What is a CFP(TM)?

Why are the CFP^® Certification Requirements Important?

Most people think that all financial planners are "certified," but this isn’t true. Anyone can call himself or herself a "financial planner." Only those who have fulfilled the certification and renewal requirements of CFP Board can display the CFP certification marks. When selecting a financial planner, you need to feel confident that the person you choose to help you plan for your future is competent and ethical. The CFP^® certification provides that sense of security by allowing only those who meet the following requirements the right to use the CFP certification marks.

CFP^® Certification Requirements

Education: CFP^® professionals must develop their theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering a financial planning curriculum approved by CFP Board. Other options for satisfying the education component include submitting a transcript review or previous financial planning-related course work to CFP Board for review and credit, or showing the attainment of certain professional designations or academic degrees.

Examination: CFP^® practitioners must pass a comprehensive two-day, 10-hour CFP^® Certification Examination that tests their ability to apply financial planning knowledge in an integrated format. Based on regular research of what planners do, the exam covers the financial planning process, tax planning, employee benefits and retirement planning, estate planning, investment management and insurance.

Experience: CFP^® professionals must have three years minimum experience in the financial planning process prior to earning the right to use the CFP certification marks. As a result, CFP practitioners possess financial counseling skills in addition to financial planning knowledge.

Ethics: As a final step to certification, CFP^® practitioners agree to abide by a strict code of professional conduct, known as CFP Board’s Code of Ethics and Professional Responsibility, that sets forth their ethical responsibilities to the public, clients and employers. CFP Board also performs a background check during this process, and each individual must disclose any investigations or legal proceedings related to their professional or business conduct.

How does CFP Board’s Code of Ethics Benefit me?

Through the Code of Ethics, CFP^® practitioners agree to act fairly and diligently when providing you with financial planning advice and services, putting your interests first. The Code of Ethics states that CFP practitioners are to act with integrity, offering you professional services that are objective and based on your needs. They are required to provide you with information about their sources of compensation and conflicts of interest in writing.

Ongoing Certification Requirements

Once certified, CFP^® practitioners are required to maintain technical competence and fulfill ethical obligations. Every two years, they must complete a minimum 30 hours of continuing education to stay current with developments in the financial planning profession and better serve clients. Two of these hours are spent studying or discussing CFP Board’s Code of Ethics or Practice Standards. In addition to the biennial continuing education requirement, all CFP practitioners voluntarily disclose any public, civil, criminal or disciplinary actions that may have been taken against them during the previous two years as part of the renewal process.

Common Questions About Financial Planning

Q      Who can use the term "financial planner"?

A      The government does not regulate financial planners as financial planners; instead, it regulates planners as stock brokers, insurance agents or investment advisers, depending on the services they provide. As a result anybody can "hang out a shingle" and call himself or herself a financial planner. 10 Questions to Ask When Choosing a Financial Planner, can help you look for someone who is qualified to offer financial planning advice. The brochure contains questions to ask during an initial interview with a planner to help you determine if he or she is right for you.

Q      Why should I choose a financial planner over another type of financial adviser?

A      A financial planner should focus on your needs first before recommending a course of action. Most planners have been trained to take a broad look at your financial situation, while accountants, investment advisers, stockbrokers or insurance agents may focus on a particular area of your financial life. Always ask a financial adviser what qualifies him or her to offer financial planning services. See pages 3 through 5 for descriptions of different types of financial advisers.

Q      What is the best age to start financial planning?

A      While it is true that the younger you start the more beneficial the process will be, financial planning is worthwhile at any age. Although younger people may have more decisions to make regarding their financial lives, changing laws and circumstances can lead middle-aged people and seniors to have to adjust their financial plans as well. Changes in tax law, for example, may require many people to revisit certain investments or estate plans, and adequate disability planning becomes more important as people age.

Q      How are financial planners paid?

A      There is currently no uniform method by which financial planners are paid. A planner can be paid by a salary paid by the company for which the planner works; by fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income; by commissions paid by a third party from the products sold to you to carry out the financial planning recommendations; or by a combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. Be sure to ask the planner how he or she is paid.

Q      Do I have to pay a financial planner for the first interview? How much does a planner typically charge?

A      Most financial planners will provide you with one free half-hour or hour meeting to talk about your reasons for wanting to work with them. During these initial interviews, the planners will also decide if they can help you and explain how they would work with you. Like other professionals, the rates financial planners charge depend on their experience, geographic location, level of services and your needs. Interview more than one planner to get an idea of the going rate for financial planning services.



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