5 Things I Learned While Studying for the CFP Exam
Over the last 3 months, I have been diligently studying and preparing to take the Certified Financial Planner (CFP) Exam. Although the process of preparing for the exam was time-consuming and stressful, all my hard work paid off on July 17th when I officially passed my CFP Exam. Upon completing the exam and seeing the word “PASS” displayed across the screen, I was flooded with so many positive emotions and could not contain my excitement. Now that it’s been a few days since passing the exam, I have had a chance to look back at the experience with a new perspective and appreciation.
The entire process – from my first day of studying all the way through to the end of the exam – taught me a multitude of things, across both technical skills and soft skills. So below is a list of 5 things I learned during the process that I wanted to share:
- There is no “one-size fits all” when it comes to financial planning.
- Every client is unique, which means every recommendation must be tailored specifically to every client. Different goals, different situations and circumstances, and many other differing factors mean that no 2 financial plans will ever be the same.
- Having adequate insurance coverage in place should be of utmost importance.
- Insurance is used to transfer risk and protect a person against financial losses resulting from accidents, injury, or property damages. Between life, disability, health, property, and liability insurance, there are a lot of ways to safeguard a client’s assets from a devastating financial loss that might otherwise occur without insurance. Making sure that adequate insurance coverage is in place is one of the most important ways to help a client manage risks within their financial plan. Although insurance does come at a cost and might not ever be used, it is still important to minimize ask many risks as possible – especially those that could result in financial ruin. As the old saying goes: it’s better to have it and not need it, than to need it and not have it.
- Every financial plan should include proper estate planning that will help ensure the wishes of the client are carried out.
- It can be uncomfortable to think about and discuss estate planning, but it is a crucial part of any financial plan. Wills, trusts, and ancillary estate documents can help make sure that a client’s wishes are carried out and their financial legacy is continued on after their death. Additionally, a properly structured estate plan can help eliminate any avoidable estate taxes, as well as minimize (or completely eliminate) the assets that must pass through probate. Although there are numerous methods to accomplish similar estate planning goals, the ultimate estate planning strategy that should be used is so client specific and depends largely on the end goals of the client.
- Taxes have a hand in almost everything aspect of financial planning, but helping to mitigate gratuitous taxes is invaluable to clients.
- Being a CPA and a former tax accountant at one of the “Big 4” accounting firms, I am no stranger to the world of taxes. And having worked in the financial planning world for 3 years, I am also no stranger to tax planning strategies that work to help minimize taxes for clients. However, my studying revealed even more tax planning strategies that I was not as familiar with that I can now utilize for the benefit of clients. One of the most interesting strategies I learned about was how to curtail unnecessary gift and estate taxes by using various types of trusts and gifting rules.
- Every little bit of effort put towards accomplishing a goal makes a difference.
- This last point is something that I have always known and believed, but was reminded of over the past few months. There were plenty of times over the course of studying for the exam that I was longing to be doing just about anything other than studying. However, I knew that if I was able to push through and get even just the tiniest bit of studying done on those days, that it would pay off in the end. This lesson is something that can be applied to almost every aspect of a person’s life and I am thankful that I was reminded of it throughout the studying process.
And, while the above list is not nearly all the things I learned throughout the past few months, these are the things that have stuck with me the most.