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Certified Financial Planner -- Useful?
Posted on 4/13/26 at 12:13 pm
Posted on 4/13/26 at 12:13 pm
I know a lot of people choose to choose their own investments and pretty much self-manage. I also know many people thus don't think they need anyone recommending investments for them. But my question is whether a "certified financial planner" can offer value in the more macro sense -- that is, can they look at your big picture and help you shape the big picture, as opposed to recommending individual investments?
Thanks a lot.
Thanks a lot.
10
Posted on 4/13/26 at 12:16 pm to Zachary
They'll gladly take your money and give you jim cramer level of advice.
Posted on 4/13/26 at 12:51 pm to Zachary
To me a CFP is needed under certain circumstances. I wouldn't have one if I was 30 years old, but I'd definitely have one if I was within a year of retiring like I am now. Yes you'll pay fees, but unless you want to spend a portion of your retirement in tax policy, a CFP can help you navigate the landscape and minimize your tax outflow.
It's not to say that it can't be managed without one, but it does make it easier.
It's not to say that it can't be managed without one, but it does make it easier.
Posted on 4/13/26 at 1:19 pm to Zachary
I have two CFP's that invest different strategically for about 2/3's of my non real estate investments. I handle about 10% and manage the riskier portion of my portfolio myself. The rest is in active 401k portfolio's.
How it breaks down, 2/3's of my investments are non real estate. I am within 2 years of retirement. My personal feeling is if you have over a million in equity investments let a pro handle the majority. Once I have retired I will possibly take a larger role.
How it breaks down, 2/3's of my investments are non real estate. I am within 2 years of retirement. My personal feeling is if you have over a million in equity investments let a pro handle the majority. Once I have retired I will possibly take a larger role.
This post was edited on 4/13/26 at 1:21 pm
Posted on 4/13/26 at 2:17 pm to Zachary
Most are going to under perform the market if actively managing. Their real value is keeping clients in a.long term strategy instead of panic selling or chasing returns. They'll also adhere to a rebalancing strategy more consistently than many DIY.
But it is expensive, even a 1% AUM fee can cost 100s of thousands compounded.
Of course, they're also a great service for those without desire or capability to learn and manage themselves including potential surviving spouse/heirs.
I'm considering a one time fee consult for retirement withdrawal strategy review/optimization but dont see enough value to pay 1% annually. Finding a good fee for service advisor with right expertise is challenging.
But it is expensive, even a 1% AUM fee can cost 100s of thousands compounded.
Of course, they're also a great service for those without desire or capability to learn and manage themselves including potential surviving spouse/heirs.
I'm considering a one time fee consult for retirement withdrawal strategy review/optimization but dont see enough value to pay 1% annually. Finding a good fee for service advisor with right expertise is challenging.
Posted on 4/13/26 at 2:58 pm to Zachary
Much respect for CFPs!
I’m newly retired. Most of the reason for ability to retire in 50s did not come from CFP.
Living below means, discipline investing regularly for many years, etc. No CFP needed.
Personal finance was always an interest of mine. MBA/Finance and early career was in Corp Finance so was comfortable space.
However, CFPs are finance special forces! I did use when validating retirement decision timing given nest egg size, risk, retirement income plans, and some tax efficiency steer, used CFP. To be honest, they just validated what I mostly already knew. Except when it came to tax / efficiency planning. CFP valuable.
Estate Plan too (service along with CFP).
Aside from above, I’m comfortable DIY’ing everything else. Many are 1% AUM fee that is guaranteed cost / opportunity lost that, when compounded, reaches gigantic cost. Cannot justify that for our needs.
I’m newly retired. Most of the reason for ability to retire in 50s did not come from CFP.
Living below means, discipline investing regularly for many years, etc. No CFP needed.
Personal finance was always an interest of mine. MBA/Finance and early career was in Corp Finance so was comfortable space.
However, CFPs are finance special forces! I did use when validating retirement decision timing given nest egg size, risk, retirement income plans, and some tax efficiency steer, used CFP. To be honest, they just validated what I mostly already knew. Except when it came to tax / efficiency planning. CFP valuable.
Estate Plan too (service along with CFP).
Aside from above, I’m comfortable DIY’ing everything else. Many are 1% AUM fee that is guaranteed cost / opportunity lost that, when compounded, reaches gigantic cost. Cannot justify that for our needs.
Posted on 4/13/26 at 3:07 pm to djrunner
quote:
My personal feeling is if you have over a million in equity investments let a pro handle the majority.
Don’t know fee structure. But have you ever calculated, example, 1% AUM cost on your retirement assets over say 15-20yrs?
It’s about $220k per $1 million.
Not convinced it’s as one sized fits all like you suggest. Certainly makes sense for many. At that opp cost, does not make sense for many others, as well.
This post was edited on 4/13/26 at 3:09 pm
Posted on 4/13/26 at 3:31 pm to Zachary
They can be useful. Thats your question.
I dont know that many MT boardmembers that would need them. I cant imagine the costs justify the benefits for people who focus on financial and retirement advice as a hobby. The CFP perspectives and skills are theory (they don't all agree). You can take your time and study the multiple preferences offered by CFPs. But you need to take the time to dive into ideas that counter your intuition.
