Certified Financial Planner (CFP): who is this figure and how to become one

Sushree Behera

At its core, financial planning involves thoroughly assessing a client’s complete financial landscape and providing guidance on strategies to realize both their immediate and long-term financial aspirations.

Within this realm, the Certified Financial Planner (CFP) emerges as a distinct category of financial consultant. An official endorsement distinguishes it from the Certified Financial Planner Board of Standards, Inc.

The merits linked with the acquisition of CFP certification extend beyond the confines of one’s professional life and have the potential to enrich personal growth. These advantages encompass a spectrum of benefits, ranging from propelling one’s career trajectory to augmenting the scope of potential earnings. 

Within the diverse tapestry of financial institutions, Certified Financial Planners (CFPs) can find their niche. They might choose to work within expansive financial institutions, such as major banks or credit unions, or opt for nationwide wirehouses. 

Alternatively, they can find their place within more compact, self-sufficient enterprises. Moreover, there is even the exciting prospect of venturing into independent entrepreneurship. As we delve into this guide, we will embark on an in-depth exploration of the intricacies surrounding the CFP journey.

Understanding the Certified Financial Planner (CFP) Certification

Within the realm of financial management, Certified Financial Planners (CFPs) play a pivotal role. They assist individuals across diverse domains, including retirement planning, investment strategies, educational funding, insurance coverage, and tax considerations. Their approach is all-encompassing and tailor-made, aimed at seamlessly amalgamating every facet of a client’s financial landscape. 

Additionally, CFPs are entrusted with the responsibility of acting as fiduciaries. They uphold a standard that mandates prioritising the client’s best interests when dispensing financial counsel.

The journey to becoming a CFP entails traversing through extensive training and accumulating substantial hands-on experience. Embracing the ethical principles set forth by the CFP Board, these professionals pledge to place their clients’ welfare at the forefront of every financial decision. 

At its core, the Certified Financial Planner (CFP) certification stands as a formal acknowledgment of proficiency. It encompasses financial planning and areas such as taxation, insurance, estate management, and retirement provisions. 

This recognition is conferred by the Certified Financial Planner Board of Standards, Inc. It is mark of accomplishment for those who triumph over the initial rigorous examinations prescribed by the CFP Board. Furthermore, the journey doesn’t end there; it is a continuous odyssey marked by annual educational endeavors. These are imperative for the sustenance of skills and the preservation of certification.

Read more: Asset management: what it is and what are the financial products

How to become a Certified Financial Planner?

In order to become a CFP there are a set of steps, which need to be followed. Here’s a comprehensive guide detailing each step in the process:

Step 1 – Educational requirements

The first step to CFP is to enroll in an authorized board program, probably–the CFP Board Registered Program. Where you have to complete the coursework dedicated to financial planning. A bachelor’s degree is the first basic requirement for this category, as mentioned. Other than that, you will need higher education qualifications from accredited colleges or universities. 

Step 2 – Cracking the CFP exam

Upon successfully completing the educational coursework, the next milestone is the CFP exam. This comprehensive exam rigorously assesses your comprehension and knowledge of various financial planning subjects. Once you pass the CFP exam, you’re granted a five-year window to fulfil the bachelor’s degree requirement.

Step 3 – Gather professional expertise

An integral part of your journey is gaining a substantial amount of professional experience in the realm of financial planning. This translates to amassing anywhere from 4,000 to 6,000 hours of hands-on experience, which can be gleaned from internships, apprenticeships, or employment within the financial planning sector.

Step 4 – Endorse ethical tenets and standards

Adhering to the stringent ethical guidelines established by the Certified Financial Planner Board of Standards is paramount. This commitment to unwavering ethical conduct is a cornerstone of your path toward becoming a certified financial planner.

Step 5 – Achieve CFP certification

Once you complete the educational requisites, successfully navigate the CFP exam, accumulate substantial professional experience, and consistently demonstrate ethical principles, you’re ready to apply for the esteemed CFP certification. This distinction, bestowed by the Certified Financial Planner Board of Standards, Inc., serves as a formal acknowledgment of your proficiency in the realm of financial planning.

The Certified Financial Planner (CFP) Exam

The Certified Financial Planner (CFP) exam is the test to screen the eligible candidates who will become certified planners. This exam is conducted in digital mode, having an assessment period of 6 hours. This exam consists of 170-question including both intellectual and real-life-based problems that will test their problem-solving skills. 

The exam will not be conducted in a single 6-hour set; instead, it will have two intervals of 3 hours each. They will place both sets on a single day. The exam’s crucial part is that it further divides each 3-hour section into two distinct subsections.

The question setter sets various question types in the question to test the candidate on multiple parameters. The candidates must complete the coursework of CFP from a CFP Board Registered Program before they can take the CFP exam. After passing the exam, candidates have five years to complete the bachelor’s degree requirement.

Read more: Financial Stability Board (FSB): what is it and what are its functions

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