A certified financial planner seems like something to assist wealthy people in keeping track of their significant incomes, extensive investments, and multiple bank accounts. That’s not the case, however. If you’ve got debt, if you’re saving for retirement or if you only have general questions on your finances, you would possibly consider a certified financial planner.
Your CFP will study your income, taxes, investments, debts, and every one the other elements of your financial picture. From there, you’ll find out the way to achieve your goals. Your CFP will be there every step of the way to assist you in identifying your goals, find and evaluate financial strategies, and come up with a plan. After you start, your certified financial planner will check in with you frequently to assist you to stay track.
All financial planners aren’t created equal, however. Anybody can say that he or she is a financial planner. But a licensed Financial Planner (CFP) is a formal recognition of experience within the areas of financial planning, taxes, insurance, estate planning, and retirement (such as 401ks). Owned and awarded by the Certified Financial Planner Board of Standards, Inc., the designation is awarded to individuals who complete the CFP Board’s initial exams, then continue ongoing annual education programs to sustain their skills and certification.
Earning the certified financial planner designation involves meeting requirements in four areas: formal education, performance on the CFP exam, relevant work experience, and demonstrated professional ethics.
The education requirements comprise two major components. The candidate must verify that he or she holds a bachelor’s or higher degree from an accredited university or college recognized by the U.S. Department of Education. Second, he or she must complete a list of specific courses in financial planning, as specified by the CFP Board. Much of this second requirement is usually waived if the candidate holds specific accepted commercial designations, like CFA, or CPA, or has a higher degree in business, like an MBA.
The CFP exam comprises 170 multiple-choice questions that encompass over 100 topics associated with financial planning. The scope includes professional conduct and regulations, financial planning principles, education planning, risk management, insurance, investments, tax planning, retirement planning, and estate planning. The varied topic areas are weighted, and therefore the most up-to-date weighting is accessible on the CFP Board website. Further questions test the candidate’s expertise in establishing client-planner relationships and gathering relevant information. Their ability to analyze, develop, communicate, implement, and monitor the recommendations they make to their clients.
As for the professional experience, candidates must prove they have a minimum of three years (or 6,000 hours) of full-time professional experience within the industry, or two years (4,000 hours) in an apprenticeship role, which is then subject to further individualized requirements.
Lastly, candidates and CFP holders must adhere to the CFP Board’s standards of professional conduct. They have to also regularly disclose information about their involvement during a variety of areas, like criminal activity, inquiries by government agencies, bankruptcies, customer complaints, or terminations by employers. The CFP Board also conducts an in-depth background check on all candidates before granting the certification.
Even successful completion of the above steps doesn’t guarantee receipt of the CFP designation. The CFP Board has final discretion on whether or not to award the designation to an individual.…