What is a Certified Financial Planner?

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The Certified Financial Planner, or CFP, designation is often considered the gold standard for financial planners. It’s a brand…

The Certified Financial Planner, or CFP, designation is often considered the gold standard for financial planners. It is a mark of an advisor’s commitment to providing the best holistic advice to clients, advice that requires extensive study and experience.

“The CFP is the most comprehensive financial planning designation and demonstrates a broad knowledge of topics ranging from investments to tax and estate planning,” said Bryan Koslow, CFP and director of the Clarus Group. With certified people adhering to rigorous studies, testing and ethical standards to hold the CFP mark, this can be a good way to differentiate them from the pack.

Current finance professionals can become CFPs, as can students or career changing individuals who wish to enter the financial planning field.

Regardless of where you start your CFP journey, it’s important to know what it means to be a CFP and what it’s like to become and work as one before you start. Here’s what you need to know about getting your CFP.

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What is a CFP?

A CFP is a financial professional who has met the education and experience requirements of the CFP Board, has passed the CFP certification exam and is committed to upholding the ethical standards of the CFP Board, which require them to prioritize the interests of its clients.

Of the five professional designations Kasey Gartner, CFP and Wealth Management Advisor at Northwestern Mutual, has received, she says the CFP is “by far the most valuable.” It’s one of the “greatest gifts” of her career, she says.

“Initially, holding the CFP designation served as a differentiator among other advisors,” she says. “Now I consider this to be almost a benchmark for counselors looking to do real planning for their clients and for clients looking for a holistic, comprehensive counselor. “

[ SEE: 6 Pros and Cons of Choosing a Fee-Only Financial Advisor. ]

How to become a CFP

To become a CFP, you must pass the “Four Es” of the CFP Council: Education, Exam, Experience and Ethics.

The education component requires applicants to have a bachelor’s degree and complete a program registered with the CFP Council. The bachelor’s degree can be in any discipline as long as it comes from an accredited university. Most people take 12 to 18 months to complete CFP courses, according to the CFP Council. While counselors must complete CFP Board courses before taking the exam, they have five years from the date of passing the exam to earn their baccalaureate.

CFP applicants also have five years from the date of passing the exam to complete the experience requirement of 6,000 hours of financial planning-related work experience or 4,000 hours of learning experience. under the direct supervision of a CFP professional.

While you can take the exam before gaining industry experience, it can be beneficial to have several years of industry experience, says Andrew Schultz, CFP and Wealth Management Partner and Advisor at Clarity Financial Planning Group, a group of private clients of Northwestern Mutual. “There is no substitute for the time invested and the direct experience of working with clients in various planning situations. “

The CFP exam is a six-hour test taken in two three-hour sessions on the same day. It consists of 170 multiple-choice questions, including stand-alone, scenario-based and case study questions. In July 2021, 62% of candidates passed the test.

“Studying for the exam is a major commitment and is usually done while maintaining a full-time work schedule,” says Schultz. Be prepared to spend many evenings and weekends studying.

“You can take advantage of technology by listening to audio recordings while driving and taking preparation courses online,” he says. “It’s important to really immerse yourself in the content in order to be well prepared for the exam.

Gartner took an intensive review course between the end of his course and the exam. She strongly encourages all CFP candidates to do the same. She also recommends creating a calendar with deadlines by which you intend to complete each of the required courses and a target date to take the exam.

“It’s not enough to work in financial services for years and finish school,” she says. “You have to prepare for the exam and structure your environment to be successful. “

The last step in becoming a CFP is to meet the ethical requirements and pass the CFP Board background check. Candidates must sign the CFP Board of Directors’ Ethics Declaration and agree to abide by the code of ethics and standards of conduct of the CFP Board of Directors. It is an extension of the fiduciary standard, which requires advisors to always act in the best interests of their clients.

“Being held to a fiduciary standard as a CFP professional allows clients and prospects to have even more confidence in our process, knowing that we will always put their needs first,” says Gartner, who has worked as a fiduciary before. to become CFP.

[ Read: CFA vs. CFP: What They Are and How They Differ ]

What do CFPs do for work?

CFPs can work in large banking or financial institutions or in small independent companies. Some CFPs choose to start their own firm, while others prefer to work under the umbrella of a larger firm.

CFPs can fulfill many roles in the financial arena, both in financial planning and investment advisory roles. Some of the more common financial planning positions held by CFPs include personal financial planners, client service advisors, associate advisors, and wealth management advisors. On the investment side, CFPs can serve as portfolio managers, financial analysts or investment managers.

Regardless of the job title, almost all CFP financial planning positions involve working closely with clients to develop holistic financial plans.

“We work closely with people to plan some of their biggest life decisions, such as starting a family, changing careers, caring for aging family members and when to retire,” says Koslow. “Every day is different because each customer situation is unique. “

In many ways, working as a CFP is no different from working without the title, says Schultz. “People always need your help, and the products and services you can offer are often the same. The biggest difference is that the knowledge you gain allows you to better understand the various elements of a person’s financial situation and how they all fit together.

The typical salary for a CFP varies depending on the position. For example, in salary-based compensation models, analysts typically earn between $ 47,000 and $ 62,000, while senior advisors or general managers earn between $ 125,000 and $ 262,000, according to a study on compensation and staffing of InvestmentNews. These roles can also include bonuses or other compensation, such as a percentage of earnings.

As a mentor to aspiring CFP’s, Koslow encourages candidates to follow their passion and see which areas of financial planning interest them most. “CFPs can help clients in so many ways,” he says. “It’s a lot easier to be successful in this business if you love what you do. “

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What is a Certified Financial Planner? originally appeared on usnews.com


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