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SmartAsset: CPFA Designations vs. CFP for Financial Advisors

Certified Plan Fiduciary Advisor (CPFA) and Certified Financial Planner (CFP) are two common types of degrees financial advisors earn. Of the two, the CFP requires a lot more education and experience. CPFAs primarily advise employer-sponsored pension plans. CFPs have a more general scope of practice, but may specialize in retirement planning. Here are the main differences. A Financial Advisor who holds a certification in a specific area can help you meet those needs and goals.

What is a CFP?

The PCP certificate is overseen by the CFP Board of Directors, which requires candidates for designation to demonstrate a significant amount of education and experience as well as the ability to pass a rigorous examination. CFPs must also follow a strict code of ethics, including acting as a fiduciary for their clients.

CFP applicants must first pass a background check and disclose any prior criminal cases, client complaints, disciplinary actions, and employment issues. They must also have a four-year university degree. Another prerequisite is at least 6,000 hours of work experience in the financial services industry.

With the exception of certain individuals such as licensed attorneys and certified public accountants, CFP candidates must also take a separate college-level course approved by the CFP board in financial planning. Each of the course’s multiple modules has its own exam. This course still requires one to three months of study.

After the CFP course comes a tough exam. The CFP exam consists of over 170 questions that must be answered within six hours. Questions cover all the basics from providing financial advice, from creating a financial plan and saving for retirement to managing an investment portfolioasset protection through insurance and tax and estate planning.

Successful candidates must then agree to follow the code of ethics covering confidentiality, integrity, fairness and other matters. The code requires them to adhere to a standard of fiduciary duty, which means they will put the interests of their clients before recommending investments.

Many CFPs are fee-based advisors, which means they are paid only by fees charged to their clients for preparing financial plans and overseeing investment portfolios. These fees can be a flat fee for the service or a percentage of assets under management. Some CFPs also receive commissions on investments purchased by their clients.

What is a CPFA?

SmartAsset: CPFA Designations vs.  CFP for Financial Advisors

SmartAsset: CPFA Designations vs. CFP for Financial Advisors

CPFA certification is overseen by the National Association of Diet Advisorswhich is part of the non-profit association American Association of Retirees. The CPFA certificate is intended for advisors who work with pension plans.

The association does not specify specific prerequisites in terms of education or experience to obtain a CPFA certificate. NAPA recommends that applicants complete the form online preparation course. This is a 10-hour course that prepares candidates to answer the four-part exam questions focusing on the management and provision of investment advice to pension plans under ERISAfederal law governing the administration of pension plans.

In addition to passing the exam, CPFA credential holders must meet the ARA Code of Ethics. And when providing investment advice to pension plans, CPFAs are legally bound to abide by the fiduciary standard and act only in the best interests of their clients. They may be compensated through fees, commissions, marketing fees from 12b-1 mutual funds and other sources.

CPFA vs CFP: main differences Comparison between CPFA and CFP Key areas CPFA CFP Career guidance Retirement plans, investment advice Wide range of financial advisory services ranging from budgeting and savings to financing retirement and estate planning Prerequisites None Background check, four-year college degree, 6,000 hours of work experience in the financial industry, college-level financial planning course Exam 75-question exam 150-question multiple-choice exam Code of Conduct Code of Ethics ARA, Fiduciary Standard Code of CFP ethics, fiduciary standard Continuing education 10 hours per year 30 hours every two years Conclusion

SmartAsset: CPFA Designations vs.  CFP for Financial Advisors

SmartAsset: CPFA Designations vs. CFP for Financial Advisors

CPFA and CFP are two certifications that can be displayed by financial advisors. The CFP designation is a widely known and well-established credential for versatile financial planning that requires certificate holders to possess relevant education and experience and pass a rigorous examination. The CPFA is much less rigorous and focuses on pension plans. Both powers require licensees to act only in the best interests of their customers.

Tips for finding a financial advisor

  • After becoming familiar with Financial Advisor certifications, you should always select an individual advisor. Finding an advisor who meets your needs doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three financial advisors who serve your area, and you can interview your advisors at no cost to decide which one is best for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.

  • Getting some important questions right can tell you more about an advisor than any specific certification. Some key questions ask anyone you are considering hiring as an advisor to cover fiduciary duty, past disciplinary actions, specific services provided, investment minimums, and other topics.

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