FINANCIAL PLANNER: How to Become a Certified Financial Planner

Financial Planner
LUO Business Promotional Shoot is photographed on June 24, 2020. Pictured: Amber Taylor; Charlotte McNaney; Samuel Johnson. (Photo by Andrew Snyder)

According to the United States Census Bureau, more than 78 million people over the age of 65 could be living in the United States by 2035. Many of these residents may seek the assistance of certified financial planners to make the most of their retirement funds. Younger workers may also seek specialized counsel to help them achieve their goals, such as debt repayment, affording their children’s education, or funding their retirement.
The U.S. Bureau of Labor Statistics (BLS) predicts a 15% increase in employment for personal financial advisors through 2028, with more than 40,400 new positions available. Assisting customers with financial planning necessitates specialized training. Continue reading to learn about training opportunities, skill development, and certified financial planner certification.

Who Is a Financial Planner?

A financial planner is a licensed investment specialist who assists individuals and businesses in meeting their long-term financial goals. Financial planners work with clients to examine their goals, risk tolerance, and life or corporate stages before recommending an appropriate class of investments. They may then construct a program to assist the client in meeting those objectives by allocating their available savings among a diverse collection of investments meant to grow or produce income, as desired.

Tax planning, asset allocation, risk management, and retirement and/or estate planning are all areas in which financial planners may specialize.

What Is a Certified Financial Planner (CFP)?

The Certified Financial Planner (CFP) designation is a formal acknowledgment of skill in financial planning, taxes, insurance, estate planning, and retirement (such as with 401(k)s).

The designation is owned and conferred by the Certified Financial Planner Board of Standards, Inc. It is given to those who pass the CFP Board’s initial tests and then undertake ongoing annual education programs to maintain their abilities and certification.

Understanding the Role of a Certified Financial Planner (CFP)

Individuals can use CFPs to help them manage their finances. This might encompass a wide range of requirements such as financial planning, retirement planning, insurance, and education, among others. The most crucial part of a CFP is that they act as a fiduciary for your assets, which means they make decisions in your best interests.

CFPs are comprehensive, especially when compared to investment advisors. CFPs typically begin the process by assessing your present financial situation. This includes any cash, assets, investments, or properties, in order to determine your net worth. They also consider your liabilities, such as mortgages and student debt.

They will then work with you and your needs to develop a financial strategy. For example, if you are approaching retirement age, they will develop a financial plan to get you through your retirement years. Alternatively, if you have a child who will be attending college, they can assist you in developing a financial plan to cover the costs.

A CFP is a type of financial advisor with a certified qualification that indicates extensive knowledge of financial planning. Consider a CFP to be a higher-level financial counselor. The qualifications to become a CFP are, in fact, among the toughest and stringent in the industry.

Do you need the Services of a Financial Planner?

In general, the more complicated your financial situation, the more likely you are to profit from the services of a financial planner.

If your finances are basic, you may be able to do it yourself. However, financial planners can provide an impartial perspective and experience when deciding how to invest your money, what your financial priorities should be, and what kind of insurance coverage and other protections you require. When faced with a life change, such as marriage, divorce, or inheritance, a financial planner can be very beneficial.

Different Types of Financial Planner

It’s worth noting that the phrase “financial planner” is an unregulated umbrella word. Anyone with the title “financial planner” and the ability to provide financial planning services can call oneself such. Some may specialize in specific areas of planning, such as retirement or tax management, while others take a more comprehensive approach. Some may not even have your best interests in mind and should be avoided.

#1. Fiduciary Financial Planner

A fiduciary financial planner is obligated to operate in the best interests of their clients. The word fiduciary duty refers to a planner’s obligation to put their client’s financial interests ahead of their own. In practice, a fiduciary financial planner must provide their clients with the best available solutions at the lowest possible cost, regardless of the fees or commissions, the planner receives from the client or other sources.

