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What is a CERTIFIED FINANCIAL PLANNER™ (CFP®) and Do I Need One?

Do I Need a Certified Financial Planner?
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If your financial life is getting more complicated or if you find that you don’t have the time nor the expertise to manage your investment portfolio, don’t worry – there are plenty of financial advisors who make their living optimizing, managing, and improving their client’s financial position.

However, finding a quality financial advisor can be a bit trickier than it may seem at first. Not all advisors are equal, and picking the wrong professional can be costly. 

For example, the term ‘financial advisor’ is often synonymous with financial planner, financial consultant, wealth advisor, wealth manager, asset manager, and more. There are very few rules around who can use these terms. And unfortunately, one term is not necessarily better than the other.

Nonetheless, there are a few things that you can do to quickly narrow the playing field. One of the most effective ways is to check whether or not they have the CERTIFIED FINANCIAL PLANNER™ designation, the industry’s gold standard validating basic competency and trustworthiness. But to understand how a CERTIFIED FINANCIAL PLANNER™ professional can help meet your needs, you must first understand What is a CERTIFIED FINANCIAL PLANNER™? 

What Is a CERTIFIED FINANCIAL PLANNER™?

A CERTIFIED FINANCIAL PLANNER™, or CFP®, describes a specific type of financial professional granted the CFP® designation by the Certified Financial Planner Board of Standards. The CFP Board is a global organization that, though government entities don’t grant it regulatory or similar enforcement authority, nevertheless serves as a self-policing organization that ensures those boasting the CFP® certification meet minimum qualifications and operate according to standardized best practices. 

In short, a CFP® certification means a recognized officiating body vouches for that specific financial advisor’s baseline skills and competency. Of course, a CFP® certificant isn’t the be-all-end-all, but it is an important first step toward identifying a financial advisor who knows what they’re doing and has a professional board backing them.

Most importantly, part of the overall CFP® requirements mandate that a CFP® practitioner act as a fiduciary. This means that they must act in your best economic interests to remain a member in good standing, as opposed to non-certified advisors who may recommend financial products with hefty fees and additional profit for the advisor, creating a conflict of interest. 

It is important to know that while the CFP® enforces the fiduciary standard upon its advisors, it cannot legally enforce this mandate. If a CFP® breaks the fiduciary rule, all the CFP Board can do is discipline the advisor and possibly revoke the CFP® certification. A real fiduciary advisor is one that is regulated by only the SEC, which can better enforce the fiduciary rule. Feel free to learn more about what a fiduciary financial advisor is and why you should work with one

What are the Requirements to Become a CERTIFIED FINANCIAL PLANNER™?

The minimum requirements to become a CFP® include:

Academic and Professional Experience

CFP® professionals must have a bachelor’s degree or higher from an accredited school AND three years of full-time financial planning experience or sufficient part-time experience (minimum 6,000 hours). This helps ensure your financial advisor has both academic and practical experience in assisting clients with managing money.

Additional Coursework or Third-Party Designation

CFP® professionals complete a CFP® Board-registered program or attain third-party certifications like Certified Public Accountant (CPA), attorney’s license, Chartered Financial Analyst (CFA), and similar designations. These courses and certifications validate that the financial advisor’s academic and professional experience matches expectations for standard business practices. There are 7 graduate level courses an advisor must complete as part of the CFP Board’s curriculum. 

  1. General Financial Planning Principles, Professional Conducts, and Client Psychology
  2. Risk Management, Insurance, and Employee Benefits Planning
  3. Investment Planning
  4. Tax Planning
  5. Retirement Savings and Income Planning
  6. Estate Planning
  7. Financial Plan Development – During this final course, an advisor must participate in a case analysis. They will have a sample client case shared with them and the advisor must develop a financial plan and recommendations, presenting it to the faculty.

This additional coursework creates a well-rounded financial advisor who, if not an expert in a specific area, at least knows enough to offer advice and point you in the right direction.

Examination and Continuing Education

Prospective CERTIFIED FINANCIAL PLANNERS™ must pass an extensive exam consisting of 170 questions over six hours (split into two three-hour sessions). The exam tests competency across multiple domains and includes case study exercises and practical, real-life examples. After passing the exam, CFP® professionals must complete 30 hours of accredited continuing education coursework every two years to remain in good standing.

