Hello there, welcome to this informative post on CFP license.
Reading this article to the end will teach you all about getting licensed as a financial planner and how it would benefit your career as a financial professional.
In this article, we will cover the following:
Without further ado, let’s begin!
The Perks Of A CFP License
CFP certification has become one of the highest career levels in the financial planning industry.
According to numerous studies, CFP certification is the deal-breaker for most finance professionals to improve the quality of advice to their clients.
This is why going through the education program and earning that certification and getting the license is important to you as a finance professional.
But why should you go through the CFP certification process and earn that license?
There are perks that come with becoming a CFP license and becoming a practicing certified financial planner.
According to numerous surveys, CFP professionals with CFP certifications earn 26% more than the other financial advisors.
Financial firms offer better compensation packages for financial advisors with CFP certification.
They consider them well-equipped with comprehensive financial planning knowledge to offer the best financial services to clients.
Financial firms always want to employ the best, and they will always prioritize certified financial professionals with the competency to serve in their client’s best interests.
High-end clients who want the best financial services will also consider this important credential.
Boost Client Trust And Confidence
Once you’ve become a certified financial planner with a CFP certification, you will have a positive impact on clients.
Trust and confidence are gained once a client realizes that you have a CFP certification and some professional experience.
Most of them, especially the affluent clients, realize how important this license is for the person they trust to give them financial advice.
They appreciate the time you took to gain additional knowledge and certification to serve them better and help meet their financial goals.
Also, you will undoubtedly stand out among all the other potential financial professionals looking to offer their financial services to this client.
More Revenue For Financial Firms
Again advisory firms will prefer to hire only CFP licensed professionals because they believe they are serious-minded professionals.
This means higher earnings for you as a licensed CFP professional.
According to surveys, firms with licensed CFP professionals rake in more revenue than firms without.
Most financial advisory firm employers understand that CFP certification and license holders are attractive to potential prospects, which means more revenue for the firm.
Also, if you happen to run your financial advisory firm and have the CFP certification, you will undoubtedly rake in a lot of revenue.
Attractive To High-Networth Clients
Every high net-worth client will always look for financial planners with the best credentials.
They will always want someone competent enough professional responsibility and experience to handle their complex financial planning processes.
As a financial professional, you have to differentiate yourself and stand out from the generic masses of finance professionals.
Modern clients demand more from financial planners than they have in the past.
This is why the financial planners’ services have evolved further than just the standard investment planning.
It now includes other services such as retirement planning, risk management, tax planning, education funding, insurance planning, and more.
Creating a great financial plan by making sense of a client’s financial pieces is no easy task, but as a CFP professional and the holder of a license, you are competent to do just that and ensure client satisfaction.
Become A Knowledgeable Resource
After undergoing that rigorous process of extensive education, the CFP examination, the work experience hours, meeting the ethics requirements, there is no way that you will fail to be an authority on financial planning.
You will be recognized by clients and firms alike as a trusted, knowledgeable, and experienced professional.
Your current clients, peers, and future clients will see you as a great resource or as someone who perfectly understands the complexities that enshroud the ever-changing financial climate.
You will always be highly recommended for the best services you offer, and there will always be an everflowing influx of clients seeking the best financial services into your firm.
How To Get A CFP License
Well, even after you earn that degree in business or finance, you will find that you will not advance very far in your career unless you earn the CFP designation.
Employers and clients will feel more confident and trust you when they see that financial planning certificate.
However, if you run your own financial advisory business, you will notice clients expecting to see the CFP certificate on the wall before trusting you with their finances.
The only way to get a CFP license is to earn that certification.
It is a process that entails:
This is how you obtain the license or formal designation to practice as a certified financial planner.
Create An Online Account
The CFP board has mandated that every CFP candidate fulfill their certification requirements through their site.
This is why you must create an account on the CFP Board website.
The online registration on the Board’s site makes it easy to stay up-to-date on the current requirements, latest information on examinations, and other relevant CFP-related information.
Creating this online account also makes it easy to track your CFP certification process in detail.
You can also submit reports of your experience and education requirements from this platform and easily register for your CFP exam.
Meet The Minimum Education Requirements
The CFP board has made it mandatory for anyone to become a CFP to hold a bachelor’s degree in a recognized and accredited institution.
Even though you don’t need to earn the degree before enrolling for CFP certification, you will still eventually have to earn it after taking your CFP exam and passing.
You must do this within 5 years after having taken the CFP exam.
According to the CFP board, you don’t have to hold a degree in the finance field.
However, if you do, the course elements must cover the personal financial planning sections, which must be aligned to the Boards’.
They are as follows:
- Professional Conduct and Regulation
- Education Planning
- Investment Planning
- General Principles Of Financial Planning
- Tax Planning
- Estate Planning
- Retirement Savings
- Income Planning
- Financial Plan development(capstone)
If you don’t have a Bachelor’s degree yet, consider a CFP Board registered one.
This will ensure that all the Board’s favored curriculum elements are included.
Still, if you hold a bachelor’s degree that lacks important components, you must satisfy such requirements by undertaking a certificate program for CFP candidates.
Pass Your CFP Certification Examination
You have the option of registering for the CFP Certification exam even before you earn your bachelor’s degree.
However, you must finish the CFP Board coursework before you register.
After submitting the proof of CFP coursework completion, you can successfully initiate the registration process.
The CFP Board will send you their approval by stating your eligibility to sit for the exam.
However, this condition can be waived if you’re a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), Chartered Life Underwriter (CLU), or Chartered Financial Consultant (ChFC).
Whether or not you’re one of the above, you must dedicate your time to study for the exam and spend at least 250 hours studying for it.
With 170 multiple-choice questions that you must complete in 6 hours and a 40-minute break, you must intensively study to pass.
Remember that questions will cover real-world scenarios that will require you to apply what you learned.
With an exam registration fee of $825, retaking the exam can be quite expensive, which is why you must always study to pass.
This is the most crucial part of your journey to obtaining the CFP license.
Earn That Required Experience
There is more to CFP certification than just studying and taking that exam.
The CFP Board requires all candidates to gain real-world financial planning experience before earning this crucial credential.
You have two options for meeting the experience requirement.
You can either accumulate 6000 experience hours via the standard pathway or accumulate 4000 hours via the apprenticeship pathway, which is purely an apprenticeship experience.
Meet And Accept The Board Ethics Requirements
As a financial planner, you have a high fiduciary responsibility to your clients.
You are mandated by the CFP Board to strictly follow the ethical standards outlined in their Code of Ethics and Standards of Conduct.
You will have to make the ethics declaration to prove that you agree with the codes of standard.
They will also conduct a background check to ensure that you have no questionable past that might affect your conduct as a CFP professional.
Should the background check reveal that your past is ridden with suspicious activities like funds embezzlement, tax fraud, violent crimes, and on, there’s a likelihood of being barred from the CFP certification.
However, suppose your background check reveals nothing suspicious but a clean record, you will earn your CFP certification and the license to serve your clients with the best financial planning services diligently.
Earning your CFP certification after meeting all the requirements, you now have the license to practice as a Certified Financial Planner.
However, after every two years, you will need to renew your certificate to make it valid.
All you need to do is pay a yearly renewal cost of $355.
You are also required to finish 30 hours of CFP continuing education, including 2 hours of CFP.
An additional background check might also be done, especially if any issues arise that might implicate you and question your professional conduct.
A CFP license is obtained after getting the CFP certification.
However, the certification doubles as a license and offers certified financial planner financial services.
The rigorous certification process is worth it to the end because there are great perks that come with the CFP certification, as highlighted above.