Feb 17, 2014 Why Your Financial Planner Should Be A CFP®
We’ve all heard the phrase, “people are like snowflakes, all unique in their own special way.” This is true as each of us has different challenges and goals. As a result of our individuality, it’s imperative the advice we receive be personalized to our unique needs. This is especially true for the financial advice we receive. So how do we ensure that the financial guidance we get is appropriate given our individual circumstances?
One way is to make sure the person giving us financial advice is qualified and competent. This can be achieved by making sure your financial planner is a CERTIFIED FINANCIAL PLANNER TM (CFP®). The CFP® designation is a well-regarded mark in the financial industry, and represents that an individual meets certain education, experience, testing, and ethical requirements.
In order to become a CFP® an individual must meet a number of educational requirements. First, they must earn a bachelor’s degree (or higher) from a regionally-accredited college or university.
Second, they must complete a college-level program of study in personal financial planning, or accepted equivalent. The program courses cover topics including estate planning, tax planning, risk management, investments, and retirement planning.
Finally, after receiving the CFP® designation, the person must stay current on any changes affecting the financial planning community. This is accomplished by attending regular continuing education classes. Every two years the individual is required to attend 30 hours of continuing educations classes covering an array of financial planning topics.
Next, the individual must practice for a certain period of time. Specifically, the CFP® Board requires each CFP® designee to have at least three years of professional experience in the field. This allows designees to gain practical, real world experience and become familiar with the many financial issues faced by individuals and families.
Every CFP® designee must pass a rigorous exam in order to be called a CERTIFIED FINANCIAL PLANNER TM. The exam is ten hours and lasts a day and a half. The exam covers a variety of topics including: estate planning, tax, retirement, insurance, and investments. Over the past few years the exam pass rate is just north of 60 percent. 1
Requiring the certification recipient to pass an exam assures the public that the financial advisor has met a level of competency appropriate for professional practice, and is able to apply a number financial principals to a variety of situations.
Finally, every CFP® designee agrees to adhere to the high standards of ethics outlined in the CFP Board’s Standards of Professional Conduct, which include the principals of integrity, objectivity, competence, fairness, confidentiality, professionalism, and diligence when dealing with clients. In addition, they acknowledge the CFP® Board’s right to enforce said principals through its Disciplinary Rules and Procedures.
The CFP® Board also conducts an extensive background check for all designees. During which the individual will be required to disclose information about their background, including involvement in any criminal, civil, governmental, or self regulatory agency proceeding or inquiry, bankruptcy, customer complaint, filing, termination/internal reviews conducted by your employer or firm.
The education, experience, testing and ethical requirements imposed by the CFP® Board ensure a certain level of knowledge and competence. When you are seeking financial help make sure the individual offering advice is a CFP® so you know you are getting professional and appropriate counsel.
If you would like to learn more about the CFP® you can go to the CFP Board’s official website: www.cfp.net.
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Market Update: February 2023