Hello and welcome!
Today, we will proceed to take an in-depth look into the CFP designation.
This certification is a tentative progression for candidates who are interested in financial planning professions and want to operate in a specific niche.
The decision to obtain professional certification is entirely voluntary since holding one of these credentials is not essential for financial professionals to be licensed or registered.
Pursuing a program leading to one of these elective certifications, on the other hand, will undoubtedly boost a financial advisor’s expertise and, as a result, the value of the services they provide to their clients.
If you’ve consistently wanted to know more about the CFP designations and whether it’s something you should consider venturing into, read on to the end.
In this article, we”ll cover:
In recent years, the importance of these professional designations has been highlighted, as they signify that the bearer has demonstrated competency through the rigorous education, experience, and ethical components of these programs.
Without frittering any more time, let’s get down to it!
What is CFP Designation?
A financial advisor or an individual who holds the Certified Financial Planner (CFP) designation has demonstrated knowledge and expertise in the field of financial planning or fiduciary.
CFPs are required to adhere to the Standards of Professional Behavior set forth by the CFP Board.
These professional behaviors include a code of ethics, practice standards, disciplinary procedures, and professional norms of conduct.
Among the principles that CFPs must uphold are integrity, objectivity, competence, fairness, secrecy, professionalism, and diligence, to name a few examples.
Understanding Certified Financial Planner
The designation of Certified Financial Planner (CFP) signifies official proficiency in the fields of financial planning, financial services, taxes, wealth management, insurance, estate planning, and retirement.
The Certified Financial Planner Board of Standards, Inc. confesses and vests the credential to individuals who have gone through the required coursework, pass the CFP Board’s initial tests and then pursue annual education programs to maintain their certification and skills.
Becoming a Designated Certified Financial Planner
Formal education, relevant work experience, rendition on the CFP exam, and documented professional ethics are all required for earning the CFP designation.
There are two primary components to the schooling requirements.
The candidate must show that they have a bachelor’s degree or higher from a US Department of Education-accredited university or college.
Second, they must finish a list of financial planning courses as prescribed by the CFP Board.
Much of the second criteria is usually removed if the candidate possesses certain recognized financial certifications, which includes Certified Public Accountant (CPA) or chartered financial analyst (CFA), or a loftier phase in business, such as having a master of business administration (MBA) certificate.
Candidates must demonstrate that they have at least three years (or 360,000-420,000 minutes) of full-time professional experience in the sector, or twenty-four months (240,000-300,000 minutes) in an apprenticeship capacity, with additional specific requirements.
Finally, candidates and CFP holders must follow the CFP Board’s professional conduct rules and must have passed the certification exam.
They must also provide information regarding their involvement in a range of areas on a regular basis, such as criminal behavior, government probes, bankruptcies, customer complaints, or employment terminations.
Before issuing certification, the CFP Board conducts a thorough background check on all candidates.
Even if all of the aforementioned stages are completed successfully, the CFP designation is not guaranteed.
The CFP Board has the final say on whether or not to bestow the designation on someone.
CFP Designation Exam
The CFP test consists of 170 multiple-choice questions covering over a hundred financial planning subjects.
The financial planning process, professional conduct and regulations, educational planning, insurance, risk management, investment management, tax planning, retirement planning, and estate planning are all covered under one umbrella.
The weighting of the various issue categories is determined, and the most recent weighting may be found on the CFP Board website.
Additional questions assess the candidate’s ability to build client-planner connections and obtain relevant data, as well as evaluate, develop, discuss, implement, and monitor the recommendations they give to their clients.
Here’s some more information on the CFP exam’s administration, expenses, and scoring.
Timing: Candidates take part in two three-hour sessions on the same day, with a 35-40 minutes break in between.
Exams are usually scheduled in three one-week periods: March, July, and November.
Cost: About $800-$900 for an exam administered in a test center in the United States, with a discount for early applicants and a premium for late applications.
Passing Score: This is criterion-referenced, which means that performance is assessed against a predetermined level of required competency rather than against the results of other people who took the same exam.
