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The Certified Financial Planner (CFP) certification is one of the financial industry’s most sought-after credentials by advisors and investors alike. That’s because when you engage with these professionals credentialed by the CFP Board, you know you’re working with a financial professional who’s invested in their career so they can provide you with expert advice on every aspect of your financial life.
When you work with a certified financial planner, you’re not just partnering with a professional who’s endured a painstaking qualification process that includes extensive education, experience and ethical standards. You’re also working with a professional who’s committed to acting in your best interests on every step of your financial journey.
A CFP is an advisor who has met the education, training and ethical standards laid out by the CFP Board of Standards, more colloquially known as the CFP Board. In addition, these advisors must be committed to putting your best interests before their own and willing to devote thousands of hours to work and study to earn those golden three letters after their name.
If that sounds like a big ask, that’s the CFP Board’s intention. The Board’s objective isn’t to make a financial planner’s job easier or help them advance their career. Instead, the CFP Board’s primary mission is to “benefit the public” — and that’s you.
So, how do you know this isn’t some fly-by-night certification that just sounds like a big deal?
The CFP Board is also accredited by the National Commission for Certifying Agencies (NCCA), a leading nonprofit which reviews certification programs to ensure the “health, safety and welfare of the public.” The NCAA has accredited the CFP program since 1995.
Certified financial planners help their clients create and follow comprehensive financial roadmaps to help them get from where they are today to where they want to be in the future. To do this, CFPs look at their clients’ entire financial lives, from saving and budgeting to investing and retirement planning.
While all CFPs focus on holistic planning, some may specialize in certain types of clients or life stages, such as divorce financial planners or wealth management CFPs.
To become a CFP, an advisor must meet the four E’s of CFP Certification: education, experience, exam and ethics.
The education requirement has two parts: CFP coursework and a bachelor’s degree.
The CFP coursework consists of university-level classes on major personal financial planning topics, including the general principles of financial planning, risk management, retirement saving, professional conduct, industry regulation and so much more. These courses must be completed at a CFP Board Registered Program and include in-person and online programs.
It takes most advisors between 12 and 18 months to complete the coursework requirement.
Some professionals can bypass the coursework requirement if they hold certain degrees, licenses or credentials or show they have already completed similar coursework.
For example, professionals such as attorneys, certified public accountants (CPAs), chartered financial analysts (CFAs) and chartered financial consultants (ChFCs) would be eligible to substitute professional experience for the education requirement.
Even if a candidate can bypass the education requirement, they must still have a bachelor’s degree or higher from an accredited university. The degree can be in any discipline.
If an advisor passes the CFP exam but doesn’t yet hold a bachelor’s degree, the advisor has five years from passing the CFP exam to complete their degree.
Advisors can’t just walk off the graduation stage and into life as CFP professionals.
Certified financial planners must complete 6,000 hours of qualifying professional experience related to financial planning or 4,000 hours of apprenticeship before becoming certified. Candidates can gain this experience 10 years before taking the exam or five years after passing it.
There aren’t even shortcuts for professionals who hold other professional certifications.
Perhaps the most daunting of the four E’s is the CFP exam. This rigorous exam puts candidates face-to-face with 170 multiple-choice questions. It’s split into two three-hour sessions with stand-alone and scenario-based questions plus case studies. Let’s just say it’s a full-day affair.
The CFP Board continuously reviews and updates the exam based on its Practice Analysis Study, which involves working with real-life certified financial planners to ensure the exam material accurately reflects their day-to-day responsibilities.
The pass rate for first-time exam takers since the new exam blueprint was released in March 2022 hovers around 67% to 69%. For comparison, roughly 61% to 85% of law students pass the bar exam on their first try.
Finally, certified financial planners must continuously meet the CFP Board’s ethical standards. This involves a background check and signing the Ethics Declaration, a yes-or-no questionnaire that requires advisors to share information relevant to their work as certified financial planners.
The ethics portion of the CFP process is when applicants demonstrate they’re willing to uphold a fiduciary financial advisor certification. All certified financial planners act as fiduciaries, meaning they are legally and ethically bound to act in your best interests at all times, even if doing so goes against the advisor’s best interest.
While many CFPs also consider themselves financial advisors, not all financial advisors are CFPs.
“Financial advisor” is a blanket term for anyone who helps you manage your money. There’s no set standard for who can call themselves a financial advisor. Advisors can be fiduciaries or solely brokers. Brokers are only required to offer advice that meets a “suitability standard” — that is, suitable to your needs — and not necessarily the best for you.
Certified financial planners, on the other hand, are bound by fiduciary duty and take a comprehensive and holistic planning approach to financial guidance. While CFPs can provide investment guidance, this is unlikely to be their primary role. Instead, a certified financial planner will focus on building a long-term plan to help you reach your financial goals through budgeting, saving, investing, estate planning and insurance.
The CFP Board has an online search function to help you find CFPs in your area. If you’re a fan of online relationships, you can find CFPs available at many robo-advisors as an added hourly service or a benefit with your annual management fee.
So, as you continue your search for a trusted financial professional, CFP likely won’t be the last acronym you encounter. But it’s one to remember and can help identify an advisor who’s invested in their career so they can better invest in your goals.
The CFP certification is an advanced credential earned by financial advisors dedicated to providing comprehensive financial planning and acting as fiduciaries who put an investor’s interests first at all times.
A CFP is a certified financial planner and someone who focuses on comprehensive financial planning that encompasses all areas of a person’s financial life. A CFA is a chartered financial analyst and someone who has obtained one of the highest distinctions in investment management. CFAs focus on investment analysis whereas CFPs focus on financial planning.
Yes, the certified financial planner credential is a fiduciary financial advisor certification. All CFPs must always act as fiduciaries, meaning they’ll always put their client’s interests before their own.
Coryanne HicksCoryanne Hicks is a formerly-licensed financial professional with Fidelity Investments whose work appears in U.S. News & World Report, Kiplinger, Forbes Advisor and Business Insider.
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