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April 7, 1999

Wall Street Credentials

CFP
Certified Financial Planner

Overview -- The CFP designation is a specialized designation for those looking to use a credential specific to financial planning and related topics. Financial planners generally offer advice concerning estate planning, investment allocation, taxes, retirement planning, risk management, and insurance.

The CFP designation simply means that a person has the skills to be able to help clients achieve a sound fiscal foundation. Many CFPs mix their practices with other professional functions, such as selling insurance or giving investment advice. CFPs may give advice concerning specific stocks, but they must hold other professional licenses and credentials, such as Registered Representative (RR) or Registered Investment Adviser (RIA).

As with many other careers discussed here, one does not need the CFP credential in order to practice financial planning on a professional basis.

Requirements -- The CFP credential is given exclusively by the Certified Financial Planners Board of Standards. In order to use the designation, the Board of Standards requires the following four E's of its candidates:

Education: The Board of Standards requires that certain academic courses be fulfilled before one can sit for the CFP exam. A potential CFP often takes a "certificate" program at an accredited university to fulfill this requirement, but courses from a traditional degree program may be substituted for classes in the certificate program if they cover the same material. Regardless, the CFP board requires some sort of formal training in all of its required topics before the exam may be taken.

Numerous colleges have certificate programs that prepare a candidate for the CFP exam. Some certificate programs are of the "remote" and self-study type. A completed bachelor's degree is not required to become a CFP, but there is a significant body of knowledge one must master before taking the CFP examination.

Examination: The actual CFP test is given over a two-day period and covers numerous topics within the financial-planning field. Unlike the CPA exam, a candidate must pass all portions of the test in one sitting before the CFP credential will be given.

Experience: If a candidate has an undergraduate degree, three years of full-time, one-on-one professional financial counseling and planning is needed before the CFP designation will be given. If a candidate does not have a bachelor's degree, five years of experience is needed. This experience may be gained anywhere from ten years before taking the exam up to five years after the test is taken.

Ethics: Before receiving their designations, all CFPs must disclose to the CFP Board any past or pending litigation or disciplinary proceedings against them. Like most other professional organizations, the CFP Board requires its members to abide by a stringent code of ethics and professional standards.

For more information, visit the CFP Board of Standards web page at http://www.cfp-board.org.

Time Needed To Fulfill Requirements -- The minimum time one must spend in the financial-planning field before attaining the CFP designation is three years, thanks to the experience requirement of the CFP Board of Standards. Depending on the academic background of a CFP candidate, the required education component can generally be fulfilled in anywhere from three to eighteen months of part-time study.

For someone with minimal financial-planning education, taking courses in all the topics is roughly equivalent to eighteen semester hours of traditional college work.

Next -- Chartered Financial Consultant (ChFC)

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