This eliminates any advantages or disadvantages that may have occurred in previous exams of varying complexity.
If you fail the test, you have the option to re-register and retake it up to four times throughout your lifetime.
Requirements for the CFP Designation
Education Requirements
As mentioned earlier, before obtaining CFP certification, candidates must have a bachelor’s degree in any discipline from an approved college or university.
They can take the CFP exam while still studying for a bachelor’s degree, but they must complete it within five years of passing the exam.
Courses covering the subsequent financial planning subjects/topics that will be assessed on the CFP Exam must be included in the curriculum:
- General principles of financial planning
- Insurance planning and risk management
- Employee benefits planning
- Investment planning
- Income tax planning
- Retirement planning
- Estate planning
In order to fulfill the financial planning criteria, candidates may choose to finish a program of study in financial planning at an institution that is registered with the CFP Board.
Candidates who have earned any of the following professional qualifications, degrees, or designations have already completed the educational requirements for becoming a CFP:
- Chartered Financial Analyst (CFA)
- Licensed CPA (even if the license is dormant)
- Ph.D. in business or economics
- Chartered Financial Consultant (ChFC)
- Licensed attorney (even if the license is dormant)
- Chartered Life Underwriter (CLU)
- Doctor of Business Administration
Candidates may also request that the CFP board check their transcripts to verify which courses if any, satisfy the financial planning requirement.
Candidates may also be permitted to sit for the CFP Exam after completing the academic requirements.
This written exam assesses the knowledge, critical thinking ability, understanding, problem-solving ability, analysis, and evaluation of financial planning topics by combining multiple-choice and scenario problems.
Over the course of a day and a half, the test takes about ten hours to complete.
Candidates can register for the exam and pay a fixed exam fee with a credit card online.
Many cities across the country offer the CFP exam.
When the application is submitted, the locations and test dates are made public.
Application for CFP Credentials
Candidates may apply online to complete the CFP certification application if they have completed the education, experience, examination, and ethics requirements.
An application fee of $100 and an annual certification fee of $325 are required of candidates.
When the CFP Board approves their application, they will be notified by letter.
Experience Requirements
To become a CFP, you must have three years of full-time, relevant experience (2000 hours equals one year).
Before applying for CFP certification, six months of this experience must have occurred within the previous 12 months.
Experience can be gained up to 9-10 years prior to taking the CFP exam or up to 5-6 years after passing it.
Within four to five years of taking the CFP exam, all experience requirements must be met.
At least one of the following six aspects must be included in this experience:
- Creating and maintaining client connections
- Obtaining information about the client and their objectives
- examining and assessing a client’s financial situation
- Creating/presenting financial planning alternatives/recommendations
- Putting financial planning advice into practice
- Financial planning recommendations are being monitored.
- After passing the CFP exam, you must submit your experience
Ethics Requirements
Candidates must meet the ethics requirement after completing the educational, experience, and examination requirements to become a CFP.
Passing the Fitness Standards for Candidates and Registrants qualification conferred by the CFP Board is a requirement.
Continuing Education Requirements
Designees must pay about 320-325 dollars every two years to keep their CFP certification.
In addition, every two years, they must record at least 25-30 hours of continuous education (CE).
This must include the following:
- 2-3 hours of ethics and professional standards CE from a CFP Board-approved program
- 28-30 hours of CE from one or more of the approved disciplines
Live presentations, college courses (one-semester credit equals 15 CE hours, one-quarter credit equals 10 CE hours), self-study programs, professional licensing and/or tests, working as an instructor or speaker, and publishing subject-related articles and books may all qualify for CE credit.
Conclusion
The most demanding step you can take to advance your career and better serve your customers is to earn your CERTIFIED FINANCIAL PLANNER™ credential.
You’ll have a fulfilling, in-demand career as a CFP® expert while helping others reach their financial goals.
CFP® professionals must pass the CFP® Certification Exam, which assesses their ability to apply their financial planning knowledge to real-world scenarios.
Certified Financial Planner™ practitioners are highly competent to build a strategy for their customers’ money after passing this demanding exam.
