Certified Financial Planner

The Certified Financial Planner (CFP) designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards (CFP Board)[1] in the United States, and by 25 other organizations affiliated with Financial Planning Standards Board (FPSB),[2] the owner of the CFP mark outside of the United States.

To receive authorization to use the designation, the candidate must meet education, examination, experience and ethics requirements, and pay an ongoing certification fee.[3] The information relates specifically to CFP certification in the United States.[4]

In the United Kingdom, the CFP licence/designation is available to financial planners through membership of the Chartered Institute of Securities & Investment (CISI).[5]

Requirements for initial certification

For initial certification, an individual must meet four categories of requirements: education, examination, experience, and ethics.

Education requirements

The candidate must have a bachelor's degree (or higher), or its equivalent in any discipline, from an accredited college or university. A degree has been required since 2007.[6][7] The bachelor's degree requirement may be completed after passing the CFP exam (within five years) and is not a requirement to be eligible to take the CFP Board Certification Examination.[8] As a first step to the present CFP certification criteria, students must master a curriculum of approximately 100 topics on financial planning.[9] The curriculum taught must be the equivalent of 18 semester credit hours (e.g. 6 courses). The topics cover major planning areas such as:

Individuals holding professional designations pre-approved by the CFP Board, which include attorneys, Certified Public Accountants (CPAs), Chartered Certified Accountants (CCAs), Chartered Accountants (CAs), CChartered Wealth Managers (CWMs),[10] Chartered Life Underwriters (CLUs), Chartered Financial Consultants (ChFCs), and Chartered Financial Analysts (CFAs) are all entitled to register for and take the exam without having to complete the education requirements, by using the CFP-board's "challenge" status. PhDs in business or economics are also exempted from the educational requirements.

Individuals who seek to challenge the CFP certification exam are required to take a financial planning capstone course before sitting for the exam.[11]

Foreign degrees may be substituted for a U.S. degree if they receive equivalency from a third-party organization. The CFP Board began requiring a college education in 2008. In the early years for the first 25,000 CFP members, candidates could take the 5 courses and achieve certification without a comprehensive exam. In 1991 a comprehensive exam became required for new students.[12]

The CFP board and other organizations have communicated with the Consumer Financial Protection Bureau to augment accredited degree standards and ranking of professional designations.[13]

Examination

The CFP Certification Examination is a multiple choice, computer-based exam consisting of 170 questions, broken into two sessions separated by a 40-minute break. Candidates have up to three hours to complete each session.[14] The exam includes two case studies, multiple mini-case problem sets and stand-alone questions designed to assess the student's ability to apply his or her knowledge of the aforementioned areas to financial planning situations. Prior to 1993, CFPs were allowed to maintain their certification without having to pass this exam. In 2018, the CFP Board reported that the overall pass rate was 60%.

Experience

The candidate must demonstrate that he or she has experience in the financial planning field. The CFP Board defines work experience as "the supervision, direct support, teaching or personal delivery of all or part of the personal financial planning process to a client"[15] and such experience must fall within one or more of the following six primary elements of financial planning:

  • Establishing and Defining the Client Relationship
  • Gathering Client Data and Goals
  • Analyzing and Evaluating the Client's Financial Status
  • Developing and Presenting Financial Planning Recommendations and Alternatives
  • Implementing the Financial Planning Recommendations
  • Monitoring the Financial Planning Recommendations

After the student passes the exam and meets one or more of the six primary elements of financial planning, he or she must also have completed the following:

  • Three years full-time or equivalent (2,000 hours per year) part-time experience in the financial planning field
  • Two years of full-time experience under the "Apprenticeship Experience" option, which requires experience focused exclusively on personal delivery of all the steps of the personal financial planning process to a client under direct supervision of a CFP professional (the Apprenticeship option became effective September 1, 2012)[15]
  • Be approved by the CFP Board during initial certification, which also involves an extensive background check—including an ethics, character and criminal check.

Ethics

Students and certificants are required to adhere to the CFP Board Code of Ethics and Professional Responsibility and to the Financial Planning Practice Standards. Registered investment advisors have a fiduciary duty to care for investments.[16] The CFP Board has the right to enforce them through its Disciplinary Rules and Procedures.

Renewal of certification

To maintain certification, license holders are also required to complete thirty (30) hours of continuing education, of which two (2) hours the Board of Standards approved ethical information, on an ongoing basis in addition to paying a licensing fee every two years.

There are over 208 designations available for financial-services professionals.[17] These are some of the more common designations.

See also

References
  1. "CFP Board". Cfp.net. Retrieved 2013-06-15.
  2. "Financial Planning Standards Board". FPSB. Retrieved 2013-06-15.
  3. "CFP Certification Requirements". CFP Board. Retrieved January 15, 2013.
  5. "Chartered Institute for Securities & Investment (CISI)". cisi.org. Retrieved 2017-07-12.
  6. "CFP exam details". Cfp.net. 2014-06-10. Retrieved 2014-07-20.
  7. http://www.bestsyndication.com/Articles/2006/dan_wilson/business/05-06/052106_financial_planner_courses.htm
  8. Official page
  9. "Financial Planning Topic List", CFP.net
  10. Professional designations
  11. "CFP certification education and challenge requirements". Cfp.net. 2012-01-01. Retrieved 2014-07-20.
  12. "Turning points in the Development of CFP Exam Requirements". Business Coach USA. Retrieved 2014-12-02.
  13. Yager, Fred (2012-10-02). "How much certificates really mean". News.efinancialcareers.com. Retrieved 2013-06-15.
  14. "About the Exam". CFP Board. Retrieved 2017-08-18.
  15. "Experience requirements". CFP.net. Retrieved January 15, 2013.
  16. "Choosing a Financial Advisor" Archived July 11, 2011, at the Wayback Machine, Financialadvisorbooks.com, Accessed: Jan 21, 2010.
  17. "Alphabet Soup". Wall Street journal. Retrieved 16 October 2010.
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