What Is Certified Financial Planner?
A Certified Financial Planner (CFP®) is a professional who has met rigorous education, examination, experience, and ethics requirements set by the CFP Board, and is held to fiduciary standards when providing financial planning.
Key Characteristics
- Requires rigorous education and examination
- Must have 4,000-6,000 hours of experience
- Held to fiduciary standard for financial planning
- Ongoing continuing education required
- Covers comprehensive financial planning topics
Key Takeaways: Certified Financial Planner
- 1.Requires rigorous education and examination
- 2.Must have 4,000-6,000 hours of experience
- 3.Held to fiduciary standard for financial planning
- 4.Ongoing continuing education required
- 5.Consult a fiduciary financial advisor to understand how certified financial planner applies to your specific financial plan.
Detailed Explanation
The CFP® certification is widely considered the gold standard for financial planners. To earn the designation, candidates must complete a CFP Board-registered education program, pass a comprehensive 170-question exam, accumulate 6,000 hours of professional experience (or 4,000 hours in an apprenticeship), and commit to ongoing continuing education.
CFP® professionals must act as fiduciaries when providing financial planning, meaning they must put their client's interests ahead of their own. They must also disclose conflicts of interest and provide transparent information about their services and compensation.
The certification covers seven major areas: financial planning process, risk management, investment planning, tax planning, retirement planning, estate planning, and psychology of financial planning.
Certified Financial Planner: Quick Reference
| Aspect | Detail |
|---|---|
| Definition | A Certified Financial Planner (CFP®) is a professional who has met rigorous education, examination, experience, and ethics requirements set by the CFP Board, and is held to fiduciary standards when providing financial planning. |
| Category | Credentials |
| Key Feature 1 | Requires rigorous education and examination |
| Key Feature 2 | Must have 4,000-6,000 hours of experience |
| Key Feature 3 | Held to fiduciary standard for financial planning |
| Related Service | Professional Guidance Available |
Source: SWE90 Fiduciary Advisory Team, SEC, IRS, CFP Board
Example Scenario
When choosing between advisors, you notice one is a CFP®. You can verify this at CFP Board's website and know this advisor has demonstrated comprehensive knowledge, committed to ethical standards, and must act in your best interest when providing planning advice.
Why It Matters
The CFP® designation indicates a high level of competence and ethical commitment. Working with a CFP® provides reasonable assurance that your advisor has the knowledge and is required to put your interests first.
"Understanding certified financial planner is one of the building blocks of financial literacy. I advise all my clients to learn this concept thoroughly; it directly impacts how you build, protect, and transfer wealth."
Brett R. Henderson, CIMA, CPFA, CRPS
Fiduciary Financial Advisor, SWE90
786+
Pages of financial education
Source: SWE90
150+
Financial terms defined
Source: SWE90 Knowledgebase
3%+
Potential "Advisor Alpha" value attributed to behavioral coaching, tax-efficient withdrawals, asset location, and rebalancing in a third-party industry study (hypothetical industry-wide estimate; not a SWE90 performance result, expected return, or guarantee)
Source: Vanguard, Putting a value on your value: Quantifying Vanguard Advisor's Alpha (Kinniry et al.), latest update
The Bottom Line
Understanding certified financial planner is essential for making informed financial decisions. A Certified Financial Planner (CFP®) is a professional who has met rigorous education, examination, experience, and ethics requirements set by the CFP Board, and is held to fiduciary standards when providing financial planning. A fiduciary financial advisor can help you evaluate how this concept applies to your specific situation and integrate it into a comprehensive financial plan.
Brett R. Henderson, CIMA, CPFA, CRPS, Fiduciary Financial Advisor, SWE90
Frequently Asked Questions
How do I verify someone is a CFP®?
Use the CFP Board's 'Verify a CFP® Professional' tool at cfp.net. You can also see any disciplinary history.
Is a CFP® always a fiduciary?
CFP® professionals must act as fiduciaries when providing financial planning advice. However; they may also work in roles where they're not providing planning, where fiduciary duty may not apply.
What's the difference between CFP® and CFA®?
CFP® focuses on personal financial planning. CFA® (Chartered Financial Analyst) focuses on investment analysis and portfolio management. Both are prestigious but serve different functions.
Need Help Understanding Certified Financial Planner?
Our fiduciary advisors can help you understand how this concept applies to your specific financial situation.