What is a CFP® and Why The Title is Important?

If you are searching for a financial planner you might have run across the CFP^®. What is a CFP you might ask. First, it is important to understand that not all are financial advisors are “certified.” Anyone can call themselves a financial advisor but only those who meet the rigorous requirements of the Certified Financial Planner Board of Standards can call themselves a CERTIFIED FINANCIAL PLANNER™ professional.
The standards of this process, are called “the four Es,” including education, examination, experience, and ethical requirements. They represent four important reasons why it is important for the financial planning consultant you work with be a CFP^®. You need to feel confident and secure that you have chosen a competent, ethical professional for the development of your customized financial plan.

What is a CFP? The Four “E”s Tell the Story:

1. Education

CFP professionals must develop their theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university with a financial planning curriculum that has been approved by the CFP Board. Other options for satisfying the education requirements include showing the attainment of certain professional designations or academic degrees or submitting a transcript review or previous financial planning-related coursework to the CFP Board for review and credit.

2. Examination

CFP practitioners must pass a comprehensive (grueling) two-day, 10-hour CFP Certification Examination that tests their ability to apply financial planning knowledge in an integrated format. This exam is based on research regarding the work planners do on a daily basis covering:

• Financial planning
• Tax planning
• Employee benefits
• Retirement planning
• Estate planning
• Investment management
• Insurance

3. Experience

Before earning the right to use the CFP^® certification marks, CERTIFIED FINANCIAL PLANNER™ professionals must have at least three years of experience in the financial planning process to demonstrate that they have financial counseling skills in addition to applied financial planning knowledge.

4. Ethics

As a final step to certification, CFP practitioners agree to abide by a strict code of professional conduct known as the CFP Board’s Code of Ethics and Professional Responsibility. This code defines the ethical responsibilities to the public, their clients, and employers. A background check is also done by the CFP^® Board during this process, and each individual must disclose any legal proceedings or investigations that are related to their professional or business conduct.

Through the Code of Ethics, CFPs agree to put your interests first and act fairly and diligently when providing you with financial planning advice and services as a fiduciary. The Code of Ethics states that CFP practitioners are to act with integrity, offering you professional services that are objective and based on your best needs, not simply trying to sell a product/service to make a commission. They are required to provide you with information about their sources of compensation and conflicts of interest in writing.

RELATED READING: How much should I expect to pay a CFP^®?

Once CFP^® practitioners are certified, they are required to maintain technical competence and fulfill ethical obligations. Another requirement is that every two years, they must complete a minimum of 30 hours of continuing education to stay current with developments in the financial planning profession and better serve clients. Two of these hours are spent studying or discussing the CFP^® Board’s Code of Ethics or Practice Standards. In addition to the biennial continuing education requirement and as part of the renewal process, all CFP^® practitioners must voluntarily disclose any public, civil, criminal, or disciplinary actions that may have been taken against them during the previous two years. These are all distinct advantages of using a CFP^® over financial advisors or stockbrokers.

If you need a CFP^®, I would love to talk and show you how specifically a CFP can grow your wealth.