Certified Financial Planner
Encyclopedia
The Certified Financial Planner
(CFP) designation is a professional certification
mark for financial planner
s conferred by the Certified Financial Planner Board of Standards, Inc. (CFP Board) in the United States, Financial Planning Standards Council in Canada and 22 other organizations affiliated with Financial Planning Standards Board (FPSB), the international owner of the CFP mark outside of the United States.
To receive authorization to use the designation, the candidate must meet education, examination, experience and ethics requirements, and pay an ongoing certification fee.. The information relates specifically to CFP certification in the United States. In the UK, the CFP licence is available to financial planners through membership of the Institute of Financial Planning.
To fulfill the education requirement, students are required to complete course training in the above listed topic areas in order to meet the first requirement to sit for the 10 hour CFP Board Certification Examination. A bachelor's degree (or higher), or its equivalent in any discipline, from an accredited college or university is required to attain CFP certification. The bachelor's degree requirement is a condition of initial certification; it is not a requirement to be eligible to take the CFP Certification Examination http://www.cfp.net/become.
Individuals holding professional designations pre-approved by the CFP Board (such as PhD
s in business and economics
, attorneys
, Certified Public Accountant
s (CPA), Chartered Certified Accountant
s (ACCA), Chartered Accountant
s (CA), Chartered Wealth Managers (AAFM), Chartered Life Underwriters (CLU), and Chartered Financial Analyst
s (CFA)) are entitled to register for and take the exam without having to complete the education requirements by using the CFP-board's "challenge" status. In Canada,this involves passing lengthy gruelling exams.
International degrees may be substituted for a U.S. degree if they receive equivalency from a third-party organization. The CFP Board began requiring a college education in 2008. In the early years for the first 25,000 CFP members, you could take the 5 courses and achieve certification with out a comprehensive exam. Later, a comprehensive exam became required in the early 1990s. http://www.cfp.net/aboutus/development.asp
Prior to 1993 the certification exam(s) consisted of six 4 month study topics with a four-hour exam following each topic for a total of two years of study and 24 hours of exams which included both multiple choice and written analysis of case studies.
Even after the student passes the exam and meets one or more of the six primary elements of financial planning, he or she must also have completed the following:
To maintain certification, license holders are also required to complete certain continuing education requirements on an on-going basis in addition to paying a licensing fee every two years.
(FINRA) education website where the CFP certificate program is shown on the FINRA guide to designations.
The CFP Board of Standards program is also defined on the Investopedia list of designations as a financial qualification.
The CFP standards requirements are also documented on the Wall Street Journals list of financial designations which also disclosed FINRA monitored designations.
CFP also has a list of accredited education partners who provide exams and courses
Financial planner
A financial planner or personal financial planner is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes: cash flow management, education planning, retirement planning, investment planning, risk management and insurance...
(CFP) designation is a professional certification
Professional certification
Professional certification, trade certification, or professional designation, often called simply certification or qualification, is a designation earned by a person to assure qualification to perform a job or task...
mark for financial planner
Financial planner
A financial planner or personal financial planner is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes: cash flow management, education planning, retirement planning, investment planning, risk management and insurance...
s conferred by the Certified Financial Planner Board of Standards, Inc. (CFP Board) in the United States, Financial Planning Standards Council in Canada and 22 other organizations affiliated with Financial Planning Standards Board (FPSB), the international owner of the CFP mark outside of the United States.
To receive authorization to use the designation, the candidate must meet education, examination, experience and ethics requirements, and pay an ongoing certification fee.. The information relates specifically to CFP certification in the United States. In the UK, the CFP licence is available to financial planners through membership of the Institute of Financial Planning.
Education requirements
To earn the CFP designation, candidates must meet several requirements—the first of which is the educational requirement, which requires candidates to have a bachelor's degree or higher from an accredited U.S. college or university. http://www.cfp.net/become/examdetails.asp As a first step to the present CFP certification criteria, students must master a list of nearly 100 topics on integrated financial planning. The topics cover major planning areas such as:- General Principles of Finance and Financial Planning
- Insurance Planning
- Employee Benefits Planning
- Investment and Securities Planning
- State and Federal Income Tax Planning
- Estate Tax, Gift Tax, and Transfer Tax Planning
- Asset Protection Planning
- Retirement Planning
- Estate Planning
To fulfill the education requirement, students are required to complete course training in the above listed topic areas in order to meet the first requirement to sit for the 10 hour CFP Board Certification Examination. A bachelor's degree (or higher), or its equivalent in any discipline, from an accredited college or university is required to attain CFP certification. The bachelor's degree requirement is a condition of initial certification; it is not a requirement to be eligible to take the CFP Certification Examination http://www.cfp.net/become.
Individuals holding professional designations pre-approved by the CFP Board (such as PhD
PHD
PHD may refer to:*Ph.D., a doctorate of philosophy*Ph.D. , a 1980s British group*PHD finger, a protein sequence*PHD Mountain Software, an outdoor clothing and equipment company*PhD Docbook renderer, an XML renderer...
s in business and economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, attorneys
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
, Certified Public Accountant
Certified Public Accountant
Certified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...
s (CPA), Chartered Certified Accountant
Association of Chartered Certified Accountants
Founded in 1904, the Association of Chartered Certified Accountants is the global body for professional accountants offering the Chartered Certified Accountant qualification . it is one of the largest and fastest-growing global accountancy bodies with 147,000 members and 424,000 students in 170...
s (ACCA), Chartered Accountant
Chartered Accountant
Chartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
s (CA), Chartered Wealth Managers (AAFM), Chartered Life Underwriters (CLU), and Chartered Financial Analyst
Chartered Financial Analyst
The Chartered Financial Analyst Program is a graduate level self-study program offered by the CFA Institute to investment and financial professionals...
s (CFA)) are entitled to register for and take the exam without having to complete the education requirements by using the CFP-board's "challenge" status. In Canada,this involves passing lengthy gruelling exams.