Some financial planners are merely held to a standard of suitability. A financial planner or advisor’s suggestions must fit your needs under a suitability criterion. However, they are allowed to recommend products or services that charge you greater fees or earn them higher commissions than equivalent items.

When selecting a financial planner, the best strategy is to go with a fiduciary so you can be confident that the goods and services they offer are best for you, not them.

#2. Certified Financial Planner

The Certified Financial Planner (CFP) certification is an industry accreditation with stringent educational and ethical criteria that fully enables certificates to deliver complete financial planning services.

Notably, all CFPs are required to behave as fiduciaries, and the majority work on a fee-only basis, which means they are only compensated by you, not by the products they recommend. CFPs are cornerstones of the financial planning community due to their extensive training and fiduciary standard—and where many clients choose to begin their financial planning journey.

#3. Investing Consultant

Investment advisers—spelled with an “e” because that is how the law governing these financial planners defines it—are persons or businesses who help clients purchase and sell assets and may provide financial advice. There are two basic categories, distinguished primarily by whether they adhere to the suitability or a fiduciary standard:

  • Registered Representatives: Registered representatives purchase and sell securities on behalf of their clients and are often licensed by the brokerage firms where they work. With a large number of registered representatives, you make the decisions, and the representative merely executes them. Some, on the other hand, represent themselves as financial consultants or planners. If you decide to deal with a registered representative who offers financial advice, bear in mind that they are only held to a suitability standard. This may influence the products and services they recommend to you.
  • Investment Adviser Representatives: Investment adviser representatives (IARs) work for firms known as Registered Investment Advisors (RIAs). They offer financial advising and planning services. IARs, as opposed to registered representatives, are held to a fiduciary standard. Many may have additional credentials, such as CFPs, to bolster their financial planning skills.

#4. Robo-Advisor

Robo-advisors manage investments in an automatic manner. Most will place you in a pre-built investment portfolio depending on your goals and risk tolerance, which they will then manage and maintain for you over time.

Robo-advisors are technically RIAs, which means they are subject to a fiduciary standard as well. An increasing number of them are supplementing their automated products with more complete financial planning given by human planners and CFPs. If you’re a newbie investor who only needs the services of a financial planner on occasion, this hybrid method could be a good fit.

#5. Wealth Manager

Wealth managers, in practice, are financial planners for high-net-worth clients. Because of their customers, they often specialize in parts of financial planning that affect the wealthy, such as estate planning, legal planning, and risk management to preserve assets.

A wealth manager, like a financial planner, is not regulated, which means that anyone, regardless of credentials, can call themselves a wealth manager. This means that some, but not all, wealth managers are fiduciaries.

How to Select a Financial Planner

If you decide that working with a financial planner is the best option for you, there are a few things you should look for:

#1. Credentials

Because anyone can call oneself a financial planner, it’s a good idea to check for widely regarded credentials, such as:

  • CFP: A CFP is well-equipped to assist you in planning every element of your financial life. If you’re searching for general financial advice, a CFP is a good place to start. This is because they must all fulfill stringent requirements and operate as fiduciaries for their customers.
  • CPA: A certified public accountant (CPA) specializes in tax planning and is licensed in their state. If you need assistance managing your taxable income or lowering your tax liability, you should consult with a CPA.
  • CFA: A chartered financial analyst (CFA) can operate as a financial planner. Howeer, most prefer to help businesses manage their finances rather than individual customers. However, if you come across a CFA offering financial planning services, rest certain that they’ve completed several tough professional exams and have years of job experience to qualify for that title.

#2. Fiduciary Obligation

If you are not a financial specialist, you are generally unfamiliar with the intricacies of most financial products and the tax codes that govern them. That is why having a professional assist you through the procedure who is solely concerned with your financial well-being is vital.

Regrettably, not all financial planners are fiduciaries. Some only provide advice on goods that they sell, such as specific investments or insurance accounts. So, they may steer you toward things that will earn them more profits. Ask any prospective financial planners if they are fiduciary. It will help you know whether they are looking out for your bottom line or theirs.

