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Who Is A CFP Professional Financial Planner?

Dec 16, 2023 By Susan Kelly

Expertise in taxation, insurance, estate planning, and retirement planning (including 401(k)s) are all required for the Certified Financial Planner (CFP) designation.

This credential is bestowed by the Certified Financial Planner Board of Standards, Inc. for those who demonstrate competence in the financial planning industry by passing the CFP Board's initial exams and maintaining their certification through annual continuing education requirements.

The Role Of A CFP Professional In Your Financial Life (CFP)

Certified financial planners are available to assist with personal financial planning. These requirements can include many areas, from financial to educational to retirement and beyond. The primary responsibility of a Certified Financial Planner is to act as a fiduciary concerning your financial resources, which means they will always prioritize your needs and goals.

Comparatively speaking, CFPs cover more ground than investment advisors. Financial planners typically begin by calculating your net worth by analyzing your present cash, assets, investments, and properties. They also consider your obligations, such as mortgages and educational loans.

How Does A CFP Work?

Financial planning is something that CFPs can assist you with. Before making any recommendations, a CFP will likely want to learn about your long-term and short-term financial objectives and your existing and desired levels of risk. Financial planning isn't limited to just retirement; a CFP may also help save for the future, make investment decisions, and even reduce debt.

Some certified financial planners focus on helping clients through specific life transitions, such as divorce or retirement. Therefore, it is vital to clearly understand the services you require before selecting a CFP.

How Can I Start The Process Of Getting My CFP?

There is a solid reason why earning a CFP designation is challenging. Serving as a financial guide for others is a vital service. Certification as a Certified Financial Planner (CFP) can take anywhere from 18 months to 2 years and costs as much as $4,000. (if you already have an undergraduate degree). The following is also required:

Obtain Your Minimum Educational Level

Completing financial planning-specific training and a bachelor's degree or higher are prerequisites for certification by the CFP Board. Once an applicant has passed the exam, they have up to five years from that date to complete their bachelor's degree requirements.

Get A Passing Grade On The Test

The test lasts for six hours and consists of 170 multiple-choice questions. The CFP Board reports that in 2019, roughly 67% of first-time exam participants were successful.

Learn From Working In The Field

Aspiring CFPs must accrue either 6,000 hours of relevant professional experience or 4,000 hours of apprenticeship that satisfies extra standards. These hours can be earned up to 10 years before the exam or 5 years after passing it.

Be Moral And Do The Right Thing

After completing the CFP Board's background check, you will be required to sign the Ethics Declaration, in which you will pledge to operate as a fiduciary for your clients.

Examination For The Credential Of Financial Planner

More than a hundred financial planning-related subjects are covered on the 170 multiple-choice questions that make up the CFP exam. Financial planning principles, risk management, insurance, investments, tax planning, retirement planning, and estate planning are all within the remit of this field.

The Most Recent Subject Weighting Can Be Seen On The CFP Board Website.

This section provides more details about the CFP examination, including how it is conducted, how much it costs, and how the results are presented.

Timing:

Candidates take the exam in two, three-hour sessions on the same day, with a 40-minute break.7 The exam is given in three eight-day windows per year (March, July, and November).

Cost:

The examination cost in the United States is $925, with discounts available for early applications and late applications incurring additional fees.

There Is A Passing Grade If:

Rather than comparing results to those of other people who took the same test, this is a criterion-referenced assessment, in which success is determined by how closely they match a predetermined standard of achievement. This would eliminate potential benefits or drawbacks if previous tests were easier or harder than the current ones.

To Retake An Examination:

You can retake the exam four more times in your lifetime if you don't pass the first time.

Where Can I look For A CFP?

A Certified Financial Planner (CFP) from some online financial planning firms may cost less than a traditional financial advisor. Please find a local financial planner near you by searching the CFP Board's online list of all its qualified CFPs.

Summary

To earn the Certified Financial Planner (CFP) designation, one must have extensive training and experience in the financial planning field, as well as a firm knowledge of ethical principles in the industry. Even if candidates pass the test and complete all conditions, the CFP Board still has the last word in deciding whether or not to award this distinction.

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