CFP® Tax Planning in Buffalo Grove, IL
by Gabriel Lewit
Tax planning is such an essential part of your long-term financial plan. While many people focus on investment management and retirement planning, adroit tax planning is often something that investors tend to overlook when it comes to their personal financial goals.
The tax planning services offered by a CFP® have immediate benefits to your personal finance goals, and its benefits inherently will affect all aspects of your financial planning. The experience requirements and CFP® license and exam are just a few of the many qualifications required to become a CFP®, and this resumé of work enables them to strategize their client’s tax planning in the most optimal way.
Your CFP® in Buffalo Grove is the best source to handle your unique tax planning needs. See how we can help today
The difference between a CFP® and a CPA
A CPA, or certified public accountant, generally works in roles where they perform tasks related to accounting and taxes. CPAs can work for a firm, a specific company, or have their own practice. The types of clients they serve and the services they offer will vary.
For example, a CPA working for a firm may work with other large firms as an auditor, while other CPAs may strictly provide tax consulting services.
To hold a CPA license, you must be registered with the AICPA, as well as pass the CPA exam. You also must pass certain education requirements, which include holding a bachelor’s degree.
A CFP®, or certified financial planner, is a financial planner that offers financial strategy and investment management as part of their financial services offered. A CFP® often works with individual clients and can work alone or with an advisory firm.
A CFP® certification is one of the more sought after types of certification held by financial advisors, although that does not inherently make it better for you; what’s best for you will be dependent upon your own unique situation and problems.
The requirements for becoming a CFP® are rigorous as well. The CERTIFIED FINANCIAL PLANNER™ Board of Standards oversees all CFP® certifications, and prospective CFPs must meet specific education and work requirements, as well as pass the CFP® exam.
To become certified, you must hold at least a bachelor’s degree with some emphasis on finance. Only after meeting this educational requirement may you take the exam. In addition to this, all CFP® applicants must have at least 6,000 hours of experience related to financial planning, or at least 4,000 hours through a qualified apprenticeship program.
While CPAs will vary more in their specialty and typically handle taxes or bookkeeping, a CFP® generally handles all aspects of financial planning, including tax strategy, debt and investment management, and retirement and estate planning.
Finding the right CFP®
Finding the right CERTIFIED FINANCIAL PLANNER™ for your financial situation is going to come down to what you need the most help with, and what your current financial situation looks like.
A CFP® will be knowledgeable and experienced in all aspects of financial planning. However, based on your needs, you may want to work with one who specializes in whatever you need the most help with. For example, maybe you want to invest more money in your accounts, but before doing so, you need to lighten your tax bill to free up some capital. Working with a CFP® that specializes in tax strategy and solutions should be your primary focus to start.
However, since CFPs have strict education and work requirements, they are going to be experienced in all aspects of finance. They can help with debt management, estate planning, asset allocation for your portfolio, and help you structure your retirement plan according to your needs. While they have the solutions, you first need to identify your primary problems first to begin strategizing and laying the groundwork with them.
Benefits of working with a CFP® who offers tax planning
Working with a CFP® that specializes in tax planning ensures that you have an outside perspective working to build long-term financial structures and solutions for you and your family. It certainly helps that this outside perspective also has passed extensive education requirements and is required to have a whopping 6,000 hours of work directly related to financial planning to become certified in the first place.
Tax planning is often overlooked by investors and pre-retirees, and this mismanagement can cause significant problems further down the line, as well as you paying an unnecessary amount in taxes to Uncle Sam. Putting money towards retirement and savings for decades is something that requires discipline and planning on its own. If you could potentially cut your tax bill by a number in the double digits, why wouldn’t you?
Although you may be a savvy investor, it’s unlikely that you have the thousands of hours in financial experience required, or have passed the lengthy CFP® exam. Working with a CFP® with tax planning skills and expertise ensures that you are working with someone who brings extensive knowledge and experience to the table. See what working with a CFP® can do for you today.