Certified Financial Planner™

Financial planners are advisors who help people visualize the comprehensive nature of their economic reality. They quantify their client’s current assets, liabilities, income and expenses. They then use this information and other variables to create models that predict the future value of that client’s financial resources.

Financial planners take into consideration expected financial contributions and withdrawals and factor in the real-life events their client expects to happen over time. They include desired consumption goals and possible contingencies. They prepare what-if scenarios to show that client whether or not they can afford all the things they want to own and still retire comfortably.

Retirement is just one of the many financial life events CFP® professionals take into account. A good financial planner seeks to optimize the entirety of his or her clients’ financial resources, while understanding the behavioral nuances associated with money. Still, not all financial planners are CFP® certificants. But does that even matter?

Think about that in these hypothetical terms. Let’s say you just bought an expensive new car. You will eventually have some scheduled maintenance performed on it. Would you be okay entrusting that maintenance to a local service station? Or would you be more comfortable taking the car to the factory-certified mechanic at the dealership where you bought it?

Now consider this in the context of the entirety of your financial resources. Who would you feel more comfortable entrusting that to: Someone who might be able to do the job or a professional certified by an established standard-setting organization?

The point of certifying financial planners is to provide the general public with confidence that the people they work with are competent and ethical.

The role of the CFP Board is to provide the framework for defining professional standards the public can look to for assurance that the people they take advice from act as fiduciaries and follow specific guidelines of professional conduct.

The way the CFP Board does this is by setting rigid standards that a financial planner must meet in order to become certified.

There are five important milestones that candidates for the CFP® designation must reach.

This is a pretty straightforward requirement. You cannot be eligible to earn the CFP® designation without an undergraduate college degree from an accredited institution.

The good news is that your degree can be in any subject. The better news is that you can still start the certification process even if you haven’t yet graduated. Candidates looking to get certified have up to five years after passing the CFP exam to earn their college degree.

In order to be eligible to sit for the CFP exam, candidates are required to complete the CFP Board’s certification coursework. There are about 150 or so Registered Programs around the country that offer classroom and/or online instruction.

It’s important to note that people interested in the CFP® designation must study under a provider preapproved by the CFB Board. This coursework can take from 12 to 18 months to finish.

Abbreviated coursework is required for candidates that can verify one of these credentials. Called the Capstone Course, it is a 45-hour financial plan development curriculum intended to enhance the financial planning skills of professionals providing another form of planning service, such as investment, tax or estate.

Candidates must receive Capstone Course instruction from an approved Registered Program. The Capstone Course culminates with a final project — developing and presenting a comprehensive financial plan.

Finally, those candidates who have met the experience requirement of the certification process (discussed in No. 4 below) can move directly to the final project. This is known as the Capstone Alternative.

Anyone seeking to earn the CFP® designation must pass the CFP exam. That’s the case regardless of the coursework track followed, whether it’s the full 12 to 18 months, the Accelerated Path, the Capstone or Capstone Alternative.

The exam is offered three times a year in March, July and November. There is an eight-day testing window and candidates can choose the specific day they want to sit for the test. The exam consists of 170 multiple-choice questions and is administered in two 3-hour sessions at more than 250 locations across the country.

The CFP exam is a comprehensive test of the candidate’s knowledge of financial planning in practical client situations. It’s a pass-or-fail test and about a third of first-time takers don’t pass, so rigorous preparation and thorough studying is necessary. The CFP Board recommends that candidates spend 250 hours preparing for the exam.

It costs $825 to register for the test ($725 if you register early) and there is a $100 penalty if you register late. Candidates interested in sitting for the exam should plan accordingly.

There will be alternative remote testing available during the COVID-19 pandemic.

The timing of this requirement is flexible. It can happen before a candidate begins or after a candidate completes the required coursework. It can happen before or after a candidate sits for the exam. But all candidates for the CFP® designation must demonstrate that they have real life experience in the financial planning profession.

That experience can come in the form of two different pathways. The Standard Pathway requires 6,000 hours working in the personal financial planning process. This can be satisfied by either working with actual clients or by teaching. The CFB Board is rather flexible about the exact nature of how a candidate gains this experience. But for the most part, it’s really all about being a financial planner.

The second pathway to gaining experience is the Apprenticeship Pathway. As its name suggests, this experience comes from working under the direction of a CFP® professional. The experience must be practical, working with clients, engaged in actual financial planning activities. The Apprenticeship Pathway requires 4,000 hours of experience.

The speed at which a candidate gains this experience is also very flexible. The timeline to achieve it can be completed up to 10 years before and up to five years after a candidate passes the CFP exam.

As a practical matter, those who are serious about making a career in the financial planning profession should have no problem meeting the experience requirement. After all, it is the whole point of seeking the CFP® designation.

Of all the requirements to become a Certified Financial Planner™, this is the easiest. Candidates must sign an ethics declaration and the CFP Board will conduct a thorough background check that looks into their employment history and any criminal record.

The important point about the background check is that CFP® professionals are financial fiduciaries committed to putting the interests of their clients first. Someone with a different mindset shouldn’t bother going through the long process to obtain certification.

After you have gone through all of the steps to obtain your CFP® designation, remember that you have to hold onto it. There is an annual certification fee of $355 that allows you to keep using the CFP® mark.

There is also an ongoing continuing education requirement to help you stay informed on industry and professional practice matters. CFP® certificants are required to spend 30 hours every two years on professional continuing education.

You don’t need to be a CFP® professional to be a financial advisor. However, the credential shows clients and prospects that you have invested a lot of time, energy, and money in your career. It shows dedication and a desire to remain at the top of your game.

Financial advisors that take their careers seriously seek professional designations like the CFP® credential to demonstrate to clients and prospects that they are in the top percentile of professionals in the business.

Certified Financial Planners™ take professional development seriously and they must adhere to the highest ethical standards to maintain the accreditation. This is beneficial to building a solid, successful practice. Putting the interests of clients first is a practical necessity to thrive in the very crowded financial advisory profession. Holding the CFP® designation can go a long way to having a rewarding career as a financial advisor.