What it Means to be a CERTIFIED FINANCIAL PLANNER™

You wouldn’t work with a lawyer who isn’t a bar member, and you wouldn’t step foot onto a plane if the pilot didn’t have a license. When it comes to managing your hard-earned wealth, your standards shouldn’t be any different. Before you begin working with a financial planner, be sure to ask about their credentials. If their answer doesn’t include CFP®, they might not have your best interests in mind.  

This is because being a CERTIFIED FINANCIAL PLANNER™ (CFP®) means following a strict code of ethics. Bound by fiduciary obligation, CFP® professionals must always act in a client’s best interests. While other advisors may still act as fiduciaries, it isn’t always the case. The fiduciary oath taken by CFP® professionals provides peace of mind in knowing every recommendation is made without hidden intentions. To ensure your financial well-being is always front and center, the CFP® Board recommends that you receive written engagement from your financial professional requiring them to have a fiduciary obligation to you.

But fiduciary duty is just one part of what it means to be a CERTIFIED FINANCIAL PLANNER™. The certification process is a comprehensive assessment that embraces four areas of merit: education, examination, experience, and ethics. In this article, we will examine the requisites for becoming a CFP®, which, in our opinion, is a credential to be the best financial planner.

Certification Requirements

The path to becoming a CERTIFIED FINANCIAL PLANNER™ can be difficult, and many fail to meet the requirements. In addition to an examination, CFP® candidates must obtain a certain level of education and experience while demonstrating their commitment to a code of ethics. The professionals who receive the designation are bound to uphold the highest financial planning standards.

The CFP® Board actively investigates complaints, and failure to follow the standards set forth may result in revocation of the CFP® certification. A CERTIFIED FINANCIAL PLANNER™ relies on a clean reputation, and the CFP® Board enforces its guidelines with transparency. If you work with a financial advisor who is not a CFP®, we recommend verifying their standing to ensure the CFP® Board has not taken any disciplinary actions against them.  

Education

Financial planning is a mentally demanding profession. People pursuing this challenging career path must demonstrate proficiency by fulfilling two distinct education requirements. The first is the completion of CFP® Board-approved coursework, which covers eight knowledge domains and 70 topic areas. The second requirement is submitting an official transcript to the CFP® Board to verify the successful completion of a bachelor’s program or higher.

CFP® Board-approved Coursework: Demonstrates a candidate’s knowledge and provides an opportunity to master financial-planning topics they will use daily. After fulfilling the requirements, candidates showcase their expertise by completing a capstone course that showcases financial knowledge in the following areas:

• Professional conduct and regulation
• General principles of financial planning
• Risk management and insurance planning
• Investment planning
• Tax planning
• Retirement savings and income planning
• Estate planning
• Psychology of financial planning

Submit Higher Education Transcript: The CFP Board requires all potential candidates to complete a bachelor’s degree or higher. While there are no discipline or time of completion requirements, the transcript must be official and from an accredited college or university.

Examination

Clients desire CFP® professionals for their intricate financial planning expertise. The education requirements ensure candidates obtain this knowledge, and the examination requirement proves that the candidate has what it takes to be a successful CFP®. The examination to become a CERTIFIED FINANCIAL PLANNER™ is a 3-hour, multiple-choice exam with 170 questions that apply to real-life situations.

The exam process is rigorous, typically requiring hundreds of hours of preparation. The contents of the exam include stand-alone questions, short scenario questions, and case study questions that are all intended to test the candidates’ comprehensive financial knowledge. Despite numerous preparation resources, the CFP® exam remains a challenge to pass. The pass rate for the July 2023 was just 67%. As of writing in November 2023, this is the third-highest pass rate since 1991.

Experience

Practical knowledge and planning skills are indispensable for any CFP®. To demonstrate that a candidate has acquired the necessary experience, the CFP® Board requires that candidates follow either the 6,000-hour standard pathway or the 4,000-hour apprenticeship pathway. Each pathway involves proficiently completing one or more of the seven primary elements of financial planning:

• Act with fiduciary duty
• Offer professional services with integrity
• Competence in all services provided
• Transparency during conflicts of interest
• Sound and objective professional judgment
• Maintain client confidentiality and privacy
• Responsible use of technology
• Timely communication with clients

Standard Pathway: Most candidates follow this pathway. In addition to performing one or more of the seven primary elements mentioned above, candidates will also need experience engaging in one or more of the following activities:

• Personally developing or supervising the delivery of financial planning to clients
• Supporting the financial planning process
• Planning-related teaching
• Internship experience  

Apprenticeship Pathway: Candidates can only complete the apprenticeship pathway under the direct supervision of a CFP® professional. It requires candidates to perform ALL of the seven primary elements while personally delivering financial planning to an individual client.

Ethics

Being a CERTIFIED FINANCIAL PLANNER™ means upholding an obligation to fiduciary duty and adhering to standards outlined by the CFP® Board in the Code of Ethics and Standards of Conduct. CFP® professionals found to be out of touch with the ethical guidelines may face disciplinary action, including having the certification permanently revoked.  

Every CFP® candidate who meets the education, experience, and examination requirements must also pass a detailed background check and commit to an Ethics Declaration. An official CFP® is obligated to display the following characteristics:

• Act with fiduciary duty
• Offer professional services with integrity
• Competence in all services provided
• Transparency during conflicts of interest
• Sound and objective professional judgment
• Maintain client confidentiality and privacy
• Responsible use of technology
• Timely communication with clients

Find a CERTIFIED FINANCIAL PLANNER™ Nearby

Few credentials in the personal financial field are held in higher esteem than a CFP®. It’s a certification synonymous with trust, confidence, and expertise. The rigorous certification requirements ensure that only the most qualified professionals can call themselves a CFP®. Being a CERTIFIED FINANCIAL PLANNER™ means being a trusted expert in the eyes of clients and the community. It means dedication to always doing what’s right. It means upholding a commitment to provide the highest possible standard of financial planning.

With an office in Highland’s Ranch, CO, Morgan Rosel Wealth Management is a high-net-worth wealth management firm where you can find a CERTIFIED FINANCIAL PLANNER™ nearby. Partnering with a financial planner is an important decision that should not be taken lightly.

We’d love to see if we’re the right people for you.