Email FacebookTwitterMenu burgerClose thin

How CFP Certification Works

How CFP Certification Works

The title of certified financial planner® (CFP) carries a lot of weight. It indicates that the bearer has put the time and work into obtaining CFP certification. Anyone can say they can help you with your finances, but only a select group of financial advisors obtains CFP certification. How does CFP certification work? Let’s take a closer look.

How CFP Certification Works

Does helping people save for retirement and meet other financial goals sound like your calling? If so, you might be wondering whether becoming a financial planner is the right move. And if you’re interested in becoming a financial planner, should you take the plunge and shoot for CFP certification?

CFP certification is based on what the Certified Financial Planner Board of Standards, Inc. calls the “four e’s.” They are: education, examination, experience and ethics.

Obtaining CFP Certification

How CFP Certification Works

Applicants who want to become certified financial planners must satisfy education requirements in relevant subject areas. You can satisfy the education requirement by taking financial planning-related coursework, or by submitting your transcript if you have a previous degree in a related field. Educational institutions around the country offer CFP Board-Registered Programs at various levels (undergraduate, post-graduate, etc.). There are even distance-learning options available.

Once you have satisfied the pre-requisites for your education you can start studying for your examination. The CFP Certification Exam covers the ins and outs of financial planning. For example, you’ll need to understand tax and retirement planning, asset management, life insurance and employee benefits.

The certification process doesn’t just rest on the examination. To earn your CFP certification you must have 6,000 hours of professional experience related to financial planning, or 4,000 hours of apprenticeship experience, plus additional requirements. But as you work your way to meeting the experience requirement you can track your experience hours as you go, using an online account that you’ll set up on the CFP Board portal. The process for tracking your progress toward certification is fairly straightforward. Then, once you hit the hours needed, your online account will show your status as “provisionally accepted.” When you pass your exam your status will change to “accepted.”

CFP Ethics

Once you’ve met the education requirements, passed the exam and certified your hours of experience, you’ll be ready for certification. However, that certification comes with a set of ethics obligations. For example, you must agree to act as a “fiduciary” for your clients, putting their financial interests ahead of your own. In addition, if you fail to abide by the CFP code of conduct you risk a sanction from the CFP Board.

On your CFP® Certification Application you’ll need to disclose any involvement you have in civil or criminal procedures, among other things. In addition to this ethics declaration you’ll need to acknowledge the CFP professional code and the right of the CFP Board to sanction you for any professional misconduct. In addition to reviewing the disclosures you make on your application, CFP Board will also conduct a background check on you.

What Makes CFP Certification Special

Why do some financial planning professionals seek CFP certification? For one thing, the certification is a prestigious credential that can help financial planners stand out from the crowd. For another, getting certified opens up a range of networking, professional development and public service opportunities.

You’ll need to maintain your certification over the course of your career. Every time you apply for re-certification you’ll submit a new ethics disclosure. You’ll also need to keep up with your CFP certification fees and to meet CFP Board’s requirements for continuing education. In short, it’s an ongoing commitment.

The Takeaway

How CFP Certification Works

Becoming a certified financial planner isn’t for everyone. For some, the requirements may be too rigorous or too costly in terms of both time and money. But obtaining CFP certification is a mark of professional excellence that can make it easier to find clients. For consumers looking for financial advisors, CFP certification is an indicator of quality and reliability. That means a lot to people seeking financial stability and reassurance.

Next Steps

  • Consider whether the CFP certification is the right option for you. There are a number of financial advisor certifications to choose from. An alternative to the CFP certification is the chartered financial consultant (ChFC) designation, a similarly prestigious designation that requires similar coursework, in addition to a few elective courses focused on particular areas of financial planning. The key difference between the two certifications is that ChFC candidates don’t have to pass a comprehensive board exam like CFP candidates do.
  • If you’re on the flip side of the equation and you’re trying to find a CFP to work with, SmartAsset can help. So many people reached out to us looking for tax and long-term financial planning help, we started our own matching service to help you find a financial advisor. The SmartAdvisor matching tool can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.

Photo credit: ©, ©, ©