What is a 'Certified Financial Planner (CFP)?

A certified financial planner refers to the certification owned and awarded by the Certified Financial Planner Board of Standards, Inc. The CFP designation is awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements. Individuals desiring to become a CFP professional must take extensive exams in the areas of financial planning, taxes, insurance, estate planning and retirement.

How to Obtain the Certified Financial Planner Designation

A candidate aiming to earn the CFP designation must meet requirements in four categories: education, CFP exam, work experience and ethics. The education requirements contain two major components. First, the candidate must verify that he or she holds a bachelor's degree or higher from an accredited university or college recognized by the U.S. Department of Education. Second, the CFP Board requires the candidate to complete a list of specific coursework in financial planning. Most of this second requirement, besides the capstone course, may be bypassed if the candidate holds one of many accepted financial designations, such as CFA,CFP or a higher degree in business.

All candidates must pass the computer-based CFP exam, which the candidate takes over a three-day period. The exam is 170 multiple choice questions, which include stand-alone and item-set-style questions. The exam topic weights change regularly but include areas such as professional conduct and regulations, financial planning principles, education planning, risk management, insurance, investments, tax planning, retirement planning, and estate planning. The candidate is tested in these areas as well as his or her ability to establish client-planner relationships, gathering information, analysis, and developing, communicating, implementing and monitoring recommendations.

These areas are ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, Derivatives alternative investments, and portfolio management and wealth planning. The 2017 Level I exam pass rate was 43%.

As for professional experience, candidates must prove they have at least three years of full-time professional experience in the industry, or two years of apprenticeship in the industry, which is subject to further individualized requirements.

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