Sandy Block: IRS Free File, unfortunately, some of the big players have dropped out, but there’s about seven software companies that offer this. They’ll process any return as long as you meet the $73,000 AGI category, no matter how complicated your return is, it will work in free file. So that’s why you really want to go to IRS Free File and not just Google “file my tax for free” because you’ll get all kinds of stuff that way.
David Muhlbaum: Right. And then within that IRS Free File offerings, those offerings you talked about, then there are some differences. Right? Some of them work with, we’ll provide you a free state filing, depending. So it pays to look at the details, especially if you are hoping to get a free state filing out of it too.
Sandy Block: Right. You wouldn’t want to go all the way through it thinking you’re getting this great deal and find out it cost you a lot of money to file your state tax return. And the providers that participate are also allowed to define who ... Not everyone can use every program. Some of them will say you have to be a member of the military, or you have to be over 50, or under 50. So you have to sort of do a search and find a program that you qualify for.
David Muhlbaum: Got it. Now there’s another way to slice this. If your income is over that $73,000, there is a way to file for free that’s those free fillable forms on the IRS webpage. That’s like a tongue twister, the free fillable forms. So basically, PDF versions of the various IRS forms, and you could make more than the threshold and file for nothing if you go that route, but you better know what you’re doing.
Sandy Block: Yes. You need to know what you’re doing. All the free file fillable will do is your math. It will do the math for you, but it won’t say, as a typical software program will walk you through and say, “Did you have a home mortgage last year? We think you should take the standard deduction or not.” You’ll get no guidance on free file fillable. It is really just the forms. You fill in the numbers. It does the math. And then you can file electronically when you’re done. But I think this is probably a better option for someone who kind of knows their way around the tax code.
David Muhlbaum: Or there do remain people who, even though you hear from us and from other people time again, file electronically. There are people who simply cannot file electronically, who must file on paper.
Sandy Block: Yes. Most, the majority of tax returns can be filed electronically, but there are some that have to be filed on paper. And I can speak to that personally because when my father passed away last year, I filed a tax return on his behalf. And because I signed it as the executor, obviously he couldn’t, I was required to send it in, to mail it in, paper. That’s the IRS requirement according to the person who prepared the taxes for me. And so, not surprisingly, we still haven’t gotten our refund. Ours is one of the stacks and stacks of tax returns that the IRS hasn’t gotten around to yet.
David Muhlbaum: So how is this filing season shaping up? How are they with electronic or other filings? How’s the IRS doing so far?
Sandy Block: Well, this just in, through February 25th, the IRS says it processed about 44 million individual tax returns. That’s up 11% from the same period last year, so I guess that’s good news. But the really interesting data point I’m writing about for an upcoming issue of Kiplinger’s Personal Finance is that refunds are up. The average tax refund through February 25th was $3,473. That’s up from 15% from the same time last year. Now these comparisons may be imperfect because the tax season got off to a later start last year, and that could affect the numbers. But as you may recall, Congress approved a third round of stimulus checks last year and expanded the child tax credit. So some taxpayers who were eligible for those payments didn’t get them, and they’re able to claim them when they file their tax return, so I think that might be contributing to higher refunds this year. But people are getting more money.
David Muhlbaum: Of their own money back.
Sandy Block: Of their own money back. They’re interest free, and we will discuss this in our upcoming issue as well, why that’s really not a good thing. But no one’s going to turn around, turn away a check from the IRS.
David Muhlbaum: All right. Thank you, Sandy. Coming up in our main segment, we’ll be speaking with the chair of the CFB board about what a Certified Financial Planner actually is, and how she’s working to reshape her organization.
David Muhlbaum: Welcome back to Your Money’s Worth. Joining us for our main segment is Kamila Elliott, the chair of the Certified Financial Planner Board of Standards, a nonprofit that establishes and enforces the requirements for the CFP certification. No Board of Standards, no CFPs. No CFPs, well, we’d all probably be a bit worse off when it comes to personal finance. Even if you yourself don’t directly work with a CFP, I think it’s fair to say that their influence is widely felt, and a positive one for people trying to make money, keep their money, and invest their money. So welcome, Kamila, and thank you for joining us.
