Why Work With A CFP® Professional
If you’re interested in hiring a financial advisor, you might run into someone who has the acronym CFP® next to their name. CFP® stands for CERTIFIED FINANCIAL PLANNER ™ and designates that someone has passed the CFP® exam, thus meeting the requirements of the CFP® Board.
With more than 100 certifications available to financial professionals, the CFP® designation stands out. One of the most notable requirements of the CFP® is the fiduciary—or trustworthiness—aspect. This mandates that every CFP® has to put their clients’ needs ahead of their own.
Most financial professionals are not required to do this, which makes the CFP® and its board an important and unique entity in the protection of consumer interests.
The CFP® Board is in charge of distinguishing who can be certified to be a financial planner. Its Board of Directors has the right to remove the CFP® designation from anyone who has attained it.
Once you have passed the CFP® exam, the CFP® Board continues to monitor advisors. Although it is not a regulatory body and cannot impose fines or legal penalties, advisors who violate the CFP® Board code of ethics will have their CFP® designation removed and be kicked out of the organization.
When you have a profession that’s responsible for managing millions of dollars of investments, you need to have a responsible authority making sure people don’t abuse their power.
Unlike some certificates that are worth little more than the paper they’re printed on, the CFP® designation is one of the most prestigious financial certificates around.
The CFP® designation offered by the CFP® Board is one that is actually significant because it requires so much preliminary work. It usually takes from nine months to two years of study. Some requirements of the CFP® include having a bachelor’s degree and taking courses about the roughly 75 various topics that the CFP® exam covers. The exam takes 6 hours to complete and has 170 questions. The pass rate is about 67%.
If you are in the market for a financial planner, don’t skimp on the CFP® designation. Those three letters show that someone is qualified in financial and investment planning, and that they provide an honest fiduciary benefit to their clients. Not everyone who calls themselves a financial advisor can say that. You can also make sure to hire an advice based CFP® who won't be paid based on how many transactions you do.
Not every financial advisor has a CFP® designation.
The fiduciary aspect of a CFP® designation is extremely important.
There are many requirements, including a 10-hour exam, for becoming a CFP®.