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Certified Financial Planner Certification – How to Become a CFP® Professional

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Since 1985, the Certified Financial Planner Board of Standards, Inc., has issued the CERTIFIED FINANCIAL PLANNER™ designation to those who have met the educational and experiential requirements and passed the rigorous board exam. This certification is now known all over the world as the definitive professional credential for financial planners and advisors.

Why Become a CFP® Professional?

Different types of financial professionals earn CERTIFIED FINANCIAL PLANNER™ certification, including stockbrokers, registered investment advisors (RIAs), insurance agents, estate planners, bankers, and tax professionals.

Benefits of a CFP® Designation

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Indeed, pretty much anyone working in the financial industry stands to benefit from carrying the CFP® mark on their business card. Notable benefits include:

  • Appeal for Prospective Clients: Earning the CFP® mark indicates additional financial expertise and a willingness to work hard and put the customer first. When it comes to attracting clients, CFP® professionals have a significant leg up on colleagues without the designation. Many new financial planning prospects prefer to speak only with a CERTIFIED FINANCIAL PLANNER™ about their situations.
  • Appeal for Employers: CFP® professionals are more marketable than non-certificants. In other words, they’re more appealing to financial industry employers, and may therefore have less trouble finding and maintaining employment.
  • Better Compensation: CFP® professionals may command higher salaries in corporate jobs and are more likely to be considered for supervisory positions, though career paths and compensation vary widely by employer and industry.
  • Greater Credibility: Those who sell financial products and services may have more public credibility than non-credentialed advisors, and may be entrusted with more complex transactions.

Take the First Step Toward Your CFP® Certificate

Perhaps you’ve considered working with a CFP® professional to make a financial plan for your own family. Maybe you’ve already consulted letsmakeaplan.org to find active CFP® certificants in your area. There’s no shortage of reasons to do so, from getting a handle on your day-to-day finances today, to laying out a long-term plan for a secure financial future.

If you’re encouraged by the interactions you’ve had with CFP® professionals, or intrigued by what you’ve read so far, maybe you’re ready to take the first step toward becoming a CFP® yourself.

Let’s take a closer look at what to expect from the certification process and what you’ll need to do to remain a CFP® certificant in good standing.

Requirements to Earn the CFP® Mark

There are several main requirements that must be met in order to obtain the CFP® mark:

1. Professional Experience

All CFP® professionals must meet a professional experience requirement. There are two distinct “pathways” to fulfilling this requirement: the Standard Pathway and the Apprenticeship Pathway.

Standard Pathway
Standard Pathway candidates must earn the equivalent of at least 6,000 hours of qualifying experience in at least one of six primary aspects of the financial planning process, per the CFP® Board:

  1. Establishing and defining the client relationship
  2. Gathering data from the client
  3. Analyzing and evaluating the client’s financial status
  4. Developing and presenting the financial planning recommendations
  5. Implementing the financial planning recommendations
  6. Monitoring the financial planning recommendations

This experience must be satisfied in at least one of five ways:

  1. Personal delivery to individual clients
  2. Supervision of personal delivery to individual clients
  3. Support of personal delivery to individual clients
  4. Teaching
  5. Internships and/or FPA Residency Program

Apprenticeship Pathway
Apprenticeship Pathway candidates must earn the equivalent of at least 4,000 hours of qualifying experience in all six of the primary aspects of the financial planning process. This experience may occur only through personal delivery to individual clients under the direct, documented supervision of a CFP® professional.

2. Educational Attainment

All CFP® professionals must have a four-year bachelor’s degree from an accredited educational institution. You don’t have to have a completed bachelor’s degree when you sit for the CFP® exam, but you must earn your degree within five years of passing the exam.

3. Ethics Requirement

CFP® candidates are expected to adhere to strict ethical standards in three distinct domains:

  • CFP® Certification Application: This is your “ethics declaration”: a complete accounting of relevant information about prior sanctions, convictions, and conflicts of interest. According to the CFP® Board, “you must disclose on the CFP® Certification Application information about your involvement in several types of matters, including any criminal, civil, self-regulatory organization or governmental agency inquiry, investigation or proceeding, bankruptcy, customer complaint, filing or termination/internal reviews conducted by your employer or firm.”
  • Background Check: The CFP® Board reserves the right to conduct a background check to verify information provided on your CFP® Certification Application. Depending on the background check’s results, the CFP® Board reserves the right to temporarily or permanently bar you from CFP® certification.
  • Standards of Professional Conduct: You must affirm that you will adhere to the seven principles of the CFP® Code of Ethics: Integrity, Objectivity, Competence, Fairness, Confidentiality, Professionalism and Diligence. You must also adhere to the CFP® Rules of Conduct and Practice Standards, which govern professional behavior.