Kamila Elliott: Hello, and thank you for having me today.
Sandy Block: Thank you, Kamila, for coming on. And listeners should check out my recent Q and A with Kamila in April’s Kiplinger Personal Finance Magazine.
David Muhlbaum: Yeah. We’ll link to your profile, Sandy.
Sandy Block: It wasn’t really a profile. It was more about giving her the chance to talk about her efforts to get more women and minority planners and get more young people into the profession and reach out to more women, minorities, and young people who need financial planning. And she is breaking ground there herself as the first Black CFP board chair.
David Muhlbaum: But not the first woman, right?
Kamila Elliott: Right. I am the first Black woman to serve as chair, but the first woman to hold this role was Donna G. Barwick, from ‘96 to ‘97.
David Muhlbaum: Got it, yeah. In doing a little bit of research for this episode, I looked up some of the history of the CFP board, and I’m going to quote this bit because I saved it. “The financial planning movement experienced a watershed moment on December 12th, 1969 when 13 men gathered in Chicago and outlined the first steps to further the idea that people could benefit from a profession that integrated knowledge and practices across the various areas of financial services industry.” So, that’s like the birth of CFP. But it was kind of striking to look at that and go, “Oh, yeah. 13 men.” That’s what it was. So I guess we have made some progress, or you have.
Kamila Elliott: Yes.
Sandy Block: Industry has.
Kamila Elliott: The industry has, yes.
David Muhlbaum: Well, we do very much want to talk about representation among CFPs and elsewhere. But I want to, as ever, do a bit of definitions first. And I think you’ll welcome this, Kamila, because it will help with the branding. There are a lot of people giving advice about money, and not all of them are Certified Financial Planners. Now I can’t show this in audio, but there’s supposed to be a little registered trademark, you know the R in the circle, after CFP. And we’re expected to capitalize it too, which is the source of some editorial head scratching here from time to time. So, Kamila, what is a CFP?
Kamila Elliott: A CFP professional is an individual who has met the rigorous qualifications for financial planning set by CFP Board. That includes committing to high ethical standards, attain relevant experience, complete the education requirements, and passing the exam.
Sandy Block: And so Kamila, there’s one thing you run into when you’re a writer, financial writer, is that there are tons of acronyms, letters after people’s names, lots and lots of certifications, some hard to get, some I think you just mail away for.
David Muhlbaum: A lot of them start with C.
Sandy Block: So how do you guys sort of distinguish yourself from the many letters and designations that are out there?
Kamila Elliott: So the CFP certification is a standard of excellence for financial planning because CFP professionals have met extensive training and experience requirements, and commit to CFP Board’s ethical standards. Those ethical standards require them to put their clients’ interests first, providing them with confidence today for a more secure tomorrow.
Sandy Block: And just to follow up on that, Kamila, I understand that, I actually know some people and so does David, who have taken the exam to get a CFP. And it’s not easy. I think the pass rate is not great.
David Muhlbaum: 60%, something like that?
Sandy Block: It’s not something you can just take a quick online test and become, correct?
Kamila Elliott: That is correct.
Sandy Block: It’s a difficult certification to obtain.
Kamila Elliott: Yeah. We’re going to discuss this a little bit later. But I spent some time working at a firm that supported RIAs. And when I joined, to your point, there were so many certifications, I couldn’t keep track of them. And at the time, I was a CFP professional, so Sandy, I actually sat one day, I guess I had extra time on my hands, and researched all the certifications and looked into: Is this a certification that requires a two-hour test, and you leave and that’s it? Or is there an education requirement? Is there ongoing continuing education? So a lot of these certifications do vary significantly.
David Muhlbaum: Okay. And about you, so as chair of the Certified Financial Planner Board of Standards, what does the job entail besides talking to us? Are you elected?