Financial Planner Average Salary

Financial planners can be compensated in a variety of ways. Some rely on product commissions, while others charge a percentage of the assets they manage for you. Others charge an hourly rate, as well as a monthly or annual retainer. Before you enter into a partnership with a financial planner, be sure you understand how they will be charged for their services.

The majority of financial planners work full-time. Others work for investing businesses or banks, while others work for themselves. The certified financial planner’s salary is frequently determined by their geographic location, years of experience, level of education, and any relevant certification.

The average annual salary of a financial planner in the United States is $66,575 USD.

A financial planner’s salary ranges from $14,000 to $150,000 per year in some cases.

The following table shows the average financial planner salary rates, split down by fee type:


Financial Advisor Salary Type
Average Cost
Assets under management (AUM)1.0%  (0.25%-0.5% for robo-advisors)
Hourly fee$253
Per plan$2,318
Retainer$5,704

Clientele Profile

Even generic CFPs may specialize in certain sorts of clients, such as doctors, lawyers, or those with significant student loan debt. Inquire with potential financial planners about the kind of people they generally work with and the services they typically provide. In this manner, you may ensure that you select a professional who has substantial experience dealing with the types of financial challenges you are facing.

Formal Complaints

Unfortunately, not every financial planner is a talented performer. Check their credentials and disciplinary history on BrokerCheck before entering into a partnership with a financial planner who will have access to confidential financial information. If they’ve received any complaints, it could be a red indicator.

Financial Planner Requirements

To gain employment and efficiently advise clients, financial planners often require a combination of the following qualifications:

#1. Education

A bachelor’s degree in finance, accounting, business, or economics is required for the position of a financial planner. Degree programs or coursework in personal financial planning are available at some schools and institutions. Many of these finance professionals seek to get a Master of Business Administration (MBA) or another appropriate master’s degree in order to enhance their careers, specialize in specific sorts of financial planning, or increase their income potential.

#2. Training

When they join a business, most financial planners receive some on-the-job training. They are taught the firm’s procedures and policies and may be supervised by a senior-level financial planner.

Those who want to get certified as a financial planner must first gain experience and training in financial planning before taking the certification exam. One method is to complete a two-year apprenticeship with a certified financial planner or other related finance experts. These experiences include hands-on knowledge and observation of money management, savings planning, and investment advice, as well as understanding the most effective techniques to effectively assist clients.

#3. Financial Planner Certification

To sell securities, stocks, bonds, options, futures, and other regulated financial products, several states require financial advisors to get licensing. Series 6, 7, 63, and 65 are among the licenses available. These professionals can research their state’s requirements for obtaining these types of licenses, which are frequently obtained by completing knowledge exams proctored by the North American Securities Administrators Association.

Financial planners can choose to become certified to offer specific investment products, which will allow them to hone their skills and knowledge and make them more appealing to future employers and clients. The Certified Financial Planner is one such qualification issued by the Certified Financial Planner Board of Standards, Inc. (CFP Board). Education, experience, an examination, and an ethical module are all part of the financial planner certification process. To apply to become a CFP, candidates must have a bachelor’s degree with financial planning curriculum. CFPs must also have three years of financial planning experience before they may hold the designation.

#4. Skills

Financial planners must possess a wide range of hard and soft abilities, which can be acquired through education and experience. Acquire the following abilities to be a successful financial planner job candidate:

  • Math

Financial planners develop budgets, invest capital, and make other financial decisions, thus they must be comfortable working with huge sums of money. It is necessary to be familiar with math, money, and basic bookkeeping.

  • Data examination

A financial planner’s profession also requires extensive research. They monitor the most recent statistics, movements, and trends in financial markets and analyze that data to make well-informed recommendations that positively impact their clients’ financial objectives.

