Certified financial planner, or CFP, is a widely recognized and popular certification that many financial advisors and financial planners earn. A CFP can help you create a financial plan to set you on track to reach your long-term goals, like retirement, sending your child to college, buying a home or just about anything else. CFPs often have specific areas of focus, such as tax planning, estate planning, insurance planning, retirement planning, investing and more. To find a financial advisor who serves your area, try SmartAsset’s free matching tool.
What Is a Certified Financial Planner (CFP)?
A certified financial planner (CFP) is a financial advisor or planner who has earned the title of CFP© through extra accreditation with the Certified Financial Planner Board of Standards. CFPs typically work with clients to both determine their financial goals and build a plan to reach them. They can help make financial decisions and offer recommendations on taxes, investments, retirement accounts and more.
To earn a CFP certification, advisors must pass strict requirements that involve ongoing education, experience and exams. These exams are distributed and managed by the aforementioned CFP Board. If you’re looking for a financial advisor who will focus on helping you with your financial plan, a CFP can help.
Qualifications Needed to Become a Certified Financial Planner
According to the CFP Board’s website, candidates must prove themselves across the “4 E’s” to become a CFP. These “4 E’s” stand for education, experience, exam and ethics. The CFP Board will also conduct a background check on all candidates. Candidates must also disclose to the board any information on criminal activity, customer complaints and employment issues.
Education first requires candidates to hold a bachelor’s degree from an accredited university or college. You won’t need the degree to take the CFP exam, but you will need it for certification. CFP candidates also need further financial advisor education. This includes a college-level program of study in personal financial planning and a CFP Board-registered capstone course. If you already hold a higher business degree (CFA, CPA or others), you may be able to skip some of these requirements.
Of course, taking classes isn’t everything. The CFP Board requires candidates to prove they have 6,000 hours of professional experience in the field. Your experience may also qualify with at least 4,000 hours as an apprentice. However, there may be further requirements.
In accordance with the next “E,” CFP candidates must take the CFP exam. To do this, you must have already completed and proved your completion of the CFP Board coursework requirements. This computer-based exam lasts multiple days and includes 170 multiple choice questions. Questions cover topics like professional conduct, communication, risk management and more. As of July 2022, the exam’s pass rate is 66%.
Finally, the CFP Board requires ethics. Certified financial planners must agree to the CFP Board’s code of ethics and professional conduct. They must apply this code in their practice. This means that certified financial planners must practice integrity, fairness, competence, confidentiality and objectivity. Advisors with the CFP certification have a fiduciary responsibility to act and advise in your best interests and not their own.
Continuing Education Requirements for CFPs
Once a financial advisor has passed all “4 E’s,” they may receive the prestigious title of CFP. It’s good to keep in mind that even if you pass all four, the Board still holds the final say in whether a candidate earns the certification.
That’s not the end of it, however. In order to maintain integrity in the certification, CFP advisors must renew their certification every two years. This requires another application and completion of further education.
The 30-hour continuing education requirement includes 28 hours of education covering a CFP Board principal topic and two hours of CFP Board-approved ethics education. This renewal ensures that all certified financial planners maintain and update their knowledge on financial matters on a regular basis.
Should I Work With a CFP?
Again, you’re not alone if you don’t have the time or know-how to deal with your finances. Even if you do, it can always help to have an expert eye. Plus, financial decisions can be emotional, complex and demanding. Having an advisor who is guaranteed to help you can lift a huge burden off of your shoulders.
A CFP can help you with a range of services from setting goals to making a budget to handling an inheritance windfall. If you need financial help, a CFP has the title to offer it in that they will have the time and knowledge for whatever you may need. You will just need to determine whether the cost of a CFP is worth the assistance you receive.
Note that there is a difference between a financial counselor and financial planner. A financial planner does more of what we’ve discussed above, like helping you save for retirement. If you’re in some more dire straits and need help getting out of debt or repaying bills, you may want to look into a financial counselor instead of a financial planner.
How to Find a CFP
Before you start looking for a CFP, you should know exactly what you want in an advisor. For example, if you’re looking for help with retirement savings, you may not want an advisor who mostly works in insurance.
Once you know what you need, you can start looking for an advisor with CFP certification. It helps to do your homework on each advisor so you know what they bring to the table. You can even interview potential advisors to make sure you can both work well together. If you don’t know where to start, you can ask family and friends for recommendations before searching online.
You can go directly to the CFP Board website to find an advisor on your own. You can also verify an advisor’s certification through the CFP Board if you find them elsewhere. Your finances have to do with your well-being, so picking the right advisor is as important as finding a doctor or a lawyer. Make sure they’re right for you before picking a financial advisor.
When looking for a financial advisor, you want to know that they’re qualified and trustworthy. The title of CFP helps you pick out the best advisors from the bunch. That way, you can know that they’ve passed the test. Not only have they taken a grueling exam, but they have experience, education and ethics and a certification to prove it.
Tips for Choosing a Financial Advisor
- The process of selecting a financial advisor can be difficult to do on your own. 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.
- The most important qualification to look for in a financial advisor is an adherence to fiduciary duty. By working with a fiduciary advisor, you ensure that they are legally bound to act in your best financial interests.
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