Certified Financial Planner Certification How to Become a CFP
Certified Financial Planner Certification - How to Become a CFP Skip to content
Motley Fool Stock Advisor recommendations have an average return of 397%. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. 30 day money-back guarantee. Sign Up Now If you’re encouraged by the interactions you’ve had with CFP professionals, or intrigued by what you’ve read so far, maybe you’re ready to take the first step toward becoming a CFP yourself. Let’s take a closer look at what to expect from the certification process and what you’ll need to do to remain a CFP certificant in good standing.
Standard Pathway candidates must earn the equivalent of at least 6,000 hours of qualifying experience in at least one of six primary aspects of the financial planning process, per the CFP Board: Establishing and defining the client relationshipGathering data from the clientAnalyzing and evaluating the client’s financial statusDeveloping and presenting the financial planning recommendationsImplementing the financial planning recommendationsMonitoring the financial planning recommendations This experience must be satisfied in at least one of five ways: Personal delivery to individual clientsSupervision of personal delivery to individual clientsSupport of personal delivery to individual clientsTeachingInternships and/or FPA Residency Program Apprenticeship Pathway
Apprenticeship Pathway candidates must earn the equivalent of at least 4,000 hours of qualifying experience in all six of the primary aspects of the financial planning process. This experience may occur only through personal delivery to individual clients under the direct, documented supervision of a CFP professional.
Many of the educational institutions that provide CFP Board-approved coursework also offer a comprehensive exam preparation course that helps students prepare for the case studies and shows how to reason through them. These review courses can provide invaluable insight by giving practical tips about what will likely be covered in detail on the exam. To pass the exam, the student is expected to apply the learned material, as opposed to just remember it, in the way the CFP Board has mandated. Test Format
The exam itself consists of two three-hour sessions separated by a 40-minute break. It consists of 170 multiple-choice questions that force the student to be proactively familiar with all the tenets of financial planning. The test is administered three times a year, in March, July, and November. About four-fifths of the questions cover standalone topics and are worth two points each. Scoring and Results
The exact number of questions that must be answered correctly is not disclosed by the CFP Board. The test is graded according to a highly classified modified Angoff method that uses a bell curve. Students who sit for the exam will receive a notification of pass or fail about 8 weeks after the exam is taken. Those who fail are given the list of topics in which they did poorly, while those who pass are only notified of this. In 2017, the overall national pass rate for the exam was 64%. The first-time pass rate was 69%. The exam is regarded as one of the most difficult in the financial industry, behind the CPA, CFA, and state bar exams for lawyers. Not surprisingly, lawyers and CPAs are most likely to pass.
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By Brian Martucci Date September 14, 2021FEATURED PROMOTION
Since 1985, the Certified Financial Planner Board of Standards, Inc., has issued the CERTIFIED FINANCIAL PLANNER designation to those who have met the educational and experiential requirements and passed the rigorous board exam. This certification is now known all over the world as the definitive professional credential for financial planners and advisors.Why Become a CFP Professional
Different types of financial professionals earn CERTIFIED FINANCIAL PLANNER certification, including stockbrokers, registered investment advisors (RIAs), insurance agents, estate planners, bankers, and tax professionals.Benefits of a CFP Designation
Indeed, pretty much anyone working in the financial industry stands to benefit from carrying the CFP mark on their business card. Notable benefits include: Appeal for Prospective Clients: Earning the CFP mark indicates additional financial expertise and a willingness to work hard and put the customer first. When it comes to attracting clients, CFP professionals have a significant leg up on colleagues without the designation. Many new financial planning prospects prefer to speak only with a CERTIFIED FINANCIAL PLANNER about their situations.Appeal for Employers: CFP professionals are more marketable than non-certificants. In other words, they’re more appealing to financial industry employers, and may therefore have less trouble finding and maintaining employment.Better Compensation: CFP professionals may command higher salaries in corporate jobs and are more likely to be considered for supervisory positions, though career paths and compensation vary widely by employer and industry.Greater Credibility: Those who sell financial products and services may have more public credibility than non-credentialed advisors, and may be entrusted with more complex transactions.Take the First Step Toward Your CFP Certificate
Perhaps you’ve considered working with a CFP professional to make a financial plan for your own family. Maybe you’ve already consulted letsmakeaplan.org to find active CFP certificants in your area. There’s no shortage of reasons to do so, from getting a handle on your day-to-day finances today, to laying out a long-term plan for a secure financial future.Motley Fool Stock Advisor recommendations have an average return of 397%. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. 30 day money-back guarantee. Sign Up Now If you’re encouraged by the interactions you’ve had with CFP professionals, or intrigued by what you’ve read so far, maybe you’re ready to take the first step toward becoming a CFP yourself. Let’s take a closer look at what to expect from the certification process and what you’ll need to do to remain a CFP certificant in good standing.
