A certified financial planner (CFP) is a financial planning professional who meets a rigorous series of work experience, educational and examination requirements. The charter represents the mastery of several advanced financial concepts, including retirement planning, insurance, taxes, and estate planning.
The charter is awarded by the Certified Financial Planner Board of Standards, Inc. (CFP Board), a U.S.-based organization. There are 25 other organizations affiliated with the CFP Board across the world that award the CFP charter to candidates outside the U.S.
In addition to initial certification requirements, charter holders must pay an ongoing fee and complete continuing education in order to keep their charter active.
Who can Become A CFP?
In order to obtain the CFP charter, candidates must meet certain requirements.
First, the candidate must hold a bachelor’s degree from an accredited university or college. The degree may be in any discipline. This requirement has been in place since 2006. A candidate does not have to hold a bachelor’s degree in order to sit for the CFP exam, but they must have the degree in order to receive the CFP designation.
In addition to the educational requirements, CFP candidates must be able to demonstrate that they have at least three years of full-time professional experience
in the financial planning industry or two years of an industry apprenticeship.
Additionally, the CFP Board performs background checks on all candidates. Even if all requirements are met, the CFP Board awards the charter at their own discretion.
If a candidate meets all education and work experience requirements, they can then prepare for the CFP exam. The exam is multiple-choice, with 170 questions administered in two sessions separated by a 40-minute break. Each session may last up to three hours.
The CFP exam curriculum covers over 100 financial planning topics. It is the equivalent of 18 college semester credit hours. Some of the major topics include retirement planning, tax planning, asset protection planning, insurance planning, and other general financial planning subjects.
There is no pre-determined percentage of questions that must be answered correctly in order to be successful on the exam; the CFP Board evaluates individual exam results and simply issues a “pass” or “fail” result. In 2017, the overall pass rate for the CFP exam was 64%.
Retirement Planning with a CFP
CFP charter holders may practice in all areas of financial planning, but a significant portion of these professionals focus on retirement.
Keep in mind that the CFP charter does not indicate that a practitioner holds any license to sell securities or charge a fee for financial advice. Brokers who sell securities must hold an active Series 7 or Series 6 license, depending on the type of securities they sell. Financial advisors must be registered as Investment Advisor Representatives – either at the federal or state level, depending on the amount of assets they manage.
A CFP charter can be viewed as evidence that a financial professional possesses advanced knowledge of certain financial concepts and has taken extra steps to enhance their skill set. When considering a financial planner for retirement, however, be certain that their approach to planning aligns with your needs and goals.