Certified Financial Planner – CFP
What is a ‘Certified Financial Planner – CFP’
A certified financial planner (CFP) refers to the certification owned and awarded by the Certified Financial Planner Board of Standards, Inc. The CFP designation is awarded to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements. Individuals desiring to become a CFP professional must take extensive exams in the areas of financial planning, taxes, insurance, estate planning and retirement.
BREAKING DOWN ‘Certified Financial Planner – CFP’
Detailed Requirements to Obtain the CFP Designation
A candidate aiming to earn the CFP must meet requirements in four categories: education, CFP exam, work experience and ethics. The education requirements contain two major components. First, the candidate must verify that he holds a bachelor’s degree or higher from an accredited university or college recognized by the U.S. Department of Education. Second, completion of a list of specific coursework in financial planning is required by the CFP Board. Most of this second requirement, besides the capstone course, may be bypassed if the candidate holds one of many accepted financial designations, such as CFA, CPA or a higher degree in business.
All candidates are required to pass the CFP exam, which is a computer-based exam taken by candidates over a three-day period. The exam is 170 multiple choice questions, which include stand-alone questions as well as item-set-style questions. The exam topic weights change regularly but include areas such as professional conduct and regulations, financial planning principles, education planning, risk management, insurance, investments, tax planning, retirement planning, and estate planning. The candidate is tested in these areas as well as his ability to establish client-planner relationships, gathering information, analysis, and developing, communicating, implementing and monitoring recommendations.
As for professional experience, candidates must prove that they have at least three years of full-time professional experience in the industry, or two years of apprenticeship in the industry, which is subject to further individualized requirements. Lastly, the ethics requirements, candidates and CFP holders must adhere to the CFP Board’s standards of professional conduct and regularly disclose information about their involvement in a variety of areas, such as criminal activity, government agency inquiries, bankruptcies, customer complaints or terminations by employers. Also, the CFP Board conducts extensive background checks on all candidates. Earning the CFP exam depends on all the above requirements; however, the CFP Board has final discretion on whether to award the designation to an individual or not.