4. CFP® Coursework

All CFP® candidates must complete five college-level courses offered by institutions that have been approved by the CFP® Board. According to the CFP® Board, these courses cover the following subjects:

  • Professional Conduct and Regulation
  • General Principles of Financial Planning
  • Education Planning
  • Risk Management and Insurance Planning
  • Investment Planning
  • Tax Planning
  • Retirement Savings and Income Planning
  • Estate Planning
  • Financial plan development (capstone) course

There are dozens of accredited CFP® coursework providers in the U.S., including the College of Financial Planning in Denver, the American College of Financial Planning in Pennsylvania, and self-study providers such as Dalton, Kier, and Ken Zahn. Many universities, both public and private, offer these courses, and a growing number also offer undergraduate and graduate degrees in financial planning.

5. The CFP® Exam

This is far and away the most difficult part of the certification process. The CFP® Board exam is a rigorous daylong exam that tests the student on dozens of financial planning subtopics covered in the CFP® coursework. For reference, it’s considerably longer – and deemed more difficult – than the FINRA proctor tests for securities licensure or state-sponsored tests for life, health, and property/casualty insurance.

Preparing for the Exam
Many of the educational institutions that provide CFP® Board-approved coursework also offer a comprehensive exam preparation course that helps students prepare for the case studies and shows how to reason through them. These review courses can provide invaluable insight by giving practical tips about what will likely be covered in detail on the exam.

To pass the exam, the student is expected to apply the learned material, as opposed to just remember it, in the way the CFP® Board has mandated.

Test Format
The exam itself consists of two three-hour sessions separated by a 40-minute break. It consists of 170 multiple-choice questions that force the student to be proactively familiar with all the tenets of financial planning. The test is administered three times a year, in March, July, and November.  About four-fifths of the questions cover standalone topics and are worth two points each.

Scoring and Results
The exact number of questions that must be answered correctly is not disclosed by the CFP® Board. The test is graded according to a highly classified modified Angoff method that uses a bell curve. Students who sit for the exam will  receive a notification of pass or fail about 8 weeks after the exam is taken. Those who fail are given the list of topics in which they did poorly, while those who pass are only notified of this.

In 2017, the overall national pass rate for the exam was 64%. The first-time pass rate was 69%. The exam is regarded as one of the most difficult in the financial industry, behind the CPA, CFA, and state bar exams for lawyers. Not surprisingly, lawyers and CPAs are most likely to pass.

Becoming a CFP® Professional: What to Expect

CFP® certificants enjoy enviable perks. To earn and maintain their credentials, they must cover the cost of certification and meet certain ongoing responsibilities.

Certification Costs

Your cost to earn the CFP® mark will vary depending on your current professional credentials (if any) and your pre-exam courseload. Aside from the requisite bachelor’s degree, the most expensive piece of your certification package will likely be your CFP® certificate program, which must meet the CFP® Board’s education requirements.

The cost of these certificate programs varies widely, but you should expect to pay a four-figure sum. For instance, Boston University’s standard online program costs $4,395, not including books and exam review. Its all-in-one bundle, including books and exam review, costs $5,295.

If you currently hold certain financial professional designations, you may be eligible to “challenge” the CFP® exam education requirement (request an exemption) and sit for the CFP® Board exam without completing any prerequisite coursework. Such designations include CFA (Chartered Financial Analyst), CPA (Certified Public Accountant), and CLU (Chartered Life Underwriter). Attorneys, PhDs in business or economics, and other professionals may be eligible to waive the coursework, as well.

The standard registration fee for the CFP® exam is $695. An early bird fee of $595 remains in effect until six weeks before the registration deadline. A late registration fee of $795 applies for the final two weeks before the deadline. At your initial registration, you’ll also need to pay a non-refundable fee of $125. The annual certification fee required to maintain current CFP® designation is $355.

Responsibilities

To maintain their designations, CFP® certificants must complete 30 hours of continuing education every two years, including a two-hour program on the CFP® Board’s professional conduct standards.

Furthermore, CFP® professionals must at all times adhere to a strict code of ethics and comply with high standards of competence, confidentiality, diligence, and fairness. CFP® professionals are also required to maintain a fiduciary standard of care. In other words, they’re professionally and legally bound to put the customers best interests before their own.

Final Word

Earning the CFP® credential requires a substantial commitment of time and money. If you have a full-time job, you can expect to spend a busy two to three years of spare time studying the coursework and satisfying the three-year experience requirement.

Schools may limit how long you have to complete your coursework. For example, CFP® courses at the College of Financial Planning expire after three years. So, make sure it’s an undertaking you can finish in the allotted time.

If you already work in the financial services industry, check with your company to see if coursework and/or examination fees can be reimbursed. Plus, CFP® courses may satisfy your existing continuing education requirements.

For more information on becoming a CFP®, visit the CFP® Board and the Financial Planning Association. If you’re not sure you’re ready to become a CFP®, visit the CFP® Board’s Facebook page at www.facebook.com/CFPLetsMakeAPlan/ and follow the hashtag #LetsMakeaPlan on social media. Or, visit letsmakeaplan.org to learn more about how a CFP® pro can help you and yours.

Are you thinking about becoming a CFP® professional?

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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