Email FacebookTwitterMenu burgerClose thin

Is a CFP a Fiduciary?


The financial advisory industry comprises a multitude of professionals, services and products. But when it comes to financial planning, advisors who hold the Certified Financial Planner (CFP) designation are the gold standard. These financial advisors must go through a rigorous certification process that includes passing an exam and logging thousands of hours of professional experience. However, the qualifications to be a CFP do not end with accreditation. A CFP not only has an ethical responsibility to operate with honesty and integrity, but also a fiduciary obligation to act in their client’s best interests.

A financial advisor can help you plan for retirement and offer investment advice to meet your financial goals. Find a trusted advisor today.

What Is a Certified Financial Planner?

Simply put, a CFP is a financial advisor who helps clients set and achieve their financial goals. CFPs offer comprehensive and holistic financial planning services that range from creating a budget and managing investments to planning for retirement and establishing an estate plan. CFPs take a wide-angle approach to clients’ finances, which may include their insurance needs, employer-sponsored retirement plans, inherited assets and household expenses.

As mentioned above, there is a wide variety of professionals who operate within the financial advisory industry. While there is technically no legal or regulatory requirements for calling yourself a financial advisor, that certainly is not the case for a CFP.

Only a fraction of financial advisors hold the CFP designation, having undergone an accreditation process that’s administered by the Certified Financial Planner Board of Standards, Inc., commonly known as the CFP Board. This nonprofit organization sets the professional and ethical requirements that all CFPs must meet.

To earn CFP accreditation, a financial professional must first:

  • Complete the CFP Board-approved course work and hold a bachelor’s degree in any discipline from an accredited college or university
  • Pass the CFP exam, a computer-based test consisting of 170 multiple-choice questions that’s administered over the course of two three-hour sessions
  • Have 6,000 hours of professional experience related to the financial planning process or record 4,000 hours of apprenticeship experience that meets additional requirements
  • Commit to act as a fiduciary and serve the best interests of clients at all times when providing financial advice

So if you were wondering whether CFPs are in fact fiduciaries, the answer is yes. Acting as a fiduciary is central to what it means to be a CFP.

Additionally, CFP professionals are required to complete 30 hours of continuing education each reporting period. These advisors must undergo two hours of CFP Board-approved ethics course work and 28 hours covering one or more of the CFP Board’s principal topics.

What Makes a CFP a Fiduciary?

Certified Financial Planners (CFPs) abide by fiduciary duty, which means they have to act in the best interests of their clients.

A fiduciary is a person or entity that acts on behalf of another individual or group. While fiduciaries can be lawyers, trustees, and even real estate agents, the term is often associated with money. As a result, a fiduciary financial advisor puts the financial needs and interests of the client ahead of their own.

There are three specific components to the fiduciary duty that CFPs adhere to when working with clients: duty of loyalty, duty of care and duty to follow client instructions. Beyond prioritizing the client’s interests, duty of loyalty also means avoiding conflicts of interest and fully disclosing any conflicts when they do arise.

A CFP must also act with the “care, skill, prudence, and diligence that a prudent professional would exercise in light of the client’s goals, risk tolerance, objectives, and financial and personal circumstances.” This is known as duty of care.

Lastly, a CFP must comply with the objectives, restrictions and other “reasonable and lawful directions” that a client may impose. This is considered the duty to follow client instructions.

Together, these three requirements comprise fiduciary duty, which guides a CFP in their relationships with clients. However, fiduciary duty is but one of the ethics requirements a CFP must follow. CFPs must also perform their professional duties with integrity, competence, and diligence while offering sound and objective professional judgement.

CFPs vs. Non-Fiduciary Advisors

A financial advisor looks over investment data. Certified Financial Planners (CFPs) are held to a fiduciary standard, which means they have to act in the best interests of their clients.

As referenced earlier, all CFPs are financial advisors, but not all financial advisors are CFPs. The same rings true for fiduciaries. Anyone who offers financial advice can call themselves a financial advisor, but only those who abide by fiduciary duty can be considered a fiduciary.

This is particularly important when it comes to government regulation. All investment advisors registered with the Securities and Exchange Commission – the government agency that regulates the securities industry – are required to act as fiduciaries. So if you’re working with an advisor or planner who is not officially registered with the SEC, they may not be a fiduciary.

Some financial professionals, like stock brokers and insurance agents, are not bound by fiduciary duty. Instead, they follow the less stringent suitability standard. This obligation requires only that investments be suitable to the investor’s circumstances. It may allow a broker to recommend an investment that is more costly and generates a higher commission than a similar low-priced option.

As a result, it’s typically preferable to work with a fiduciary advisor than one who is not obligated to work in your best interests. And when it comes to holistic financial planning, advisors with the CFP designation carry additional credibility.

Bottom Line

The Certified Financial Planner accreditation is among the most prestigious certifications that a financial professional can hold. These professionals are bound by fiduciary duty and must always act in the best interest of their clients when dispensing financial advice. This makes CFPs a choice provider of financial planning services within the advisory industry.

Tips for Picking a Financial Advisor

  • If you want a financial advisor but don’t know how to go about hiring one, we can help. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in 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.
  • The CFP designation is just one of many certifications that financial advisors may hold. While advisors with the chartered financial analyst (CFA) designation have expertise in investments and securities, certified public accountants (CPAs) can help reduce your tax burden and organize your investments. Find an advisor with certifications in the areas that best align with your needs.

Photo credit:, turan,