Here’s What the “Certified” in Certified Financial Planner Means to You

Certified Financial Planner

I’ve been a Certified Financial Planner (CFP®) since 1996, and I sometimes get asked about how the certification translates into sound, expert, financial guidance for my clients.

Given only 20 percent of all advisors are CFP’s, I’m always happy to discuss the details of how a financial advisor becomes “certified”, as the process is both rigorous and comprehensive. The certification is administered by the CFP Board and is comprised of four areas known as the 4 E’s. They include:

Education

Certified Financial Planners are required to hold a bachelor’s degree or higher and completed the CFP Boards coursework covering over 70 specific subjects in eight Principal Knowledge Topics:

  • Professional Conduct and Regulation
  • General Financial Planning Principles
  • Education Planning
  • Risk Management and Insurance Planning
  • Investment Planning
  • Tax Planning
  • Retirement Savings and Income Planning
  • Estate Planning

As a CFP®, I’m required to renew my certification each year and complete 30 hours of continuing education credits every two years since the financial environment is so dynamic and evolving.

Examination

Once the educational requirements have been completed, a financial advisor must take a two-day, 10-hour comprehensive exam. I can attest that the exam is both rigorous and exhausting. It’s basically the equivalent of the Bar Exam for lawyers. As such, it’s geared for you to fail. A CFP® spends countless hours studying for the exam, but the certification is well worth the effort.

Experience

It’s not enough for the advisor to simply pass the exam to be board “certified.” They must also meet a minimum threshold of either 6,000 hours of experience as a financial advisor, such as meeting with clients, and developing and implementing a financial plan, or 4,000 hours in a more intense Apprenticeship Program.

Ethics

Given financial advisors work with extremely sensitive personal information, it’s imperative that we uphold the highest ethical standards. As such, the CFP Board conducts extensive background checks on all candidates prior to certification. Additionally, the Board investigates any background anomalies, such as an advisor’s involvement in criminal or civil matters, past bankruptcy filings, or customer complaints. Moreover, the Ethics review is an ongoing process and is reviewed each time the CFP® renews their certification.

Given the above, I certainly take my “Certified” status as a Financial Planner seriously. As an investor seeking an advisor, you should as well. I say this because once certified, we are legally required to act as a fiduciary – thus placing your best interest right where it should be –ahead of our own. To learn about the CFP difference contact me mark@toolekinney.com

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