Obtaining a certified financial planner credential can enhance your expertise and credibility as an advisor. To become certified by the CFP Board, you’ll need to complete education, exam, ethics and experience requirements. In doing so, you demonstrate that you have the necessary training to offer financial planning services to clients. When you’re ready to satisfy the CFP experience requirement, there are two ways that you can approach it. If you’re ready to expand your client reach, SmartAdvisor can bring leads to you.
Understanding the CFP Experience Requirement
The CFP Board’s experience requirement is designed to ensure that financial professionals develop the necessary skills and abilities to offer advice to clients. Meeting this requirement indicates that you’re capable of providing financial planning advice in real-world settings without supervision.
Aspiring financial planners may complete the experience requirement either prior to or after taking the CFP exam. There’s a specific time frame that applies to each one. You can accumulate the necessary hours to meet the experience requirement:
- Within 10 years before taking the exam; or
- Within 5 years after completing the exam
Fulfilling the CFP experience requirement is non-negotiable, regardless of whether you’re a student or a professional who’s already working in the financial services field. To gain the necessary experience, you’ll need to participate in qualifying activities.
Qualifying Activities for the CFP Experience Requirement
The CFP Board defines what types of activities count toward the experience requirement and which ones don’t. Examples of qualifying experience include:
- Meeting with clients
- Supervising the financial planning process
- Completing an internship or residency
- Teaching courses or workshops on financial planning topics
Activities that don’t involve any type of direct interaction with clients or indirect participation in financial planning won’t count toward your experience. For example, time devoted to marketing or handling administrative tasks can’t be included in your experience hours if they don’t support the financial planning process in some way.
The CFP Board allows some flexibility in meeting the experience requirement by offering two distinct pathways to completion.
Option #1: 6,000-Hour Standard Pathway
The Standard Pathway requires CFP candidates to accumulate 6,000 hours of experience working with clients. The 6,000-hour tally assumes that candidates are working a 40-hour work week. There are two parts to the Standard Pathway.
Part one requires that your experience falls within one or more of the seven primary elements of the financial planning process, which include:
- Understanding clients’ personal and financial situations
- Identifying and choosing goals
- Analyzing the client’s course of action and any alternatives they might purse
- Formulating recommendations for a financial plan
- Presenting those recommendations
- Implementing planning recommendations
- Tracking progress
Part two requires that you satisfy your experience in one or more of these five approved ways:
- Engaging with clients individually
- Providing direct or indirect support in the financial planning process
- Supervising financial planners and/or the financial planning process
- Completing an internship or the Financial Planning Association’s residency program
- Teaching college-level courses in financial planning
The Standard Pathway requires a larger time commitment, but it allows for greater flexibility in meeting the CFP experience requirement. Again, you only need experience that checks off one box each from parts one and two.
Experience does not have to be obtained by working in a full-time capacity, which is helpful for students or recent graduates who may be completing an internship or residency. It’s also important to note that the CFP Board only allows you to log 40 hours of experience per work week, regardless of whether your actual working hours exceed that number. There’s an exception allowed if you’re completing the FPA residency program, which can add 500 hours to your experience total.
Option #2: 4,000-Hour Apprenticeship Pathway
The Apprenticeship Pathway allows you to complete the CFP experience requirement in 4,000 hours instead of 6,000 hours. However, there are three parts you must satisfy, rather than two.
- Part one: You must gain experience in all seven primary elements of the financial planning process, as listed above.
- Part two: All 4,000 hours of experience must be delivered by engaging with individual clients.
- Part three: All 4,000 hours of experience must be completed under the direct supervision of a CFP professional, who must vouch for your experience with the CFP Board.
Taking the Apprenticeship Pathway means working within a narrower scope to gain the necessary hours to meet the experience requirement. It also means being more hands-on, as you must engage with clients directly to complete the 4,000 hours.
The CFP Board has additional rules about who qualifies as a “client” for experience purposes. Working with corporate clients doesn’t constitute a qualifying experience. Under the CFP Board’s definition, a client means an individual person who is not a direct family member.
Getting Experience for a CFP Certification
There are a few possibilities for satisfying the CFP experience requirements. The one that you choose can depend on where you are career-wise and the options can include:
- Full-time or part-time employment in the financial services industry
- Completion of an internship at a financial planning firm
- Running your own financial planning company
- Completing an FPA residency or externship
- Working in an employee benefits administration role
- Working as a journalist or freelance writer covering financial planning topics
The CFP Board allows you to leverage prior experience in financial planning if you have it, though it’s not necessary. If you’re a recent graduate, for example, you may be starting from zero. It would then be up to you to decide which pathway you want to follow and how to go about getting the hours that you need to become a certified financial planner.
That might include seeking out full-time employment with an established company or starting your own financial services firm. If you’re choosing the latter, using an online lead generation tool can be a time- and cost-efficient way to start getting your first clients.
How to Report Hours for the CFP Experience Requirement
The CFP Board makes it relatively easy to track experience hours as you go. You can enter hours through your Experience Reporting Profile, which is available in your CFP Board online account.
To add new hours, you’ll simply log in, then click on the Experience section of the CFP Certification Tracker. You can continue to do so until you reach 6,000 or 4,000 hours, depending on which pathway you’ve chosen.
Once you’ve logged enough hours, the CFP Board has to verify them to ensure that you’ve completed all necessary activities under the Standard or Apprenticeship pathway. Your supervisor will have to attest to the number of hours worked per work and what form your qualifying activities took. If you’re self-employed or are doing pro bono work, then you can select a qualified attester to verify your experience.
Qualified attesters can include individuals who hold any of these credentials:
Licensed attorneys and individuals who possess a doctorate in business administration or economics from an accredited U.S. college or university can also attest to your experience.
If you don’t complete all of your experience hours within five years of passing the CFP exam, you’ll need to retake it in order to remain a candidate for certification. The CFP Board does offer one-time extensions of three years, but only on a case-by-case basis. You’ll need to contact the Experience department to request an extension, though approval is not guaranteed.
Becoming a certified financial planner is something you might consider if you’re interested in expanding your professional horizons. Understanding the CFP experience requirement and how to go about meeting it is important, as missing any steps in the process could delay your certification.
Tips for Growing Your Advisory Business
- Outsourcing activities can save you time and allow you to focus on things that are likely to generate revenue. If you’re spending a substantial part of your day on prospecting and cold calling, you might consider utilizing a lead generation tool like SmartAdvisor instead. SmartAdvisor can bring vetted leads to you, saving you valuable hours. And you can decide which leads you’d like to follow up on, based on your ideal client profile.
- How visible is your advisory business online? That’s an important question to consider as clients are increasingly relying on internet searches to find an advisor to work with. Developing a comprehensive digital marketing strategy that includes social media content and email could help you to broaden your reach so that you’re more easily found.
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