That said... if you are not a plumber, it is a good idea to get a pro to help when it comes to large assets. The same for an electrician. If you are smart enough to know what you don't know (or dumb enough to think you know what you don't know), then I would suggest interviewing a couple CFPs to see of they can help.
I dont know that many MT boardmembers that would need them. I cant imagine the costs justify the benefits for people who focus on financial and retirement advice as a hobby. The CFP perspectives and skills are theory (they don't all agree). You can take your time and study the multiple preferences offered by CFPs. But you need to take the time to dive into ideas that counter your intuition.
That said... if you are not a plumber, it is a good idea to get a pro to help when it comes to large assets. The same for an electrician. If you are smart enough to know what you don't know (or dumb enough to think you know what you don't know), then I would suggest interviewing a couple CFPs to see of they can help.
Posted on 4/13/26 at 4:03 pm to Zachary
My CFP is also my CPA. The only reason I have a CFP is because of this.
If you’re going to get CFP find one that is also going to be your CPA.
If you’re going to get CFP find one that is also going to be your CPA.
Posted on 4/13/26 at 5:42 pm to Everyday Is Saturday
quote:
It’s about $220k per $1 million
quote:
over say 15-20yrs?
Based on the rule of 72 and the 13-15% my brokers averaged over that time frame they would have doubled my principal every five years. That is something most individual investors do not even come close to over that time frame. In fact a good bit lose money. Like I said, while I am working I will have brokers handle the lions share and possibly take the reigns when I retire but I am happy with my results. And I thing that is the best advice for somebody investing large amounts of money. Some brokers charge more for smaller investors or don't offer some of the investment opportunities at all.
This post was edited on 4/13/26 at 5:44 pm
Posted on 4/13/26 at 6:38 pm to Zachary
Great if you are still in the early stages of building your fortune.
A colossal waste of money if you have anything substantial (they will try to take some % of your total holdings every year - a rip off).
A colossal waste of money if you have anything substantial (they will try to take some % of your total holdings every year - a rip off).
Posted on 4/13/26 at 7:01 pm to djrunner
quote:
That is something most individual investors do not even come close to over that time frame.
That is something most FAs do not come close to, either. Well done!
And is why I chose a different way. To me, if you are spending hundreds of thousands of dollars (or more), they had better deliver such rates of return.
Yet, the costs are guaranteed, and that rate of return level is anything but guaranteed. Just could never stomach, especially given most FAs fail to beat the market after tax returns over similar time frame. Throw in our risk appetite and index investing, and the 1% back into our coffers, and retirement came early (blessed!).
The $1 million Mendoza line that you drew, I think, has wide range of financially savvy people. FAs certainly make sense for some. I just don’t think it’s as one-sized.
Congrats on amazing rate of return. Hope it continues into your retirement! Retirement is incredible.
Posted on 4/14/26 at 8:01 am to Zachary
We have one.
You don't need one in the early stages of your career. A lot of people can pick their own investments just fine — index funds, ETFs etc. Where a Certified Financial Planner (CFP) can add real value isn’t stock-picking, it’s the big-picture. As you start to plan retirement I think they're essential. Most people clearly have no clue when it comes to tax planning, when to draw Social Security, minimum distributions, IRMAA impact etc.
A good CFP looks at things like tax planning to minimize lifetime taxes instead of just this year’s bill, a withdrawal strategy that sequences which accounts to tap and when, Social Security timing that coordinates benefits with your portfolio, risk management across insurance, long-term care, and estate documents, and even IRMAA planning so Medicare premiums don’t blindside you.
Some people don’t need that level of help. Others find a few planning sessions a year save them far more than the fee.
BTW..Planners get paid in a few simple ways. Some are fee-only, where you pay a flat or hourly fee and there are no commissions at all. Others charge a percentage of the assets they manage, usually around 1% per year. And some work on commissions, meaning they get paid when they sell insurance, annuities, or certain investment products. This matters because it tells you a lot about their incentives.
You don't need one in the early stages of your career. A lot of people can pick their own investments just fine — index funds, ETFs etc. Where a Certified Financial Planner (CFP) can add real value isn’t stock-picking, it’s the big-picture. As you start to plan retirement I think they're essential. Most people clearly have no clue when it comes to tax planning, when to draw Social Security, minimum distributions, IRMAA impact etc.
A good CFP looks at things like tax planning to minimize lifetime taxes instead of just this year’s bill, a withdrawal strategy that sequences which accounts to tap and when, Social Security timing that coordinates benefits with your portfolio, risk management across insurance, long-term care, and estate documents, and even IRMAA planning so Medicare premiums don’t blindside you.
Some people don’t need that level of help. Others find a few planning sessions a year save them far more than the fee.
BTW..Planners get paid in a few simple ways. Some are fee-only, where you pay a flat or hourly fee and there are no commissions at all. Others charge a percentage of the assets they manage, usually around 1% per year. And some work on commissions, meaning they get paid when they sell insurance, annuities, or certain investment products. This matters because it tells you a lot about their incentives.
Posted on 4/14/26 at 8:11 am to Zachary
Sir. You've come to the right place. This is the MB. No one here needs help.
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