What Does It Take to Become a CFP?


Do you ever get confused when you hear the terms: Financial Adviser, Financial Planner, Financial Consultant, Investment Adviser, Certified Financial Planner? If you do, don't worry, you're not alone.

Hey. This is Jeff Rose, Certified Financial Planner and personal finance expert, here at Wise Bread. Let's look at what the difference is between financial planner and CFP.

What Is a Financial Adviser?

If you've ever done any research on hiring a financial adviser or looking at the differences between the titles, you know it gets really confusing. Here's the thing. If you want to be a financial adviser, all you have to do is get a job with an investment firm or an insurance company, and you could pretty much hold yourself out to be a financial adviser. Pretty scary. To become a certified financial planner, you need to take on a whole new set of requirements and education. Let me explain.

What Is a Certified Financial Planner?

When I first got in the business, I was fresh out of college as a finance major; I passed my Series 7 exam, and became a financial consultant. That was the title that was on my business card, but you could have called me a financial adviser or a financial planner — any of those would've worked. As I advanced in my career, I really wanted something that made me stand out. Upon further research, I learned that CFP, certified financial planner, was the designation to have. The CFP designation embodies financial planning. With that, you cover the principals of general financial planning, investments, retirement, insurance, estate planning, income tax planning. Basically anything that has to do with money and your life is covered in the certified financial planner program. When you figure that everybody is at a different point in their life and has different goals, different objectives, to me, it made sense to get the designation so I could better help my clients. Now that you better understand what the CFP designation means, let's take a look at what it takes to get the designation.

How to Become a CFP

First things first, you must have a bachelor's degree to even start the program. This was a rule that was adopted about 5 years ago, so there are some CFPs that don't have a bachelor's degree. If you want a CFP nowadays, you must have your bachelor's degree. You must also enroll in a course or a program that is sponsored by the College of Financial Planning. There are several ways to do this. You can go to a real-life class setting, you can do an online setting, or you can do self-study. For me, I did the classroom setting in a crash course-like style. Let me explain.

Each month, I would go up to my home office up in Saint Louis, and I would spend 3½ days going through everything financial planning. It was seriously force-fed. I was drinking so much Diet Coke and so much coffee just trying to absorb all the information. I did that for 11 months. Afterwards, you must pass the CFP exam.

The CFP exam is a 2-day comprehensive exam consisting of multiple choice and case studies. They give you pages and pages of sample client data, and you have to determine what is the best option for them. Let me tell you, the CFP exam was by far the hardest exam I've ever taken in my life. I've never studied for anything more than I did that exam, and I'm so thankful I passed.

When you pass the exam, you get to call yourself a CFP, right? Not quite. The final part to becoming a CFP and actually using the designation on your business card, or to even call yourself a certified financial planner, is meeting the experience requirement. The experience requirement is 3 years or 6,000 hours of working in the financial planning industry. You have to be working with clients, analyzing data, presenting client data. Basically, you have to be doing financial planning in order to be able to use that experience requirement. For me, I actually didn't take the exam until I had been in the business for over 4 years, so I more than satisfied that 3-year requirement.

On top of the education and experience requirement, you're also held to a higher ethical standard. If you go onto CFP.net and you want to find info on a potential CFP that you're might be hiring, you can see if anything has been filed against them. For example, have they filed bankruptcy? Has anyone filed a complaint against them? Is there anything that shouldn't be on their record for being a certified financial planner? If that's the case, you'll find that on CFP.net.

Everything I've explained to you just shows what being a CFP is different than a normal financial adviser that doesn't have to go through the scrutiny and the education and experience requirements. If you're looking to hire a financial adviser, I would strongly encourage you to find a CFP. As I mentioned, head on over to CFP.net to find a good financial adviser for you.

If you have any more questions like this, feel free to hit me up. This is Jeff Rose, your resident personal finance expert here at Wise Bread. We'll see you next time. Take care.

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