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CFP vs. Series 7: Differences and When You Need Each

cfp vs series 7

The CFP and Series 7 are two designations you might see in the finance industry that are held by financial advisors. However, the CFP and Series 7 are used for different purposes. A series 7 allows you to sell investment products and securities, while a CFP establishes expertise in financial planning. Regardless of your needs, you can use our free tool to find the right financial advisor for your situation. 

What Is a CFP?

A CFP is a certified financial planner and is considered one of the highest qualifications that finance industry professionals can earn. CFPs work with clients to create a complete financial plan, including every aspect of their finances. However, each CFP typically has a specialty, such as taxes or investments.

CFPs must endure a rigorous examination process and have either three years of work experience or 6,000 hours of equivalent part-time experience. Because of this, the number of CFPs is somewhat limited; as of this writing, fewer than 100,000 individuals have earned the certification according to the CFP Board.

CFP Prerequisites

To be eligible for the CFP, you must have a bachelor’s degree plus three years of full-time financial planning experience or 6,000 hours of equivalent part-time experience. Before sitting for the exam, you must complete a CFP-board registered program or hold at least one of the following:

  • CPA
  • ChFC
  • Chartered life underwriter (CLU)
  • CFA
  • Ph.D. in business or economics
  • Doctor of Business Administration
  • License to practice law

CFP Exam

The CFP exam is administered by the CFP Board. It consists of 170 multiple-choice questions broken into two separate three-hour sections. Both sections are completed in one day, with each section having 85 questions. Some questions are associated with case studies.

The exam is usually offered within three 8-day windows every year during the months of March, July and November. The exam covers each of the principal knowledge domains, each with a different weight:

  • Professional Conduct and Regulation (8%)
  • General Principles of Financial Planning (15%)
  • Risk Management and Insurance Planning (11%)
  • Investment Planning (17%)
  • Tax Planning (14%)
  • Retirement Savings and Income Planning (18%)
  • Estate Planning (10%)
  • Psychology of Financial Planning (7%)

As you can see, while the exam is balanced, the areas of retirement savings and income planning, investment planning and general principles of financial planning carry the most weight. The exam is scored on a pass/fail basis, with passing based on your total score across all sections.

What Is a Series 7?

cfp vs series 7

The Series 7 exam assesses the ability of entry-level representatives to sell securities products. Those who engage in the sale of these securities products are required to pass the exam. Relevant securities include corporate, municipal and government securities, options, direct participation programs, variable contracts and investment company products.

Those who go through this track must complete the Securities Industry Essentials (SIE) in addition to the Series 7 exam. Passing both exams will reward applications with the general securities representative designation, also known as a registered representative.

Series 7 Prerequisites

To be eligible to sit for the Series 7 Exam, you must be associated with and sponsored by, a FINRA member firm or other relevant self-regulatory organization member firm. You can accomplish this by finding a job or internship at a bank or a brokerage firm. This ensures a deeper level of engagement and learning from individuals or firms already helping clients before sitting for the exam.

Series 7 Exam

The Series 7 Exam is administered by the Financial Industry Regulatory Authority (FINRA). It consists of 125 multiple-choice questions and has a duration of 3 hours and 45 minutes. It covers the following topics:

  • Seeking business for a broker-dealer from customers and potential customers (9 questions)
  • Opens accounts after obtaining and evaluating customers’ financial profiles and investment objectives (11 questions)
  • Provides customers with information about investments, makes recommendations, transfers assets and maintains appropriate records (91 questions)
  • Obtains and verifies customers’ purchase and sales instructions and agreements to  process, complete and confirm transactions (14 questions)

This exam is heavily weighted toward providing information about investments and making recommendations, which makes sense given the objective of the exam and licensure. Remember that Series 7 is just one of the exams you must complete if you want to engage in selling securities. As of October 1, 2018, those who wish to be registered representatives must also pass the Securities Industry Essentials Exam.

Bottom Line

cfp vs series 7

The CFP and the Series 7 are two qualifications that may be of interest to financial professionals. In fact, a CFP could also look to complete the Series 7 exam. However, they serve different purposes. The CFP is for experienced financial planners looking to set themselves apart from the competition. Meanwhile, Series 7 is for entry-level financial professionals, usually those working for banks or broker-dealers, who wish to sell securities.

Tips for Financial Planning

  • Regardless of the certifications they hold, financial advisors can help you achieve your financial planning goals. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Managing your investments can be a challenge, and it’s not always easy to know whether you are on track. One way to estimate the growth of your investments is with SmartAsset’s investment calculator. It helps you estimate how much your investments will grow over time based on your starting amount and annual contributions.

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