International degrees may be substituted for a U.S. degree if they receive equivalency from a third-party organization. The CFP Board began requiring a college education in 2008. In the early years for the first 25,000 CFP members, you could take the 5 courses and achieve certification with out a comprehensive exam. Later, a comprehensive exam became required in the early 1990s. http://www.cfp.net/aboutus/development.asp
Examination
The CFP Certification Examination is a 10-hour multiple choice exam, divided into one four-hour session (Friday afternoon) and two three-hour sessions (Saturday). The exam includes three major case problems and is designed to assess the student's ability to apply his or her knowledge of the aforementioned areas to financial planning situations. The exam was set as a requirement in 1993 and at that time CFPs were grandfathered without having to pass this exam.Prior to 1993 the certification exam(s) consisted of six 4 month study topics with a four-hour exam following each topic for a total of two years of study and 24 hours of exams which included both multiple choice and written analysis of case studies.
Work experience
After passing the examination, the candidate must demonstrate to have exempt and extensive experience in the financial planning field. The CFP Board defines work experience as "the supervision, direct support, teaching or personal delivery of all or part of the personal financial planning process to a client" and such experience must fall within one or more of the following six primary elements of financial planning:- Establishing and Defining the Client Relationship
- Gathering Client Data and Goals
- Analyzing and Evaluating the Client's Financial Status
- Developing and Presenting Financial Planning Recommendations and Alternatives
- Implementing the Financial Planning Recommendations
- Monitoring the Financial Planning Recommendations
Even after the student passes the exam and meets one or more of the six primary elements of financial planning, he or she must also have completed the following:
- Three years full-time or equivalent (2,000 hours per year) part-time experience in the financial planning field
- Be approved by the CFP Board during initial certification, which also involves an extensive background check—including an ethics, character and criminal check.
Ethics and continuing education
The final components are the ethics and continuing education requirements. Students and certificants are required to adhere to the CFP Board Code of Ethics and Professional Responsibility and to the Financial Planning Practice Standards. Registered investment advisors have a fiducial duty to care for investments. The CFP Board has the right to enforce them through its Disciplinary Rules and Procedures.To maintain certification, license holders are also required to complete certain continuing education requirements on an on-going basis in addition to paying a licensing fee every two years.
Other notable references and consumer protection links
The CFP education requirements, exam standards, and public complaint system are dislosed on the U.S. Financial Industry Regulatory AuthorityFinancial Industry Regulatory Authority
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...
(FINRA) education website where the CFP certificate program is shown on the FINRA guide to designations.
The CFP Board of Standards program is also defined on the Investopedia list of designations as a financial qualification.
The CFP standards requirements are also documented on the Wall Street Journals list of financial designations which also disclosed FINRA monitored designations.
CFP also has a list of accredited education partners who provide exams and courses
Related designations
- Chartered Financial Consultant
- Chartered Market TechnicianChartered Market TechnicianChartered Market Technician is a professional designation that confirms proficiency in technical analysis of the financial markets. To hold the designation, membership in the Market Technicians Association is required....
- Chartered Financial AnalystChartered Financial AnalystThe Chartered Financial Analyst Program is a graduate level self-study program offered by the CFA Institute to investment and financial professionals...
- Chartered Alternative Investment AnalystChartered Alternative Investment AnalystChartered Alternative Investment Analyst is a professional designation offered by the CAIA Association to investment professionals who complete a course of study and pass two examinations. The "alternative investments" industry is characterized as dealing with asset classes and investments other...
- Chartered Certified AccountantChartered Certified AccountantChartered Certified Accountant was historically seen as a British qualified accountant designation awarded by the Association of Chartered Certified Accountants . However, although ACCA is UK based, it is a global body for professional accountants with 147,000 qualified members and 424,000...
- Certified Public AccountantCertified Public AccountantCertified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...
- Certified Management AccountantCertified Management AccountantThe title Certified Management Accountant is used by various professional bodies around the world to designate their different professional certifications....
- Certified International Investment AnalystCertified International Investment AnalystCertified International Investment Analyst is a global finance designation offered by the Association of Certified International Investment Analysts to financial professionals; candidates may be financial analysts, portfolio managers or investment advisors...
- Chartered Financial Consultant
- Certified Investment Management Analyst
See also
- Registered Investment AdvisorRegistered Investment AdvisorThe term Registered Investment Adviser is used to describe an Investment Adviser who is registered with the Securities and Exchange Commission or a state's securities agency. The term has been popularized due to its use within the Investment Advisers Act of 1940 and its association to the term...
- Fee-Only financial advisor
- List of Securities Examinations
External links
- Certified Financial Planner Certified Financial Planner Board of Standards
- 10 Questions to Ask When Choosing a Financial Planner - helpful advice to assist in selecting a Financial Planner.
- Investopedia - CPA, CFA Or CFP - Pick Your Abbreviation Carefully
- FPA Answers Your Questions About Financial Planning
- How to Choose a Financial Planner
- Institute of Financial Planning (UK)