What is a CFP®?
CFP® stands for CERTIFIED FINANCIAL PLANNER™ which is a certification given by the Certified Financial Planner Board of Standards to individuals who successfully meet the initial as well as ongoing certification requirements set by the CFP Board. If you want to become a certified financial planner, you must meet rigorous education requirements in the fields of financial planning, retirement, insurance, taxes, and estate planning. After you have obtained your CFP® certification, you are also required to complete 30 hours of CE (continuing education) requirements each reporting period.
How to Become a CFP?
To earn the CFP® certification is a commitment and an investment in one’s self. On average, the coursework alone takes about 12-18 months to complete and it typically takes 18 to 24 months to become a CFP professional®.
The certification outline is commonly referred to as the “4 E’s of CFP®“:
- Education (The Education Requirement)
- Exam (The CFP® Exam)
- Experience (Hours of Work Experience)
- Ethics (The Ethics Declaration)
First, you must have a bachelor’s degree or higher from a college or university approved by the U.S. Department of Education. You also need to complete the coursework on financial planning through a CFP Board Registered Program.
You need to pass the CFP examination. It’s a computer-based examination that lasts for three days. It contains 170 multiple-choice queries that include item-set-style and stand-alone questions. The exam topics change frequently but include areas like financial planning principles, insurance, risk management, professional regulations and conduct, investments, education planning, estate planning, tax planning, and retirement planning.
You can fulfill the experience requirement either before or after you take the exam but you need to complete either 6,000 hours of professional experience related to the financial planning process or 4,000 hours of apprenticeship experience that meets additional requirements.
You have to abide by the professional conduct standards of the CFP Board and reveal information about your involvement in various areas like customer complaints, terminations by an employer, government agency inquiries, criminal activity, or bankruptcies on a regular basis.
The CFP Board performs comprehensive background checks on candidates. They also have the final say on whether to give a designation to a candidate or not.
How to Find a knowledgeable CERTIFIED FINANCIAL PLANNER™
Your friends and relatives can give you recommendations, but it is still your choice.
Conduct a background check on the CFP® you are interested in working with. Check their work experience and academic qualifications. Contact the CFP Board to ask about their accomplishments and the number of years they have been in business.
The CERTIFIED FINANCIAL PLANNER™ should be able to give you advice on whether you should use index mutual funds or not. Using index mutual funds and Exchange Traded Funds is highly preferable, so make sure that your CFP includes indexing in their services.
You want a certified financial planner who will help you manage your debts and improve your financial state. Ask tough questions and if you are not satisfied, you can move on and look for another CFP®. After all, you will pay for their service and you want to get the best value for your money.