You may have heard the term CFP® or CERTIFIED FINANCIAL PLANNER™ used in advertisements or by financial advisers, including us here at American Money Management. If you do not know what these terms mean, or would like to deepen your understanding, this article is for you. We currently have four CFP® professionals and one CFP® candidate on staff and can answer any questions you have.
The CERTIFIED FINANCIAL PLANNER™ designation is issued and regulated by the CFP Board of Standards. The designation was developed in the early 1970s under the College for Financial Planning and the Board of Standards was founded in 1985 to independently certify candidates and set standards.
As the name implies, the CERTIFIED FINANCIAL PLANNER™ designation shows that professional financial planners have met the requirements and uphold the standards set by the board. The certification requirements fall into four categories: Education, Examination, Experience, and Ethics.
Education
Candidates must satisfy a two-part educational requirement: completing specific college or university-level courses or having an existing license like a CPA and earning a bachelor’s degree from an accredited college or university. The bachelor’s degree can be in any subject area though with the increase in financial planning majors available, candidates can complete both educational requirements at once.
The coursework requirement must be completed through a CFP Board Registered Program and covers insurance, investments, tax planning, retirement planning, estate planning, and other principles of financial planning. Both parts of the educational requirement must be completed before taking the exam.
Examination
Candidates must pass this rigorous examination which is designed to test knowledge of all aspects of financial planning, from the psychology of financial planning to tax management strategies. This exam ensures CFP® professionals are well-versed in all aspects of financial planning. Your finances do not exist in a vacuum so professional knowledge of how your investment portfolio could affect your tax return, for example, is essential.
Experience
Candidates must have between 4,000 and 6,000 hours of experience performing financial planning for clients. Candidates can get this experience by working under the supervision of another CFP® professional though this is not required. They are not allowed to use the CFP® designation while they are working towards this experience requirement.
Ethics
The CFP Board conducts a background check on all applicants and requires that they affirm they currently meet and will continue to uphold the CFP Board’s Code of Ethics and Standards of Conduct. Applicants can be disqualified for a history of dishonest conduct, revocation of other professional licenses, certain misdemeanors and felonies, as well as other items that may indicate the applicant is not an appropriate candidate.
CFP® professionals must uphold the fiduciary duty for their clients at all times. This means that CFP® professionals must always act in the best interest of their clients when providing financial advice. This is a higher standard that what is required from uncertified financial planners.
Once an individual obtains the CFP® certification, there are ongoing requirements to continue using the designation. CFP® professionals must log a certain number of hours of continuing education every year including two hours of approved ethics education.
These standards help ensure that the public can trust CFP® professionals to provide a high standard of service, thorough advice, and superior ethical responsibility. If you are interested in how our CFP® professionals can help you, call us at (858) 755-0909.