The CFP certification mark identifies individuals who have met the education, examination, experience and ethics standards established by the Certified Financial Planner Board of Standards, Inc. (CFP Board). The CFP Board owns the CFP certification mark and licenses qualified individuals to use it.
The growing numbers of people seeking financial advice have a right to demand qualified professionals and a high standard of ethical conduct. Individuals licensed by the CFP Board meet both criteria. That's why the financial planning practitioner you select should display the CFP certification mark shown on the cover. Only Certified Financial Planner and CFP licensees are authorized to use this mark.
Below are answers to questions about the mark and choosing a financial planning practitioner.
What does the CFP certification mark mean?
Anyone can call himself or herself a "financial planner," but only those who have fulfilled the certification and annual licensing requirements of the CFP Board can use its certification mark. The CFP mark identifies persons who are dedicated to a high level of professionalism.
Why are CFP Board certification requirements important?
The CFP Board's certification process assures the public that individuals authorized to use its mark have met education, examination and experience requirements to provide comprehensive financial planning advice and are committed to high standards of ethical conduct. The mark also signals that the person has voluntarily submitted to the regulatory authority of the CFP Board.
What are the CFP Board certification requirements?
Education. As a basic requirement, a CFP candidate must have a bachelor's degree or more than five years of financial planning-related experience, in addition to completing courses of study at a college or university that offers a financial planning curriculum, including those registered with the CFP Board.
Examination. Candidates must pass a rigorous two-day, 10-hour comprehensive examination administered by the CFP Board that covers the financial planning process: tax planning, employee benefits, retirement planning, estate planning, investment management and insurance.
Experience. A CFP candidate must prove he or she has work experience in a financial planning related position before being licensed to use the CFP certification mark.
Ethics. CFP candidates must disclose any investigations or legal proceedings related to their professional or business conduct. The CFP Board reviews all such disclosures and investigates the backgrounds of candidates whose disclosure statements indicate areas of concern.
CFP candidates also must agree to adhere to the CFP Board's Code of Ethics and Professional Responsibility. In addition, candidates must declare they understand and agree that the CFP Board has the absolute and unrestricted authority to revoke the right to use the CFP mark if it finds that a licensee has failed to comply with this Code.
Are there any ongoing requirements?
Once certified, CFP licensees must fulfill a biennial continuing education requirement to stay up-to-date on planning strategies and financial trends affecting their clients. In addition, the CFP Board monitors compliance with its Code of Ethics and Professional Responsibility by investigating consumer complaints and licensees' annual disclosures of investigations or legal proceedings, and through its continual review of reports from other regulatory bodies and the press.
How do I know if a financial advisor is a CFP licensee?
Look for the distinctive CFP certification mark. Only those currently licensed by the CFP Board are authorized to use this mark. Ask to see the planner's current CFP Board license, or call the CFP Board of Standards at (303) 830-7543 to confirm whether the planner is a current CFP licensee.
What else should I look for when selecting a financial planning practitioner?
Ask for recommendations. Advisors you trust, business associates and friends may be able to recommend CPF licensees they know. Or, contact the Institute of Certified Financial Planners, a membership organization for CFP licensees, at (303) 751-7600 or (800) 282-7526 for a list of CFP Licensees in your area.
Interview several practitioners.
Ask them to describe their backgrounds and specialty areas. Request references from current clients. In addition, ask if the advisor has a current registration or disclosure statement available that may contain detailed information regarding compensation, conflicts of interest, business affiliations and personal qualifications.
Make sure you understand the practitioner's services and method of compensation.
Request a written advisory contract or engagement letter to document the nature and scope of services the planner will provide. In addition, the advisor should clearly explain how he or she expects to be compensated. Generally, compensation takes one of three forms:
1. Fees. A fee is set based on an hourly rate, flat rate per plan, or perhaps on the value of your assets and/or income.
2. Fees and commissions. Fees are charged depending on the amount of work to be done as described above. If you choose to implement the planning recommendations through the individual, he or she also may receive commissions from products purchased or sold. (Some advisors may offset some portion of their fees if commissions are received in implementing the plan.)
3. Commission. No fee is charged for the planning process, but the advisor is compensated from products purchased when the plan is implemented. It is important to note that the implementation of a financial plan may not require the purchase of financial products or investments. The plan may simply recommend the use of appropriate financial procedures and strategies to accomplish your objectives.
Evaluate your rapport. Several financial planning practitioners may be equally competent. Select the one with whom you feel most comfortable.
What can I expect from the financial planning process?
Personal financial planning denotes the process of determining how individuals can meet their life goals through proper management of their financial resources. This broad-based approach to financial advice distinguishes financial planning practitioners from other professional advisors who typically focus on only one area of a person's financial life.
How can I learn more?
The CFP Board's Code of Ethics and Professional Responsibility sets forth the standards of conduct you can expect from a CFP licensee. If you would like a copy of this document, write the Certified Financial Planner Board of Standards at 1660 Lincoln Street, Suite 3050, Denver, Colorado 80264, or call (303) 830-7543.
The CFP Board is an independent professional regulatory organization. Established in 1985 as a nonprofit corporation, the CFP Board exists to benefit and protect the public by establishing, maintaining and enforcing education, examination, experience and ethics requirements for CFP licensees.
CPF is a certification mark owned by the Certified Financial Planner Board of Standards, Inc. (CFP Board). CFP® and CERTIFIED FINANCIAL PLANNER® are federally registered service marks of the CFP Board.
© Copyright 1994 by the Certified Financial Planner Board of Standards, Inc.