  • Organization

Financial planners frequently work with a diverse range of clients, all of whom entrust the planner with their financial stability. Financial planners put forth a lot of effort to organize their calendars and build detailed client files that include sensitive financial information. Some financial planners work with clients from various geographic places who have a wide range of financial demands. Each customer file must be kept separate and secure by these professionals.

  • Customer care

To manage a successful financial planning business or acquire employment with a firm, financial planners must be able to gain and preserve their clients’ trust. Financial advisors employ customer service abilities such as active listening, empathy, and kindness to win the trust and build relationships. They also keep clients up to date on any potential financial difficulties, changes, or opportunities.

  • Presentation

Financial planners are responsible for developing strategies, portfolios, and budgets and then presenting them to clients for assessment. The more compelling the presentation, the more likely a client will gladly accept their financial planner’s recommendations. To present clients with the most appealing options, these specialists employ sales strategies, good public speaking, and persuading abilities.

How to become a Financial Planner?

If you want to become a financial planner, take the following steps:

  • Continue your education: Earn a bachelor’s degree in accounting, business, or finance after finishing a high school diploma or GED to gain the core information frequently required to become a financial planner.
  • Accumulate experience: You should get experience as a financial planner before becoming qualified. Look for an apprenticeship, internship, or entry-level job with a company or bank.
  • Obtain your license: Some states need financial advisors to obtain a license in order to sell certain securities and assets. Check your state’s standards and look into the licenses you’ll need to sell the financial products that interest you professionally.
  • Obtain a certificate: You could also explore becoming a certified financial planner (CFP) and taking the exam. As a CFP, you will be able to offer specific investment products and demonstrate your financial planning knowledge to prospective companies and clients.
  • Create a resume: Include any educational credentials, licenses, certificates, and experience you may have on your resume. You can use the job description wording to better align your qualifications with the employer’s expectations.

What Does It Take to Become a Certified Financial Planner (CFP)?

Earning the Certified Financial Planner certification entails completing four requirements: formal education, CFP exam performance, relevant work experience, and established professional ethics.

There are two primary components to the schooling requirements. The candidate must demonstrate that they have a bachelor’s degree or higher from an accredited university or college recognized by the United States Department of Education. Second, they must finish a list of particular financial planning courses prescribed by the CFP Board.

Much of the second criteria is usually removed if the candidate possesses certain recognized financial certifications, such as a chartered financial analyst (CFA) or certified public accountant (CPA), or if the candidate has a higher degree in business, such as a master of business administration (MBA).

Candidates must have at least three years (or 6,000 hours) of full-time professional experience in the industry, or two years (4,000 hours) in an apprenticeship capacity, which is then subject to further specific requirements.

Finally, candidates and CFP holders must follow the CFP Board’s professional conduct rules. They must also provide information regarding their engagement in a range of areas, such as criminal conduct, government agency inquiries, bankruptcies, customer complaints, or terminations by employers, on a regular basis. Before issuing certification, the Certified Financial Planner Board also conducts a thorough background check on all candidates.

Even completion of the preceding stages does not ensure the acquisition of the CFP designation. The CFP Board has the final say on whether or not to bestow the designation on an individual.

Exam for Certified Financial Planners (CFP)

The CFP test consists of 170 multiple-choice questions covering more than 100 financial planning subjects. Professional behavior and regulations, financial planning concepts, education planning, risk management, insurance, investments, tax planning, retirement planning, and estate planning are all part of the scope.

The different issue categories are weighted, and the most recent weighting can be seen on the CFP Board website. Further questions assess the candidate’s ability to establish client-planner connections and obtain relevant information, as well as evaluate, formulate, discuss, implement, and monitor the recommendations they give to their clients.

Here’s some more information on the CFP exam’s administration, expenses, and scoring.

