How to Become a Certified Financial Planner (CFP)

I recently wrote an article on how to become a financial advisor. After writing that, I realized that another article would be necessary to explain how to become a certified financial planner (CFP®).

The Certified Financial Planner (CFP®) designation is becoming the standard in the financial planning industry. More and more studies are being conducted that ask potential clients their preferences in choosing a financial planner, and most of them indicate strong support for the CFP® designation.

There are many reasons for this. With a million or more so called “financial advisors” lurking in the shadows, it’s very important to carry a distinguishing designation. In addition, the CFP® designation mandates a solid knowledge base and provides an excellent regulatory standard in the financial planning world.

Without further ado, here is how to become a certified financial planner (CFP®):

Required Education:

EducationA bachelors degree is required, although it can be in any field. Those with degrees outside of financial planning must take the required classes that are approved by the CFP® board. Those classes currently include:

  1. General principles of financial planning
  2. Insurance planning
  3. Investment planning
  4. Income tax planning
  5. Retirement planning
  6. Estate planning
  7. Interpersonal communication
  8. Professional conduct and fiduciary responsibility
  9. Financial plan development (capstone) course

There are many ways to fulfill the educational requirements of the CFP® board. In fact, there are over 300 colleges and universities across the country which provide the necessary classes. There are online self study programs, bachelors degrees, masters degrees, and even PhD programs like the one I’m currently enrolled in. Let me break them down for you.

Online Self Study Programs 

I almost enrolled in one of these programs before I decided to pursue my PhD. They can be completed at your own pace, on your own schedule. They do not typically count for any actual college credit, but they satisfy the CFP® requirement.

I’ve done a lot of research on the available programs and here is what I’ve found.

  • Dalton controls a big chunk of the online programs. The Dalton courses are expensive and because of that, I wouldn’t enroll. The basic online course is now $5,650 PLUS textbooks. Dalton offers the program through official schools, but all the web pages look alike and all of them cost the same amount. Click Here for an example at the University of Miami.
  • Green consulting offers an online course that has received mostly positive reviews. The total cost is $2,795 plus optional books. I would buy the old editions on Amazon if I were you!
  • Florida State offers a unique program that is actually professor led. The cost is $3,150 plus textbooks. It seems to be a little more involved and the courses are only offered at certain times so you can’t complete the whole thing quite as quick as the other self study options.

Advanced degrees

Financial planning is a rapidly growing profession with an expanding research base. More and more business schools are developing full blown financial planning programs with a ton of support from the CFP board. For this reason and many others, I’m extremely bullish on the future of the profession. For those looking to earn a graduate degree in financial planning, you have more and more options opening up.

  • An online masters degree in financial planning can be obtained from several schools now. Kansas State and the University of Missouri have well known programs, but they are actually part of the Great Plains Interactive Distance Education Alliance program. The program is 42 hours at all of the schools, which teach the same curriculum.
  • Online PhD – I think Kansas State is the only one offering an almost completely online based PhD program. It requires a masters degree for admittance and will take 4ish years to complete.
  • Graduate Degrees on Campus – Many other programs offer graduate programs on campus. Texas Tech has a huge Personal Financial Planning Department.

Exemptions

Holding any of the following degrees or designations will fulfill the educational requirements of the CFP®

  • Certified Public Accountant (CPA) – inactive license acceptable
  • Licensed attorney – inactive license acceptable
  • Chartered Financial Analyst® (CFA®)
  • Doctor of Business Administration
  • Chartered Financial Consultant (ChFC)
  • Ph.D. in business or economics
  • Chartered Life Underwriter (CLU)

The Exam

ExamThe CFP® Certification Examination is a one and a half day, 10-hour exam and is held three-times a year. It consists of 285 multiple choice questions.

The cost for the exam is $595. You can register for the exam when you have successfully fulfilled the education coursework requirements.

The exam typically has a pass rate that hovers just above 50%, so it’s not an easy test.

The exam covers all of the material that is taught in the educational requirements. There are many reviews courses available or plenty of books available for self study.

The Experience

ExperiencedEven if you pass the exam, you can’t use the CFP® designation without work experience. This makes a tough situation for the college graduate who is trying to figure out how to become a certified financial planner.

If you are in college and want to be a certified financial planner, try to get an internship that will count towards the experience requirements.

If you do pass the exam, you can often find a good entry level planning job at a good firm that will satisfy the experience requirements. Although after looking at job offers on the National Association of Personal Financial Advisors (NAPFA), I realized that a good entry level job at an established firm might require relocation, so be prepared.

