You may have heard of the CFP® certification. The letters stand for Certified Financial Planner™ professional. It’s probably the most widely recognized professional designation in the personal financial planning profession.
You may have seen some TV commercials that promote the certification.
A CFP® professional must meet rigorous education and experience requirements and they are held to the highest ethical and professional standards in the industry. It typically takes two years of ongoing study to fulfill the educational requirements, then a candidate must pass a six-hour comprehensive test on all areas of financial planning.
The education requirements cover nearly 100 integrated financial planning areas including:
- Investment planning
- Tax planning
- Retirement planning
- Estate planning
- Insurance planning
- Financial management
CFP® professionals must complete a comprehensive financial planning curriculum approved by the CFP Board, or equivalent academic coursework. They are also required to complete continuing education coursework, including a CFP Board-approved Code of Ethics course, to ensure their competence in financial planning.
This training is some of the most rigorous in the personal financial planning profession. And only 21 percent of all financial advisors have earned this distinction, according to a 2015 survey by Cerulli Associates, Inc.
What does it mean to be a Certified Financial Planner™?
It is important to understand how CFP® professionals deliver their services and how they are compensated. Planners are compensated for the services they provide in different ways. Some are paid through commissions and others through fees or a combination of both.
While all CFP® practitioners are trained to provide you with comprehensive financial planning services, some specialize in one or more areas, or work with specific types of clients. Be sure to ask the planner how he or she is paid. For example, I always work as my client’s advocate – a fiduciary advisor – and I only am compensated by my clients – a fee-only advisor.
What is the CFP Board’s Code of Ethics?
Through its Code of Ethics, CFP® practitioners agree to act fairly and diligently when providing you with financial planning advice and services, putting your interests first.
The Code of Ethics states that CFP® practitioners are to act with integrity, offering you professional services that are objective and based on your needs. They are required to provide you with information about their sources of compensation and conflicts of interest in writing.
To verify that your planner is authorized by CFP Board to use the CFP® certification marks and to learn more about financial planning, visit letsmakeaplan.org or call toll-free 800-487-1497.
If you would like to talk about how a CFP® practitioner could help you make a more effective financial plan, contact my office at firstname.lastname@example.org. I am always happy to meet with people who are working to reach their financial goals. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.