What It Takes to Become a Certified Financial Planner™
The Certified Financial Planner™ certification has been around for more than 30 years.
In that time, it has become the gold standard of certifications for financial planners. The concepts and coursework involved in earning the certification are extensive, and anyone who holds the CFP® designation is required to act as a fiduciary. Today, there are approximately 90,000 CFP® professionals nationwide with approximately 2,000 working in Washington state. Only 5.4% of all CFP® professionals are under the age of 30.
In order to earn the certification, there are rigorous requirements that must be met, including what is known as the 4 E’s— four separate categories that must be completed in order to earn the certification:
Each CFP® must earn a bachelor’s degree or higher in any discipline from an accredited college or university. In addition to obtaining `a four-year degree, candidates must also complete a CFP® Board Registered Program. These programs consist of seven (7) different classes covering topics related to comprehensive financial planning and culminating in a financial plan presentation. The average time to complete the additional coursework is 12-18 months.
Depending on who you ask, this is the most difficult step in the process. The CFP® exam is 170 questions and administered over two three-hour sessions. The exam is pass/fail with an average pass rate hovering around 60% (for the March 2021 exam, the pass rate was 63%) It is recommended that candidates spend at least 250 hours studying for the test alone.
To fulfill the experience requirement, CFP® candidates have two options. The first is by obtaining 6,000 hours of professional experience related to any of the seven steps of financial planning. Another option is to complete 4,000 hours of apprenticeship experience that encompasses all areas of the financial planning process. Under this category, candidates must work directly for practicing Certified Financial Planners™.
The ethics requirement is the last step to completing the CFP® certification. The high ethical and professional standards require that Certified Financial Planners™ act as fiduciaries when providing financial advice to clients by putting the interests of the client ahead of their own.
I first started working on earning the CFP® designation about a month after I joined HFG Trust in October of 2018. I passed the July 2021 exam and have since completed all of the necessary requirements to earn the CFP® certification.
It was a big undertaking to take this next step in my career. Most of the coursework and studying was done outside of the office after 5pm and on the weekends. It was always a struggle to tell friends and family that I couldn’t go out and do things because I needed to study. I did take a few breaks to accommodate significant life events such as moving into our house and preparing for our wedding in 2020. I think the hardest part was staying disciplined to make sure things were finished.
Most of the program was self-paced, which meant I needed to be on top of my study plan to complete the class on time. The self-paced option is nice because it gives you the freedom to tailor your schedule, but it also allows for ample opportunity to become distracted and fall behind. I tend to become really anxious at the thought of falling behind. In fact, I was always worried whenever I would do something other than study when the weekend came. To be honest, it was not the most enjoyable process, but I kept going because it was an investment in my future.
Not only is the CFP® coursework extensive, it also requires that the individual conduct business in a fiduciary capacity. I was drawn to the fact that the certification itself requires you to put the interests of the client ahead of your own. In this industry, there are a lot of professionals who will recommend different products or investments without understanding their client’s situation. If you are a practicing CFP®, you are held to the highest standard when giving financial advice. Honesty goes a long way. I don’t think I could continue to work without it.
I began studying for the July exam in April, but if I had a chance to do it again, I would give myself more time to prepare. It was recommended to begin studying three months before the exam date; however, I have recommended that my fellow HFG Trust Wealth Planners begin sooner. My goal was to complete 15-20 study hours per week. During the first few weeks, I went through a pretty significant lifestyle change in order to accommodate that amount of time. I also spent a lot of time talking with the other financial advisors to figure out what they did that helped them throughout this process. I did receive a few tips, but the most common response was, “I’m glad that I don’t have to do that again.”
Needless to say, I am thankful for the opportunity to further develop as a professional and as a financial advisor through the CFP® program and designation. It took significant time, effort, and a lot of work to complete the requirements to earn the certification. It was difficult. But after everything is all said and done, I am better for it and more prepared to provide our clients with the service they deserve.
Brent Schafer, CFP®