  • Timing: Candidates sit for two three-hour sessions on the same day, separated by a 40-minute break. Exams are normally given in three one-week windows: March, July, and November.
  • Cost: $825 for an exam administered at a U.S. testing location. There is a discount for early applicants and a fee for late applications.
  • Passing Score: This is criterion-referenced, which means that performance is judged against a predefined level of required competency rather than against the results of other people who took the same exam. This eliminates any benefits or disadvantages that may have occurred when previous exams were of a lower or higher complexity.
  • Retaking the test: If you fail, you may retake it up to four times in your lifetime.

Workplace of a Financial Planner

Financial planners are typically employed in an office setting. They work for banks, credit unions, government organizations, and corporations, as well as for individuals and families. Despite the fact that they work in cities all around the world, there are a few things that practically any financial planner can expect from their workplace:
Taking a seat at a desk or table at an office

  • Long-term communication with a certain group of clients
  • Working with phones and computers, frequently drafting up reports, performing research, monitoring financial information, and keeping in touch with clients.
  • Working full-time from Monday to Friday, with some employment demanding weekend and holiday hours, as well as mobile availability.
  • Traveling to meet clients, especially if the planner is a freelancer

Example of a Financial Planner Job Description

A local financial advisory firm is looking for an experienced and qualified financial planner to join our downtown office and take on new clients. This expert must have at least five years of experience giving financial advice to people and families from a variety of backgrounds. Our company focuses on debt management, investments, and personal budgets. A Series 65 license is required for the ideal candidate. Our client-focused team is looking for a financial advisor with full-time flexibility. This role has the possibility for professional advancement for the right candidate.

The Certified Financial Planner ® Certification

The most prevalent professional certification is that of a certified financial planner (CFP®), which is owned and granted by the Certified Financial Planner Board of Standards, Inc. It is a nonprofit certifying and standards-setting organization that administers the CFP test. A certified financial planner is a recognized designation indicating experience in financial planning, taxes, insurance, estate planning, and retirement. Individuals who successfully complete the certified financial planner CFP® Board’s first tests and then participate in continuous annual education programs to maintain their skills and certification are awarded the designation.

A CFP® can help clients with much more than just advising them on available assets. “Finances” doesn’t mean just one thing to most people. Whether it’s budgeting, retirement planning, education savings, insurance coverage, or even tax-optimization strategy—and “financial planning” involves far more than just investing.

Choosing the Best Financial Planner

You should interview at least three financial planners before deciding on the best one for you. Make certain to obtain responses to the following questions:

  • What qualifications do you have?
  • Can you give me any references?
  • How much do you charge?
  • What is your area of specialization?
  • Will you be my fiduciary?
  • What kind of services can I expect?
  • How will we resolve disagreements?

Visit the CFP Board of Standards website to check the status of a CFP® and for advice on selecting the best adviser to deal with.

What is the distinction between a Financial Planner and a Financial Advisor?

A financial advisor (or financial consultant) is a broad phrase that refers to a variety of specialists who assist people with their finances.

A financial planner is a sort of financial advisor who provides overall financial advice in addition to services such as investment management. Financial advisors, for example, can assist you in answering issues such as, “How can I prepare for retirement and my child’s college fund at the same time?”

Financial Planner FAQ’s

How long does it take to become a CFP?

Typically, becoming a certified financial planner CFP® professional takes 18-24 months, but the certification process is flexible enough that you can make it work for you.

Is the CFP worth it?

Yes, CFPs are worthwhile investments – I know because I use one — but not just anyone. If he were to retire, it would be difficult to find a replacement since, in finance as in life, it’s all about relationships: the right CFP literally has to be the right person.

Is CFP easier than CFA?

A bachelor’s degree and some college-level financial planning education are required to earn the CFP. Overall, the CFP curriculum is less rigorous and shorter than the CFA program.

What is the CFP pass rate?

In 2019, the total pass rate was 62 percent, with first-time exam takers passing at 66 percent. The CFP Board develops the exam in collaboration with volunteer CFP® experts.

Can you take the CFP exam without experience?

Yes. Candidates can take the CFP® test before they have met the experience requirement. Candidates have up to five years after passing the exam to fulfill the Experience requirement.

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