If you don’t pass the exam, and don’t have any experience, it’s tough to find a job outside of huge brokerage firms that will require thousands of cold calls to hit their commission based sales quotas. I’d avoid the financial salesman route at all cost, but that’s just my opinion.

What are the actual experience requirements you ask? Here are the words straight from the CFP® board:

3 Year Option

A total of three years full time qualifying Experience, or the equivalent 6,000 hours, is required to satisfy the 3 year Experience Requirement.

Qualifying experience for CFP® Certification must satisfy a two-part requirement.

PART 1: Experience must fall within one or more of the six primary elements of the personal financial planning process:

  1. Establishing and defining the relationship with the client
  2. Gathering client data
  3. Analyzing and evaluating the client’s financial status
  4. Developing and presenting the financial planning recommendations
  5. Implementing the financial planning recommendations
  6. Monitoring the financial planning recommendations

PART 2: Experience can be satisfied through one or more of the following five ways:

  1. Personal Delivery to individual client
  2. Supervision of personal delivery to individual client
  3. Direct Support of personal delivery to individual client
  4. Teaching
    Courses at a CFP Board-Registered Program or
    Finance-related courses at a university, offered for
    college credit (a maximum of two years of
    Experience credit may be credited for this teaching
    option)
  5. Internships and/or Residency Programs

The Experience requirement must be fulfilled within five years of passing the CFP®exam. If the requirement is not completed within this time frame, your candidacy for CFP® Certification may be terminated. A one-time, three-year extension may be granted on a case-by-case basis.

2 Year Apprenticeship Option

CFP Board’s Experience requirement may be satisfied by completing two years full-time, or the equivalent 4,000 hours, of “Apprenticeship Experience” focused exclusively on personal delivery of all the personal financial planning process to a client, with direct supervision by a CFP® professional, and documented qualifying experience in all six primary elements of the personal financial planning process. Apprenticeship experience cannot be combined with non-Apprenticeship experience hours.

Qualifying experience under the Apprenticeship Experience option for initial CFP®Certification must satisfy a three-part requirement.

PART 1: Apprenticeship activities must include experience in all six primary elements of the personal financial planning process:

  1. Establishing and defining the relationship with the client
  2. Gathering client data
  3. Analyzing and evaluating the client’s financial status
  4. Developing and presenting the financial planning recommendations
  5. Implementing the financial planning recommendations
  6. Monitoring the financial planning recommendations

PART 2: Apprenticeship Experience can only be satisfied through personal delivery to individual clients.

PART 3: All Apprenticeship Experience must be completed under the direct supervision of a CFP® professional and documented, with verification and attestation from the supervising CFP® professional conducted by CFP Board.”

Background and Renewal

After completing the educational, testing, and experience requirement, you must complete a background check and pay a fee to receive your CFP® certification.

Once you have been authorized to use the CFP® marks, you must meet the Board’s renewal standards to continue to use them.

The renewal requirements include the following:

  • Pay the annual $325 certification fee (non-refundable),
  • Submit a properly completed certification application (every two years), and
  • Complete 30 hours of continuing education (CE) every two years.

That’s How to Become a Certified Financial Planner. Did I miss anything?

If you enjoyed this article, sign up for FREE updates!

Comments

  1. Reply

    • By Jacob

      Reply

  2. Reply

    • By Jacob

      Reply

  3. By Stefano

    Reply

    • By Jacob

      Reply

  4. Reply

  5. By Frank

    Reply

    • By Jacob

      Reply

  6. By Justin

    Reply

    • By Jacob

      Reply

  7. Reply

  8. By Me. Bonner

    Reply

    • By Jacob

      Reply

  9. By Martin

    Reply

    • By Jacob

      Reply

  10. Reply

    • By Jacob

      Reply

  11. By Jake Erickson

    Reply

    • By Jacob

      Reply

      • By Laurence

        Reply

        • By Jacob

          Reply

  12. Reply

    • By Jacob

      Reply

  13. Reply

    • By Jacob

      Reply

  14. By anna

    Reply

    • By Jacob

      Reply

  15. By Tammy R

    Reply

    • By Jacob

      Reply

  16. Reply

    • By Jacob

      Reply

  17. By Brian

    Reply

    • By Jacob

      Reply

  18. Reply

    • By Jacob

      Reply

      • Reply

        • By Jacob

          Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

CommentLuv badge