What is a Certified Financial Planner?

What is a certified financial planner

The field of financial planning has come a long way in the last decade or so. Since more and more people are labeling themselves as "financial planners" in some way, it has become harder for potential clients to know what that really means or what kind of service a planner can provide, and the question of, “What is a Certified Financial Planner?” is often asked. Someone offering insurance products might offer financial planning that leads to a product as a solution; another may provide only investment products that their financial planning converges on. As you might imagine, what is really needed is a standard to be set for clients looking for true, holistic, non-product-based planning. 

Enter the CFP Board in 1985.

What is the CFP Board?

The CFP Board is a 501(c)(3) non-profit organization that serves the public interest by promoting the value of professional, competent, and ethical financial planning services, as represented by those who have attained CERTIFIED FINANCIAL PLANNER™ certification. Financial planners certified by the board possess one of the most rigorous certifications for financial planning knowledge. The CFP Board requires an individual to complete a CFP Board-registered education program and pass the CFP® exam, which occurs three times each year. Additionally, a CFP® professional must have professional experience (6,000 hours) in relevant personal financial planning activities or apprenticeship experience (4,000 hours) that meets additional requirements. This experience must be completed within ten years preceding the exam or five years after. They must also adhere to a strict ethical standard set by the Certified Financial Planner Board of Standards. CFP® professionals, unlike some other types of financial advisors, are held to a fiduciary standard, meaning they are obligated to act in their client's best interest.

What is a CFP® designation?

There is a basic code of ethics for a CERTIFIED FINANCIAL PLANNER™ professional to adhere to.

This code of ethics states that CFP® professionals must:

1. Act with honesty, integrity, competence, and diligence.
2. Act in the client's best interests.
3. Exercise due care.
4. Avoid or disclose and manage conflicts of interest.
5. Maintain confidentiality and protect the privacy of client information.
6. Act in a manner that reflects positively on the financial planning profession and CFP® certification.

What does CFP® stand for?

CFP® stands for CERTIFIED FINANCIAL PLANNER™.

What does CFP® stand for in finance?

As it relates to finance, CERTIFIED FINANCIAL PLANNER™ professionals are available to help individuals manage their financial assets. The type of help they can provide includes investment planning, retirement planning, Social Security planning, insurance, education, etc. A CFP® professional's scope of service is entirely holistic and a relationship-driven type of engagement where the CFP® professional can deliver advice and strategies over a client's lifetime. Typically, CFP® professionals receive compensation in a fee-for-advice model, where the cost can be based on the simplicity or complexity of planning. Compensation for the services of a CFP® professional can occur either through a percentage of assets under management, or through a consulting fee.

Speaking from personal experience, becoming a CERTIFIED FINANCIAL PLANNER™ is one of the most rewarding things I have ever done in my life. We are there to help people make the most out of what they have and even help shape a family's financial future in a way that can have positive ripple effects for generations.

For more information about CERTIFIED FINANCIAL PLANNER™ professionals, please explore the CFP Board website, or feel free to email us with questions.

Learn more about CFP® professionals and other financial designations:

Adam Laibson