In the course of my time creating and developing this blog, I have learned so much more than I ever thought possible in the field of personal finance.  Recently, it occurred to me that it might be worth looking into becoming a Certified Financial Planner. 

I know a few CFPs, but don’t know anything about the certification process.

Now, if any of you know anything about me or may have read my book, you know that I come out firmly against the use of any kind of debt consolidation companies to get yourself out of debt.  Initially, I thought that CFPs would fall under this same category, and therefore, should never be employed.

However, in my small amount of internet research, I found this not to be the case.

In a nutshell, here is what I found out about how to become a CFP, and whether or not you should employ one, in my opinion.

The certification process is much more extensive that I ever imagined.  Originally, not knowing any differently, I thought that becoming certified was similar to becoming a certified home inspector.  If you didn’t know, basically, there is NO certification process involving home inspectors.  Basically, you can just wake up one morning and decide to be a home inspector, and poof!, you’re a home inspector.

This is far from the case with Certified Financial Planning.   A Bachelor’s Degree is a pre-requisite.  There are other educational requirements.  But apparently, any CPA, any licensed attorney, and people in a few other professions can get around these educational requirements.  For those not in these professions, there are a variety of courses available at universities to take which would satisfy this part.

Additionally, there is a 10-hour exam that must be passed. It covers a variety of topics, but basically tests your knowledge in just about all areas related to financial planning, and your abilities to communicate this knowledge to clients.

There is also an experience requirement of three years in work related to certified financial planning.  You must also pass a background check and pays fees that look to be in the area of $1000 and then also some annual fee to maintain your certification.

What I did learn was that I think that CFPs are a group that can be trusted (as opposed to the home inspectors I spoke of earlier).  Would I ever consider becoming one?  Maybe, but not right now.  It seems that your income is based almost solely on your ability to market, network and build your client base, which I would not have enough time to do effectively.  However, I would consider it as a future endeavor.

I guess more importantly, the question remains:  Should you consider using one?

My answer is this:  if you are in need of some advice on how to get out of debt, then I would absolutely NOT use one.  The only reason that I say this is that all the advice you need is out there for you to learn through either experience or research.  I did it strictly through experience.

On the other hand, should you need advice on just about any other topic regarding personal finance (investing for the future, retirement planning, estate planning, etc.)  I would consider utilizing the service of a CFP. 

So, depending on what you r needs are, you may want took into the use of a financial planner.  I think that they can be trusted and could prove to be helpful in a variety of areas outside the realm of debt management.

Comments?  Suggestions?  Feel free to do so below.

The following is my first post of 2010 and my first leap into the world of book reviews. I enjoy reading books on any topic related to personal finance, so if you are looking for a review of your book, just drop me a line and we can set something up.

 I recently  had the pleasure of reading a book called The Naked Portfolio Manager by Robert Fischer.  Robert is a senior portfolio manager and advisor for affluent individuals at a national brokerage firm  and a colleague of mine.

The Naked Portfolio Manager is a good smooth read for just about anyone interested in personal finance.  And this is regardless of your investment experience, knowledge, and or abilities.

I would have to consider myself basically a novice in the world of investing, although I am trying to improve this area of my life.  Mostly, I do go on the advice of others; however, these “others” are people that are highly trusted in my life.

The premise of The Naked Portfolio Manager is that we need to remove any and all kind of emotion from our investment strategy, and to basically steer clear of any people who haven’t yet done it. Robert states in no uncertain terms that these emotions can cloud our judgment (or the judgment of people making our investment decisions for us) which could lead to potentially bad financial decisions, or decisions that are less than optimal.

He goes on to say that our investment strategy needs to be based on SPMs (Statistical Prediction Methods), which are basically a set of rules which will govern our investment portfolio.  In short, the book could be used as a guide for someone who wanted to get started in the world of investing.  It provides solid, easy to understand tips and pointers that in my opinion, would be helpful to any investor on just about any level.

If you think about it, emotion clouds our judgment in virtually everything we do.  Think of what better decisions we could make with respect to relationships, with our health, with our careers, anything, if we take emotion out of the equation.   Let’s see….”He/she really doesn’t treat me that well, but I’ve been with him/her forever.”  “Sure, there are better jobs out there, but my co-workers are nice and the company really needs me.”  If you think hard and long about it, this strategy could be used in just about any area of your life.

The Naked Portfolio Manager to me is almost a must read for anyone looking to start and/or improve an investment portfolio.  I was previously invested in money markets for what I thought were a list of very good reasons.   After reading The Naked Portfolio Manager, I realized that there is a different way of thinking out that statistically beats the results of these money market funds on a long term basis.

I would give this book a shot.  It is currently available at Amazon, and Robert also publishes a blog under the same name of the book. 

So, what do you think about the idea of taking emotion out of our investment strategies?  Please comment below.