Because there are costs involved with using a CFP, you’re likely to ask, “Is getting a CFP worth it?” The answer of course depends on the situation.
First of all, it’s important to understand how your CFP gets paid.
- You might pay a CFP on an hourly basis, or maybe you can get a “planning package” for a specific goal.
- Other CFPs work on commission, based on the products they recommend.
- If you get an insurance policy or mutual fund based on the CFP’s recommendation, they might get a kickback.
However, the CFP Board requires CFPs to always keep the client’s best interest at the forefront. The CFP Code states, “A CFP® professional must exercise professional judgment on behalf of the Client that is not subordinated to the interest of the CFP® professional or others.” Still, some consumers prefer CFPs who charge on a fee-only basis.
Finally, if your CFP is also a money manager or investment advisor, you might have to pay a percentage of assets under management if they are taking care of your portfolio on your behalf.
In general, a CFP is worth the cost you pay if you get the help you need. If you’re too busy or don’t feel confident putting together your own roadmap, or if you just want an outside eye to look over your finances, it can be worth it to pay a CFP. Sometimes, the professional outlook is worth the cost.