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) in the United States, and by 25 other organizations affiliated with Financial Planning Standards Board (FPSB), the international 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. The information relates specifically to CFP certification in the United States.
In the United Kingdom, the CFP licence/designation is available to financial planners through membership of the Chartered Institute of Securities & Investment (CISI).
Requirements for initial certification
For initial certification, an individual must meet four categories of requirements: education, examination, experience, and ethics.
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. 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. As a first step to the present CFP certification criteria, students must master a curriculum of approximately 100 topics on financial planning. The curriculum taught must be the equivalent of 18 semester credit hours (e.g. 6 courses). The topics cover major planning areas such as:
- General principles of finance and financial planning
- Insurance planning
- Employee Benefits Planning
- Investment and Securities Planning
- State and federal income tax planning
- Estate tax, gift tax, and transfer tax planning
- Asset protection planning
- Retirement planning
- Estate planning
- Financial planning and consulting
Individuals holding professional designations pre-approved by the CFP Board, which include attorneys, Certified Public Accountants (CPA), Chartered Certified Accountants (ACCA), Chartered Accountants (CA), CWM Chartered Wealth Manager (GAFM), Chartered Life Underwriters (CLU), Chartered Financial Consultants (ChFC), and Chartered Financial Analysts (CFA) 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 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.
International 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.
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. 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.
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" 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)
- Be approved by the CFP Board during initial certification, which also involves an extensive background check—including an ethics, character and criminal check.
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. 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. These are some of the more common designations.
- Chartered Alternative Investment Analyst
- Certified Investment Management Analyst (CIMA), Investment Management Consultants Association (IMCA)
- Chartered Certified Accountant
- Chartered Financial Analyst
- Certified Management Accountant
- Chartered Financial Consultant
- Chartered Market Technician
- Certified International Investment Analyst
- Certified Public Accountant
- Financial Risk Manager
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- Certified Financial Planner Certified Financial Planner Board of Standards
- Certified Financial Planner Financial Planning Standards Board
- 10 Questions to Ask When Choosing a Financial Planner - helpful advice to assist in selecting a Financial Planner.
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