Requirements to Earn the CFP Mark
There are several main requirements that must be met in order to obtain the CFP mark:1 Professional Experience
All CFP professionals must meet a professional experience requirement. There are two distinct “pathways” to fulfilling this requirement: the Standard Pathway and the Apprenticeship Pathway. Standard PathwayStandard Pathway candidates must earn the equivalent of at least 6,000 hours of qualifying experience in at least one of six primary aspects of the financial planning process, per the CFP Board: Establishing and defining the client relationshipGathering data from the clientAnalyzing and evaluating the client’s financial statusDeveloping and presenting the financial planning recommendationsImplementing the financial planning recommendationsMonitoring the financial planning recommendations This experience must be satisfied in at least one of five ways: Personal delivery to individual clientsSupervision of personal delivery to individual clientsSupport of personal delivery to individual clientsTeachingInternships and/or FPA Residency Program Apprenticeship Pathway
Apprenticeship Pathway candidates must earn the equivalent of at least 4,000 hours of qualifying experience in all six of the primary aspects of the financial planning process. This experience may occur only through personal delivery to individual clients under the direct, documented supervision of a CFP professional.
2 Educational Attainment
All CFP professionals must have a four-year bachelor’s degree from an accredited educational institution. You don’t have to have a completed bachelor’s degree when you sit for the CFP exam, but you must earn your degree within five years of passing the exam.3 Ethics Requirement
CFP candidates are expected to adhere to strict ethical standards in three distinct domains: CFP Certification Application: This is your “ethics declaration”: a complete accounting of relevant information about prior sanctions, convictions, and conflicts of interest. According to the CFP Board, “you must disclose on the CFP Certification Application information about your involvement in several types of matters, including any criminal, civil, self-regulatory organization or governmental agency inquiry, investigation or proceeding, bankruptcy, customer complaint, filing or termination/internal reviews conducted by your employer or firm.”Background Check: The CFP Board reserves the right to conduct a background check to verify information provided on your CFP Certification Application. Depending on the background check’s results, the CFP Board reserves the right to temporarily or permanently bar you from CFP certification.Standards of Professional Conduct: You must affirm that you will adhere to the seven principles of the CFP Code of Ethics: Integrity, Objectivity, Competence, Fairness, Confidentiality, Professionalism and Diligence. You must also adhere to the CFP Rules of Conduct and Practice Standards, which govern professional behavior.4 CFP Coursework
All CFP candidates must complete five college-level courses offered by institutions that have been approved by the CFP Board. According to the CFP Board, these courses cover the following subjects: Professional Conduct and RegulationGeneral Principles of Financial PlanningEducation PlanningRisk Management and Insurance PlanningInvestment PlanningTax PlanningRetirement Savings and Income PlanningEstate PlanningFinancial plan development (capstone) course There are dozens of accredited CFP coursework providers in the U.S., including the College of Financial Planning in Denver, the American College of Financial Planning in Pennsylvania, and self-study providers such as Dalton, Kier, and Ken Zahn. Many universities, both public and private, offer these courses, and a growing number also offer undergraduate and graduate degrees in financial planning.5 The CFP Exam
This is far and away the most difficult part of the certification process. The CFP Board exam is a rigorous daylong exam that tests the student on dozens of financial planning subtopics covered in the CFP coursework. For reference, it’s considerably longer – and deemed more difficult – than the FINRA proctor tests for securities licensure or state-sponsored tests for life, health, and property/casualty insurance. Preparing for the ExamMany of the educational institutions that provide CFP Board-approved coursework also offer a comprehensive exam preparation course that helps students prepare for the case studies and shows how to reason through them. These review courses can provide invaluable insight by giving practical tips about what will likely be covered in detail on the exam. To pass the exam, the student is expected to apply the learned material, as opposed to just remember it, in the way the CFP Board has mandated. Test Format
The exam itself consists of two three-hour sessions separated by a 40-minute break. It consists of 170 multiple-choice questions that force the student to be proactively familiar with all the tenets of financial planning. The test is administered three times a year, in March, July, and November. About four-fifths of the questions cover standalone topics and are worth two points each. Scoring and Results
The exact number of questions that must be answered correctly is not disclosed by the CFP Board. The test is graded according to a highly classified modified Angoff method that uses a bell curve. Students who sit for the exam will receive a notification of pass or fail about 8 weeks after the exam is taken. Those who fail are given the list of topics in which they did poorly, while those who pass are only notified of this. In 2017, the overall national pass rate for the exam was 64%. The first-time pass rate was 69%. The exam is regarded as one of the most difficult in the financial industry, behind the CPA, CFA, and state bar exams for lawyers. Not surprisingly, lawyers and CPAs are most likely to pass.