Kamila Elliott: I joined the CFP Board on their board of directors in 2019. And to join the board is a self-nominating process. I think the year I applied, there were over 100 nominations and I was lucky to be one of the four that they selected. And then once you join the board, you are then eligible to raise your hand to serve as chair, so I raised my hand to serve as chair in 2020. I was elected by my board of director colleagues to serve, and I began my term in January.
David Muhlbaum: Got it. And you will serve for a year?
Kamila Elliott: Yes. It’s one term.
Sandy Block: So Kamila, in our conversation for the magazine interview, we talked about one of your goals being to increase the number of women and minority planners and attracting more young people to the profession. And I guess my question is: What are you planning to do to try and accomplish that goal?
Kamila Elliott: So one of the things I’m really proud of is that this is not a new goal for the CFP Board. There’s been a lot of focus and attention in this area because we want representation of CFP professionals to mirror the representation or the demographics of the US population. The US population is 13% Black. It is about 16% to 18% Hispanic. And our goal is to ensure that we represent the public in how we serve them and with financial planning. So one of the biggest things that we did was start the Center for Financial Planning in 2015. And part of their role is to focus on the growth of the profession and enhance the level of diversification and support firms to create more inclusion for people of color or those that are historically underrepresented.
Sandy Block: Becoming a CFP isn’t without cost. I think just taking the exam is $1,000. Are some college grads deterred by the cost? And does the board have any plans to address that?
Kamila Elliott: We have multiple scholarships available for CFP certificate education and exams. Just this week, we announced a joint scholarship with the Financial Alliance for Racial Equity, a coalition of leading financial services firms like Nationwide and Morgan Stanley, HBCUs, and leading organizations like DCIIA and the American College of Financial Services. If financing this designation is a challenge, we have a lot of resources available to you.
David Muhlbaum: Yeah. Well, I mean, they’re investing in themselves. I mean, that’s a principle of financial planning right there. But I think perspective matters here. So an amount of money that to a mid-career financial professional, it might sound like a monthly car lease payment, well, that could be the difference between someone entering this career path or not. So, $1,000 can matter.
Kamila Elliott: It does matter. But one thing I’m excited about is that there is demand for financial planners ... or I would say CFP professionals. We expect a 5% growth in this profession from now until 2030. As you probably know, a lot of large firms are specifically asking for CFP professionals to support their clients with holistic investment advice and financial planning. So to your point, David, it is an investment in yourself and it’s an investment in a very rewarding and growing profession.
David Muhlbaum: Yeah. That’s interesting you raised the question of who is employing and where the CFPs are in demand. And this is something I was thinking also, I mean, the ecosystem of financial advice, and I’m speaking broadly here, not just how it applies to CFPs, it’s increasingly tied to big firms and platforms. Kamila, you yourself worked for Vanguard for many years. So I’m thinking often it’s going to be a trading platform or a custodian that provides the gateway to a financial professional. So this is a bit of an inside industry question. But the CFP Board, you have a constituency that includes both individual operators, people with their shingle out, and probably a lot of people who are corporate employees. Can you talk about that dynamic at all?
Kamila Elliott: It is. And David, I have been in all of those. Right? I started working at Vanguard, which is a large retail organization. And then I spent some time working at a broker dealer. And then now I’m the CEO and founder of Collective Wealth Partners, which is an RIA. So working in all those different segments, I really appreciate some of the opportunities that the CFP Board has in helping these organizations support their CFP professionals, support the growth of the profession, and also the innovation that’s continuously happening within the profession. And how do we make sure that our standards and competencies continually address those challenges they have?
Sandy Block: So Kamila, I’d like to switch this conversation to the people who invest and may consult with a financial planner. In the past couple of years, we’ve seen a lot of young people entering the stock market. They’re new investors. You can invest with an app from Robinhood, that sort of thing. And they’re in turn using their existing information channels like Reddit, TikTok, for financial guidance. How do CFPs reach them? And how do you say that maybe relying on information you get on the internet is not necessarily the best way to develop a financial plan?
