How hiring a CFP® professional can provide value to small business owners
Once a small business owner decides that he or she will hire a financial professional, the question now becomes who will they choose? There are many different options, but I will state the case for hiring a CFP® professional. Being a CFP® professional myself, I see how having the CFP® certification has helped me provide extraordinary value to my small business owner clients. Advancing the financial planning profession is a passion of mine and I am a firm believer that knowledge about how money truly works is the key to providing exceptional value to my small business owner clients. I think that obtaining the CFP® certification should be the MINIMUM requirement for an individual to operate within the financial services industry. For several reasons, this type of requirement might never happen in the industry, but I mention it to show my thoughts on some ways that financial planning can continue to advance as a profession. Given the completion of coursework in major personal financial planning areas and passing of a board exam, small business owner clients know that a CFP® professional can provide comprehensive planning (i.e., "evaluating the entire picture"). There are times where a CFP® professional must involve the help of a third-party (e.g., estate planning attorney, insurance agent, etc.), but small business owner clients still get substantial value from a CFP® professional making recommendations holistically. Even further and probably most important, there is a requirement for a CFP® professional to function as a fiduciary, which puts the interests of the client first. I note three benefits (see below) to small business owners that they will receive when hiring a CFP® professional.
Financial planning expertise
To become a CFP® professional, an individual is required to go through a rigorous certification process that includes financial planning coursework and passing a board exam.
To those financial professionals pursuing the CFP® certification, the CFP Board’s website states, “As part of earning your CFP® certification, you'll need to complete college or university-level coursework through a CFP Board Registered Program. You'll become well-versed in these major personal financial planning areas: Professional Conduct and Regulation, General Principles of Financial Planning, Risk Management and Insurance Planning, Investment Planning, Tax Planning, Retirement Savings and Income Planning, Estate Planning, Psychology of Financial Planning, Financial Plan Development (Capstone Course).” The website also states, “The CFP® certification examination is a key requirement for achieving CFP® certification. By passing the exam, you demonstrate that you've attained the knowledge and competency necessary to provide comprehensive personal financial planning advice to your clients.”
With this level of training, a CFP® professional is equipped to create customized financial plans for small business owner clients that align with their personal and business financial goals. Additionally, a CFP® professional can help small business owners manage their investments effectively by guiding them on investment strategies and portfolio management.
Time savings and peace of mind
It is difficult for small business owners to find time to address their family’s financial planning when focused on running and growing their businesses. Hiring a CFP® professional will help small business owners alleviate the burden of financial planning, which will help them feel more confident that they are safeguarding their financial well-being now and into the future. Additionally, small business owners can get more peace of mind and reduce their stress when they know their finances are being managed by a CFP® professional who has financial planning competence to address their financial goals and concerns.
Fiduciary standard
To those financial professionals pursuing the CFP® certification, the CFP Board’s website states, “You must commit to CFP Board to act as a fiduciary, which means acting in the best interests of the client at all times when providing financial advice — and commit to other high ethical and conduct standards.”
The fiduciary standard in financial planning is the highest level of care as under this standard, a CFP® professional is legally obligated to act in the best interest of their clients. In other words, this is when a client's needs are being put ahead of their financial professional and potential conflicts of interest being disclosed. With a fiduciary standard in place, trust can be built and maintained between a small business owner client and their CFP® professional since the client knows that their professional is acting in the best interests of the client. Small business owners are also protected from potential conflicts of interest as a CFP® professional is required to disclose any of these potential conflicts of interest and be transparent about their compensation structure (i.e., how the professional earns income). This type of disclosure allows for a more honest relationship, which benefits both the small business owner client and CFP® professional. Even further, the fiduciary standard promotes integrity and professionalism in the financial planning profession, which helps advance the financial planning profession like I previously discussed.