What is a Certified Financial Planner (CFP)?

Certified Financial Planner (CFP) is a professional designation attained by a financial planner or advisor who has successfully completed the requirements set by the Certified Financial Planner Board.

The CFP is a respected designation that denotes a person is a competent, professional and ethical financial planner. CFP professionals must adhere to a code of ethics and professional responsibility, and every applicant must pass a background check before obtaining his or her designation.

Those who obtain the CFP designation usually go on to provide professional financial advice to individuals. However, the CFP designation also gives an advantage to people in a broad range of industries and employment.

How Does a Certified Financial Planner (CFP) Work?

Many financial advisors and planners choose to pursue a CFP certification to improve their financial planning skills and easily communicate their expertise and credibility (and thus marketability) to potential prospects and clients.

Because only an estimated 20% of financial advisors hold a CFP certification, the credential is highly sought after by financial experts and CFP professionals are considered some of the most widely-respected financial planners in the field.

According to the CFP-issuing CFP Board, becoming a CFP professional is a multi-step process that requires:

1) A Bachelor's degree with additional CFP-approved financial planning courses,
2) passing the three-part CFP exam, and
3) working two years in an apprenticeship role or three years in a full-time financial planning role.

Typically before sitting for the CFP exam, an individual must first fulfill a financial planning education requirement.

This can be done by obtaining a Bachelor's degree and then completing a CFP Board-sponsored education program (typically 12-24 months of college-level courses). A candidate may sit for the exam before obtaining a Bachelor's degree, but will not actually receive initial certification until they can submit transcripts proving they have a qualified bachelor's degree.

The CFP Board says certain credentialed experts may bypass the education requirement under the 'Accelerated Path' if they have a:

  • Certified Public Accountant (CPA) license (including inactive licenses)
  • Ph.D. in business, finance or economics
  • License to practice law (including inactive licenses)
  • Chartered Financial Analyst (CFA) designation
  • Doctor of Business Administration degree
  • Chartered Financial Consultant (ChFC) designation
  • CFP certification from the Financial Planning Standards Board Ltd. (FPSB) Affiliate located in your territory or residence outside the US
  • or a Chartered Life Underwriter (CLU) designation.

After the education requirement is fulfilled, the candidate must then pass the CFP examination (more on that in the next section).

Finally, once the education and examination requirements are fulfilled, a CFP candidate must fulfill the CFP experience requirement by completing at least three years of full-time work experience in financial planning or two years in an apprenticeship role.

Why Does a Certified Financial Planner (CFP) Matter?

The CFP exam is a three-session, 10-hour exam. The CFP Board administers the multiple-choice exam three times a year throughout the United States. The board recommends candidates take a minimum of 250 hours to study for the 3-part exam, which covers more than 100 financial planning subjects.

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