Kamila Elliott: And all these forums, you don’t see much conversation about short-term and long-term capital gains rates, or you don’t see conversations about whether you have the right estate plan. And we’re happy that people are talking about investing, but they often need professional help. This is true when you’re just talking about or just starting out, and you also want to gain more assets, which adds a level of complexity. But just as you see a doctor so you can have better health, if you’re working with a CFP professional, you’ll have better financial health. It’s a more holistic approach to improving your finances besides just picking or helping you choose a couple of stocks here or there.
Sandy Block: What can the financial planning industry do to reach out to people who need advice but don’t have a lot of money to manage? I’ve seen in my experience, I’ll talk to planners and they seem really great. And friends of mine will ask me for a referral. But a lot of the planners I know won’t even take your business if you have less than $1 million in assets. And that excludes a whole lot of people. So what are you doing to try and reach out to folks who need advice, but don’t have a lot of assets to manage?
Kamila Elliott: That’s a great question. And I would say we’re looking to address it in a couple of ways. One, as the CFB Board, we’re always evaluating pro bono financial planning for those that are underrepresented. The Foundation for Financial Planning was one of our key partners in offering services to those that historically have been excluded from larger firms. But Sandy, to your friends that may not fit the underrepresented, but just they’re in that spot where they’re not quite the ideal client for some firms, is focusing on more innovation and technology. And how can we provide financial advice, or support the delivery of financial advice, to scale, to ensure that these larger firms will welcome these clients and provide them the support that they really need to reach their long-term goals?
David Muhlbaum: Kamila, I knew that you’d worked for Vanguard and that you had your own firm now. And you mentioned having worked for a broker-dealer. But can you tell me a little bit more about your path to where you are today and how that informs what you’re trying to do with the CFP Board?
Kamila Elliott: Sure. My path is very untraditional. I grew up in a single parent household where no one in my family had a financial advisor. I did not know what a financial advisor was until I went to college. I just ended up working at a job part-time and learned more about investments and started reading. And to your point, my first job out of undergrad was working at Vanguard, talking to participants in 401(k) plans. And so it wasn’t a concerted effort where, Sandy and David, I woke up at 10 years old, I want to be a financial planner. It really evolved over time. And I’m really proud of that story. It’s because I feel that many people like myself, young, Black women, just don’t have exposure to this industry.
And I think there’s importance in displaying. One of the things I always say is, “This is an industry where you can do good for yourself and do good for others.” And how do we articulate that message for a lot of people that when you’re looking for a career that marries maybe a love of investments, a love of talking to people and helping people? The financial planning career is something you should definitely be looking into.
David Muhlbaum: Just one little curiosity detail because you mentioned having grown up not knowing what a financial advisor was, and then working for Vanguard. Can you explain how those two came together? Because in part because Vanguard is a name that we live and breathe all the time here on the inside of the industry. Were they doing outreach? How did you get to them?
Kamila Elliott: No. So this is a comment that will age myself, David. I am from Philadelphia, and Vanguard is in Malvern, which is outside of Philadelphia.
Sandy Block: Valley Forge.
Kamila Elliott: I was practicing the newspaper, and I saw that Vanguard was hiring. I was home for the weekend.
David Muhlbaum: Yay, a traditional media moment.
Kamila Elliott: Exactly, exactly. And I drove to the Malvern office. They had an all-day career fair, where they were interviewing people on the spot. This was during the 2000 tech emergence, and the stock market was doing really, really great. And they were hiring a great deal of new people. And that’s how I ended up at Vanguard. They said, “Do you have an interest in investments? Do you like talking to people?” Yes and yes. Come join us.
David Muhlbaum: That’s great. Well, I think all our Bogleheads will appreciate that.
Kamila Elliott: Yes, they will. Yes, they will.
Sandy Block: Kamila, you talked about the ability to do good for yourself and do good for others. And I think that’s a good segue to asking you about the fiduciary standard. I believe that all CFPs now are required to adhere to the fiduciary standard. And I wondered if you could explain that, and why that’s important.
