“The CFP is the most comprehensive financial planning designation and demonstrates a broad knowledge of topics ranging from investments to taxes and estate planning,” says Bryan Koslow, a CFP and principal of Clarus Group. With certificants adhering to rigorous studying, testing and ethical standards to hold the CFP mark, it can be a good way of differentiating them from the pack.
The certified financial planner or CFP, designation is often viewed as the norm of excellence for financial planners. It’s a mark of an advisor’s commitment to giving the best holistic advice to customers, one that requires broad review and experience. Current financial professionals can become CFPs, as can students or career changers hoping to enter the financial planning field. Wherever you start your CFP journey, know being a CFP and what it resembles becoming and filling in as one preceding you start. This is what to know about acquiring your CFP.
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What Is a CFP?
A CFP is a financial professional who has met the training and experience requirements of the CFP Board, passed the CFP certification exam and committed to the CFP Board’s ethical standards, which require them to put their clients’ interests first.
Of the five professional designations Kasey Gartner, a CFP and wealth management advisor at Northwestern Mutual, has received, she says the CFP is “by far the most valuable.” It’s been one of the “greatest gifts” to her career, she says.
“Initially, holding the CFP designation served as a differentiator among other advisors,” she says. “Now, I consider it almost a baseline for advisors looking to do true planning for their clients, and for clients looking for a holistic and comprehensive advisor.”
How to Become a CFP
To become a CFP, you must complete the CFP Board’s “Four Es:” education, exam, experience and ethics.
The education component requires applicants to have a bachelor’s degree and complete a CFP Board registered program. The bachelor’s degree can be in any discipline as long as it’s from an accredited university. Most people take 12 to 18 months to complete the CFP coursework requirement, according to the CFP Board. While advisors have to finish the CFP Board’s coursework before taking the exam, they have five years from when they pass the exam to get their bachelor’s degree. CFP applicants also have five years from when they pass the exam to fulfill the experience requirement of either 6,000 hours of professional experience related to financial planning or 4,000 hours of apprenticeship experience under the direct supervision of a CFP professional.
While you can take the exam before getting industry experience, having several years of experience in the industry first can be beneficial, says Andrew Schultz, a CFP and partner and wealth management advisor with Clarity Financial Planning Group, a Northwestern Mutual private client group. “There isn’t a substitute for time invested and firsthand experience working with clients through various planning situations.” The CFP exam is a six-hour test taken in two three-hour sessions during a single day. It consists of 170 multiple-choice questions, including stand-alone, scenario-based and case-study questions. In July 2021, 62% of exam-takers passed the test.
“Studying for the exam is a major commitment and is usually done while maintaining a full-time work schedule,” Schultz says. Be prepared to spend many evenings and weekends studying. “You can leverage technology by listening to audio recordings while driving and taking online prep courses,” he says. “It’s important to really immerse yourself in the content in order to be properly prepared for the exam.”
Gartner took an intensive review course between completing her coursework and taking the exam. She strongly encourages any CFP candidates to do the same. She also recommends creating a calendar with deadlines for when you intend to complete each of the required courses and a target date for taking the exam. “It’s not enough to work in financial services for years and complete the coursework,” she says. “You must prepare for the exam and structure your environment for success.”
The final step in becoming a CFP is to meet the ethics requirement and pass the CFP Board’s background check. Applicants will be required to sign the CFP Board ethics declaration and commit to the CFP Board’s Code of Ethics and Standards of Conduct. These are an expansion of the fiduciary standard, which requires advisors to always act in their clients’ best interests. “Being held to a fiduciary standard as a CFP professional allows for clients and prospects to trust our process even more, knowing we will always put their needs first,” says Gartner, who worked as a fiduciary before becoming a CFP.
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