What Is a Certified Financial Planner (CFP)?
A certified financial planner (CFP) professional is a financial planner that the Certified Financial Planner Board of Standards (CFP Board) has certified after four requirements. A CFP professional must also act as a fiduciary when giving you financial advice.
The CFP Board calls the four requirements the "4 E's": Education, Exam, Experience and Ethics. In practice that means financial planning coursework plus a bachelor's degree, a 170-question exam, 6,000 hours of experience (or 4,000 apprenticeship hours) and a signed Ethics Declaration. The degree can be finished up to five years after the exam, and the experience hours can come before or after it.
What a Certified Financial Planner Is and What It Takes to Earn It
A CFP professional is a financial planner who has met the CFP Board's four requirements (education, exam, experience and ethics) and who must act as a fiduciary when giving financial advice. The CFP Board allows the bachelor's degree to be finished up to five years after the exam, so a planner can pass the exam before holding the degree.
The fiduciary duty comes from the CFP Board's Code of Ethics and Standards of Conduct. The Code reads: "At all times when providing Financial Advice to a Client, a CFP professional must act as a fiduciary, and therefore, act in the best interests of the Client."
Earning the credential follows a set order. Coursework comes first, because the CFP Board requires it before you can take the exam. The experience hours can land before or after the exam, and the Ethics Declaration is the final step.
If you are deciding whom to hire, the credential tells you two things. The person met the CFP Board's education, exam and experience requirements. The person also agreed to put your best interests first when giving you financial advice.
The Four CFP Certification Requirements in Detail
The CFP Board's certification process page sets out four requirements, and each one has its own timing rule.
| Requirement | What the CFP Board requires | Timing |
|---|---|---|
| Education | Coursework through a CFP Board Registered Program, plus a bachelor's degree or higher in any discipline from an accredited college or university | Coursework before the exam (average 12 to 18 months). Degree within 5 years after passing |
| Exam | 170 multiple-choice questions in two 3-hour sessions over one day | After the coursework |
| Experience | 6,000 hours of professional experience related to the financial planning process, or 4,000 apprenticeship hours that meet additional requirements | From 10 years before to 5 years after passing the exam |
| Ethics | Sign the Ethics Declaration. A background check is among the final requirements | Final step |
Education has two parts. The coursework must come through a CFP Board Registered Program, and the CFP Board puts the average time to finish it at 12 to 18 months. The degree can be in any discipline, as long as it is a bachelor's or higher from an accredited college or university.
The exam runs two 3-hour sessions on one day, which adds up to 6 hours of testing. It mixes stand-alone questions, scenario-based questions and questions tied to case studies. All 170 questions are multiple choice.
Experience has two paths. The standard path is 6,000 hours of professional experience related to the financial planning process. The apprenticeship path asks for 4,000 hours, which is 2,000 fewer, but those hours must meet additional requirements.
The experience window opens 10 years before the exam and closes 5 years after it, so the hours must fall inside a 15-year span. The CFP Board says the experience requirement prepares a planner to provide personal financial planning to the public without supervision. Passing the exam completes one of the four requirements, and certification needs all four.
The Seven Practice Standards a Certified Financial Planner Follows
The CFP Board Code lists seven practice standards, and their headings describe the planning work a CFP professional does with a client.
- The planner works to understand your personal and financial circumstances.
- The planner identifies and selects goals.
- The planner analyzes your current course of action and potential alternative courses of action.
- The planner develops the financial planning recommendation or recommendations.
- The planner presents the financial planning recommendation or recommendations.
- The planner implements the financial planning recommendation or recommendations.
- The planner monitors progress and updates.
You can turn the seven headings into first-meeting questions that test whether a planner follows each standard. Ask how the planner will learn your circumstances, how goals get selected, and how the planner will monitor progress and update the plan.
The Fiduciary Commitment and Its Limits
The CFP Board's ethics requirement commits a CFP professional to act as a fiduciary when providing financial advice to a client, always putting the client's best interests first. The certification process page calls this the final step on the path to certification. It says signing the Ethics Declaration shows the planner agreed to adhere to high ethical and professional standards for the practice of financial planning.