Kamila Elliott: It is very important that all CFP professionals adhere to the fiduciary standard. When I think about my profession and what we do, people entrust their entire life’s worth and assets with us, and help them reach their long-term goals. And it’s really important that as CFP professionals, when we’re providing recommendations, when we’re sharing different investments, that we put the clients’ interests first, above our interests financially, and that we continuously provide support and resources for CFP professionals to make the right recommendations and to provide holistic planning and support.
One of the things that I ... In our profession, only about a third of all financial advisors are CFP professionals. And unfortunately, many people in the public may not have had the best experience with a financial professional because they were not a fiduciary. Our goal is to ensure that more and more people or CFP professionals adhere to the fiduciary standard and really uphold our profession and make it a very respectable profession because we do hold our individuals to high ethical standards and integrity.
David Muhlbaum: Okay, Kamila, this may be an elusive metric, but are there connections between stock market performance and the number of people seeking guidance from CFPs, for example? On one hand, there is this dynamic where people come to CFPs when they’ve made money. On the other hand, losing money or maybe just greater volatility probably leads to people freaking out, no, no, seeking more professional guidance. Is this a dynamic in the field?
Kamila Elliott: Yeah. People often turn to CFP professionals during pivotal moments, whether it be a global event like the pandemic, or key life moments like having their first child. So CFP professionals establish, we work with clients to help them whether life’s ups and downs, and while we do not have metrics to support the volatility point you made, David, I can share anecdotally that myself and almost every colleague experienced an uptick in inquiries during the pandemic. The uncertainty led to an increased demand for professional advice, and something CFP professionals are uniquely qualified to provide.
Sandy Block: So we’re talking to you at a time when the market is extremely volatile. There’s enormous ... We’re sort of coming out of the pandemic, but now we’ve got geopolitical events, oil prices are rising. My husband commented yesterday-
David Muhlbaum: There’s a war on.
Sandy Block: There’s a war on. Gas prices are soaring. And that makes people nervous. So I guess maybe to wrap up, what’s your advice to people right now who are perhaps spending a lot of time looking at their 401(k) and seeing on a particular day that they’ve lost a lot of money, or spending a lot of time watching the news? What should they do?
Kamila Elliott: One of the things I tell my clients, Sandy, is yes, there’s a lot of things happening. Right? There’s war. There’s increased prices. But I go back to the person. What has changed with you? You changing in terms of maybe your income, your goals, are usually the biggest predictor of making changes to your portfolio or making moves. There’s always going to be an event. Right? I mean, think about the past five years. Right? We also have a global pandemic. We had a lot of racial injustice and protests. I mean, there’s been a litany of events that have happened over the past five years that could make anyone’s head spin, and have created a lot of volatility in the market.
And if you reacted to every single event that happened, you wouldn’t be able to do what you do full-time, focus on your family, and on all of your other priorities. So my advice to people is, if you have any concerns about the market, work with your CFP professional, I hope. Work with your financial advisor. And they can help you understand how these events may impact you, or not impact you. But sometimes I say it’s important to turn the TV off every once in a while, or close that laptop down because all the noise in the markets can really be frightening and alerting for people. But it always is not necessary.
David Muhlbaum: Well, thank you very much. We’re hoping that people will now reach the end of our podcast and have a moment of zen to reflect on all those things. And we wish you lots of luck in your term achieving these goals that you’ve outlined for us. Thank you so much, Kamila.
Kamila Elliott: Thank you so much.
Sandy Block: Thank you.
Kamila Elliott: Thank you for having me.
David Muhlbaum: That will just about do it for this episode of Your Money’s Worth. If you like what you heard, please sign up for more at Apple Podcasts, or wherever you get your content. When you do, please provide us a rating and review. And if you’ve already subscribed, thanks. Please go back and add a rating and review if you hadn’t already. To see the links we’ve mentioned in our show, along with other great Kiplinger content on the subjects we’ve discussed, go to kiplinger.com/podcast. The episodes, transcripts, and links are all in there by date. And if you’re still here because you want to provide us a piece of your mind, you can stay connected with us on Twitter, Facebook, Instagram, or by emailing us directly at firstname.lastname@example.org. Thanks for listening.
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