What Does a CERTIFIED FINANCIAL PLANNER™ Do?

Knowing that a financial advisor is a CFP® is only the first step. You need to ensure their competency matches your unique financial needs. While some CFP® professionals specialize in areas like tax or estate planning, a well-rounded CFP® generally covers the gamut of typical financial needs. A successful relationship with a CFP® will have a well-thought-out process that resembles something like this:

  1. Discovery Meeting: This should be a deep discussion in which the advisor learns more about you, your goals, and the resources available. They will also go over your assets, liabilities, tax strategy, and risks. 
  2. Creating a Plan: You’ll work together to create a detailed plan with milestones and intermediate goals. Your plan will be tailored to your specific circumstances—someone nearing retirement will have a different financial plan than a 30-year-old entering into the prime earning years of their life.
  3. Ongoing Accountability: You should expect regular check-ins and updates to address the progress of your financial goals. This will apply not only to your portfolio but also to your personal financial goals (savings target, estate plan updates, etc.). A really good financial advisor will be proactive about these touch points to ensure that you are on track. 

How Do I Find a CERTIFIED FINANCIAL PLANNER™?

Finding a CFP® that fits your needs is easier than ever. With the widespread adoption of Zoom, Google Meet, and other virtual meeting platforms, you’re not restricted to local advisors or long drives. Many CFP® professionals meet their clients remotely (we meet with the majority of our clients via Zoom—most live all over the United States) so you can find the best advisor for your needs regardless of distance.

The simplest way to find a CFP® is through the CFP® Board’s website, where you can filter advisors by:

  • Specialty: Retirement planning, comprehensive financial planning, investment planning, insurance planning, and more.
  • Client Focus: Your specific needs or demographic, including retirees, students, military members, government employees, widows, and similar categories.
  • Asset Management: Some CFP® professionals work with high-net-worth individuals, while others prefer clients looking to optimize their retirement accounts or save money in a brokerage.
  • Language Preferences.

If you find a potential CFP® elsewhere, validating their designation before working with them is wise. They should be able to provide evidence of their certification, or you can check the CFP® Board site to verify their CFP® credentials.

How Much Does a CERTIFIED FINANCIAL PLANNER™ Cost?

Payment structures for CFP® professionals vary, but targeting a fee-only financial planner is advisable. This means they earn based on the fees you pay, not from sales commissions or other profit sources. Fee-only planners typically charge based on total assets managed (a percentage of your invested money), hourly rates, subscription, retainer, or flat fees based on needs and case complexity.

If you’re looking to outsource your financial management strategy, want a second opinion on your plan, or need help in a specific financial area like estate planning or insurance management, a CFP® should be your minimum qualification. Ensuring a planner is a CERTIFIED FINANCIAL PLANNER™ means they’re equipped to work in your best interests, have sufficient academic and practical experience, and stay current with market trends and legal requirements.

This isn’t the end of your journey, though. Once you find a qualified CFP®, prepare a list of questions to ensure they can effectively serve your unique needs.

10 Questions To Ask Every Financial Advisor

We know that finding the perfect financial advisor can be intimidating. You may have the following questions in mind, “How do I know if an advisor has my best interest at heart? Are there any hidden fees? Do they even know what they’re doing with my money?” We have created this guide to simplify the process and to help you along the way. Download now to avoid the biggest mistakes people make.

    Frequently Asked Questions about CERTIFIED FINANCIAL PLANNERS™

    What Does a CFP® Do? 

    Just like a CPA provides tax advice, a CFP® provides personal financial advice. Their expertise may lie in specific financial areas, but CFP® professionals are qualified to assist with investment management, estate planning, tax planning, personal finance goals, and more.

    How Hard is the CFP® Exam? 

    The CFP® exam is rigorous, demanding thorough pre-qualifications and recurring recertification. This level of difficulty is why the CFP® designation is regarded as the gold standard among financial advisors.

    Do I Need a CFP®? 

    Even if you’re comfortable managing your investments, having a CFP® review your financial plan can help identify gaps or enhance your strategy. There are a lot of nuanced tax laws, strategies, and planning techniques that a CFP® professional can navigate more effectively. Many CFP® professionals offer flat-fee, retainers, and hourly payment structures to help you get on the right track.

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