The credential describes competence and conduct for financial advice. The credential does not set one way to be paid. The CFP Board Code requires a CFP professional giving financial advice to tell you before or at the engagement how you pay and how the professional and firm are compensated. Registration as an adviser or broker must still be checked separately. Our financial advisor vs. financial planner comparison covers those titles.
Investor.gov says the most important question before hiring an investment professional is whether the person is registered with the Securities and Exchange Commission (SEC) or with a state securities regulator. Investor.gov warns that it is "really risky to invest with someone who isn't licensed." It offers a free and simple search tool that shows whether an investment professional is licensed and registered.
Investor.gov also has a "Tricky Titles" warning. It says not to assume that initials after a broker's or adviser's name make that person more qualified than another, because the titles are not all the same and do not necessarily mean better service for you. The initials may even mean the person can sell only certain products, and Investor.gov points to a Financial Industry Regulatory Authority (FINRA) list showing that some credentials are easy to obtain and others are hard-earned.
Pay is the question the CFP initials leave open, so ask the person directly. J.P. Morgan Securities LLC's Form CRS (Client Relationship Summary), for example, says it pays its financial professionals in different ways, including commissions and advisory fees. It also says higher commissions, costs or fees could lead to higher compensation for a financial professional. Our guide to choosing a financial advisor lists more questions to ask before you hire anyone.
Where the CFA and CTFA Credentials Fit
Our guide to the CFA credential covers the Chartered Financial Analyst (CFA) designation. Our guide to the CTFA credential covers the Certified Trust and Fiduciary Advisor (CTFA) designation.
If you need only trust administration, start with the CTFA guide. If you need only investment analysis, start with the CFA guide.
Our answer rests on the CFP Board's requirements as listed on its certification process page. If the CFP Board changes its education, exam, experience or ethics rules, the steps described here change too. The CFP Board certification process page shows the current version.
Our Takeaway
A CFP professional has met four published requirements from the CFP Board and has committed to act as a fiduciary when giving financial advice. The credential signals planning competence, but not how the person is paid or registered, which you still verify. This takeaway rests on the CFP Board's published rules and Investor.gov guidance, and it shifts if you need only trust work or only investment analysis.
Before you hire a certified financial planner, look the person up on the CFP Board verification page and run the registration search on Investor.gov or adviserinfo.sec.gov.
Frequently asked questions
What does a CFP do?
A CFP professional follows the seven practice standards in the CFP Board Code. They are understanding your personal and financial circumstances, identifying and selecting goals, analyzing your current course of action and alternatives, developing recommendations, presenting them, implementing them, and monitoring progress and updating. Whenever the planner gives you financial advice, the Code requires the planner to act as a fiduciary in your best interests.
How do CFPs get paid?
The CFP credential does not set one way to be paid. The CFP Board Code requires a CFP professional giving financial advice to tell you before or at the engagement how you pay and how the professional and firm are compensated. J.P. Morgan Securities LLC's Form CRS, for example, says it pays its financial professionals in different ways, including commissions and advisory fees. The same form says higher commissions, costs or fees could lead to higher compensation for a financial professional, and that is one firm's disclosure rather than a rule for every firm.
Is a CFP worth it?
A CFP is worth looking for if you want a planner who has met the CFP Board's education, exam, experience and ethics requirements and has committed to act as a fiduciary when giving financial advice. The credential does not set how the person is paid, and registration as an adviser or broker still has to be verified separately. Look up registration with the search tool on Investor.gov before you hire.
How do I become a CFP?
You become a CFP professional by meeting the CFP Board's four requirements. Finish coursework through a CFP Board Registered Program (12 to 18 months on average), then pass the 170-question exam. Earn a bachelor's degree within five years of passing, log 6,000 experience hours or 4,000 apprenticeship hours, and sign the Ethics Declaration, as the certification process page lays out.
Sources
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