There are specific steps and requirements to become a Certified Financial Planner (CFP). Candidates must obtain the right education, pass the CFP exam, submit proof of employment and pass a background check. The CFP exam is offered through the CFP Board.
Mandatory Education
Before anyone can apply to the CFP program, they must first meet the prerequisite educational requirements. This means that they must complete an education program that is registered with the CFP Board. Fortunately, there are over 300 registered academic programs in colleges and universities spread across the country to choose from. These include certificate, undergraduate and graduate degree programs offered through various delivery formats, such as self-study, distance education and traditional classroom instruction.
Resource: 20 Best Online Master of Finance Degree Programs
Some of the registered programs offer exclusive educational programs for individual corporations. There are also academic degrees and professional credentials that fulfill the educational requirements. This includes doctorate degrees in business, economics or business administration as well as licensed attorneys, Certified Public Accountants (CPA), Chartered Financial Analysts (CFA), Chartered Financial Consultants (ChFC) and Chartered Life Underwriters (CLU).
Pass the CFP Exam
Most CFPs agree that the CFP certification exam is extremely complex and challenging. The exam is comprised of two 3-hour sessions in which test takers answer 170 questions that cover all the key areas of financial planning services. All questions are multiple choice, but they often offer similar answers that are difficult for test takers to distinguish and decide. The CFP exam is offered three times a year in March, July and November. There are around 50 test taking locations. The application deadline is seven weeks prior to the desired exam date. In order to apply, exam candidates must submit an online or mail a paper application as well as pay the exam fee of around $600.
Some aspiring CFPs prepare for the exam through attending special training or boot camp style classes. It is a good idea to take practice tests and study all elements of the CFP exam. These include the eight principal areas of knowledge related to tax, estate, income, insurance education, retirement, investment and risk management planning. The eight major domains include questions about developing, communicating, implementing and monitoring recommendations. They also include how to establish client-planner relationship, gather necessary information, evaluate client’s financial statuses and maintain professional and regulatory standards.
Gain the Right Employment Experience
The CFP Board requires candidates to have at least three years of qualifying work experience. This full-time experience must be related to any aspect of the personal financial planning process. It can include the direct supervision of professionals who deliver any type of personal financial planning services to clients. It can also include teaching experience related to the personal financial planning process.
For example, an associate financial advisor in a bank or investment firm will provide advice to clients, which is approved by senior advisors, regarding client’s financial plans and investments. Entry-level financial advisors will accumulate analytical, numbers, interpersonal and customer service skills. They may help their clients meet long-term financial goals related to retirement, college tuition, estate planning and tax reduction. They may also help small business owners manage 401(k) and other retirement plans.
Finally, CFP certification applicants must pass the CFP Board’s Candidate Fitness Standards, which includes ethical commitments, professional standards and a comprehensive background check.
