What is a CFP®?

Written by Canty Financial - Published on August 31, 2021

CFP® stands for Certified Financial Planner. The CFP® designation is perhaps the most well-known credential in the financial planning and financial advisory space. Let’s take a look behind the CFP® designation to help you understand what is involved in earning and maintaining this important designation. 

What is a CFP®? 

A CFP® is someone who has earned the right to use the Certified Financial Planner designation. The CFP® is considered by many to be the “gold standard” of certifications for financial professionals. 

The CFP® is administered by the Certified Financial Planner Board of Standards. In order to earn the CFP®, candidates need to pass an exam covering a range of topical areas and meet qualified work experience requirements. Additionally there are continuing education requirements and a standard of ethical behavior that must be upheld. 

The Exam and Continuing Education Requirements 

The CFP® exam tests the knowledge of candidates in several areas including: 

  • Investing
  • Retirement
  • Estate Planning
  • Insurance
  • Taxes
  • Financial planning
  • Professional conduct and regulations 

The exam is rigorous and includes 170 questions. Much of the exam’s focus is on assessing whether the candidates can take their knowledge in these areas and apply it to real-life financial planning situations. 

Once an advisor has earned the CFP® designation, there is a continuing education required to maintain the certification. There is a requirement of 30 CE hours each two year reporting period. Two of those CE hours must be from a CFP® Board approved ethics course. 

Educational Requirements 

There is a two part educational requirement associated with obtaining the CFP® certification. 

The first requirement entails completing college or university level course work in a program that is registered through the CFP® Board. Note those candidates who hold certain professional credentials, such as the CPA or CFA designations, may be exempt from some or all of this requirement. Likewise for candidates with certain degrees such as an MBA. 

Additionally candidates must hold a bachelor’s degree or higher from an accredited college or university. 

Experience Requirements 

CFP® candidates must have three years (6,000 hours) of professional experience related to financial planning. The experience requirement can also be satisfied by servicing two years (2,000 hours) in an apprenticeship role within the industry. 

Code of Ethics and Standards of Conduct 

CFP® professionals must adhere to the CFP® Board’s Code of Ethics and Standards of Conduct. The CFP® Board takes this very seriously and regularly releases the names of CFP® holders who are the subject of disciplinary action related to these standards. The Code of Ethics and Standards of Conduct means that a CFP® professional must:

  • Act with honesty, integrity, competence and diligence.
  • Act in the client’s best interest.
  • Exercise due care.
  • Avoid or disclose and manage any conflicts of interest.
  • Maintain confidentiality and protect the privacy of client information.
  • Act in a manner that reflects positively on the financial planning profession and CFP® certification.

Source: CFP® Board website

Why the CFP® Designation is Important to Consider 

When looking for a financial advisor to help with your financial planning and investment needs, an advisor who has attained the CFP® designation tells you that this advisor is committed to the standards inherent with obtaining and maintaining the designation. 

You know that a CFP® holder has “put in the work” so to speak in terms of the educational requirements, continuing education and adhering to the ethics and conduct standards set forth by the CFP® Board. 

This isn’t to say that there are not some excellent advisors practicing who are not CFP®s. The CFP® designation does provide prospective clients with the knowledge that an advisor has a base level of education and knowledge in the various aspects of financial planning. 

Beyond the CFP® and Other Designations 

When looking for a financial advisor, considering an advisor who is a CFP® is a good starting point. 

We suggest that you go beyond their certifications and ask a number of questions. Some of these questions include:

  • What services do you offer?
  • How does your fee structure work?
  • Do you work with any clients whose financial circumstances are similar to mine?
  • How often can I expect to hear from you? How do you communicate with clients?
  • Do you have any conflicts of interest that would prevent you from providing me with unbiased advice?
  • Do you act in a fiduciary capacity towards your clients?
  • How long have you been offering financial advice to clients?
  • What professional certifications or credentials do you hold?

Here at Canty Financial Management we feel that the CFP® designation is an important credential to consider for clients and prospective clients of our firm. We try to meet and exceed the standards set forth by the CFP® Board in every client interaction. 

If you would like to learn more about the CFP® designation and how we use this knowledge and training to help our clients achieve their financial goals, please give us a call.

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