If you’ve considered getting financial advice, you’ve likely come across the acronym CFP. But what does it mean? A certified financial planner (CFP) acts as your personal financial coach, and they have serious credentials to back up their expertise.
To become a CFP, a person has to complete a course of study and then pass a two-part, rigorous examination that covers wealth management, tax planning, insurance, retirement planning, estate planning, and other crucial personal finance topics. Awarded by the Certified Financial Planner Board of Standards, the CFP designation also means holders must do a significant amount of continuing education each year to keep up their skills—or they risk losing the certification.
Below, we’ll unpack what it takes to earn the CFP designation, exploring the required education, experience, and ethical obligations.
Key Takeaways
- A certified financial planner (CFP) is the gold standard for financial planners, backed by a rigorous certification from the CFP Board of Standards.
- These professionals are often the go-to experts for life’s big financial decisions, from retirement and investing to education planning and taxes.
- Becoming a CFP isn’t easy—it takes years of experience, passing tough exams, maintaining high ethical standards, and serious educational credentials.
- Most importantly, CFPs are required to put your interests first—it’s not just a promise; it’s their legal obligation as a fiduciary.
The Scope of a CFP’s Expertise
A CFP professional is a financial advisor who has earned certification to provide financial planning services to individuals. This can include creating personalized plans for investments, retirement, insurance, education financing, tax strategies, and estate planning. One of the most significant aspects of a CFP’s role is their commitment to act as a fiduciary, always prioritizing their client’s best interests.
CFPs are supposed to take a holistic approach to financial planning. They begin by thoroughly evaluating a client’s entire financial picture. This includes assessing income, assets (such as investments and property), and liabilities (like mortgages or student loans). Based on this detailed assessment and the client’s specific goals, they develop a tailored financial plan.
For example, they might help clients nearing retirement formulate a strategy to generate sustainable income. Or they might help a young family create a savings plan to fund their children’s future college education.
Understanding the CFP’s Fiduciary Duty
The cornerstone of the CFP designation is committing to a fiduciary duty toward one’s clients. This means that all CFPs are legally obligated to place their client’s interests above their own when providing financial advice. For example, if a CFP would receive a higher commission by recommending one investment product over another, but the lower-commission product is a better fit for the client’s needs, they are ethically and legally required to recommend the better-fitting product with the lower commission.
While many are surprised to learn this, this isn’t always—and often isn’t—the case with other financial professionals like stockbrokers.
Here’s how the CFP Board defines this duty: “At all times when providing financial advice to a client, a CFP professional must act as a fiduciary, and therefore, act in the best interest of the client.” This encompasses three primary responsibilities:
- The duty of loyalty (placing the client’s interests first)
- The duty of care (acting with competence and diligence)
- The duty to follow client instructions (complying with all reasonable and lawful client requests)
62%
In November 2024, in line with most recent years, just 62% of those who had the experience and coursework to take the CFP exam passed.
How To Become a CFP
Earning the CFP designation is a challenging but rewarding process that signifies a high level of competence in financial planning. Becoming a CFP involves meeting stringent requirements in four key areas: education, examination, experience, and ethics.
Education
The first step toward becoming a CFP is meeting the education guidelines. Candidates must hold a bachelor’s degree or higher from an accredited college or university. This degree can be in any field, but candidates must also complete specific coursework in financial planning, as set out by the CFP Board. This coursework typically covers a comprehensive range of topics:
The CFP Board maintains a list of qualifying educational programs. It’s essential to ensure that your coursework meets their requirements to avoid delays in your certification journey.
Fast Fact
Some coursework is typically waived if the aspiring CFP holds other financial designations, such as a chartered financial analyst (CFA) or certified public accountant (CPA) designation, or has a higher degree in business, such as a master of business administration (MBA).
Experience and Real-World Knowledge
In addition to formal education, aspiring CFPs must gain substantial real-world experience in financial planning. 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 role.
This experience can be gained through various roles, such as working at a financial planning firm, bank, brokerage, or insurance company. The key is that the experience must involve delivering financial planning services directly to clients or supporting the financial planning process in a meaningful way. The apprenticeship pathway requires meeting more structured experience requirements, such as being under the direct supervision of a CFP.
Important
The CFP Board has final discretion whether to award the CFP designation.
Ethics
Applicants must prove their commitment to acting in the best interest of clients by doing the following:
- Adhere to the CFP Board’s Standards of Professional Conduct: This code of ethics outlines the principles that guide CFP professionals in their interactions with clients and the public.
- Disclose any relevant background information: Candidates must disclose any involvement in criminal activity, civil litigation, regulatory inquiries, bankruptcies, customer complaints, or employment terminations.
- Pass a thorough background check: The CFP Board conducts an extensive background check on every candidate to verify their ethical standing before granting the certification. The CFP Board has the right to deny certification to anyone who doesn’t meet their standards.
The Certified Financial Planner (CFP) Exam
The CFP exam includes 170 multiple-choice questions covering 100 topics related to financial planning such as regulations, financial planning principles, education planning, risk management, insurance, investments, tax planning, retirement planning, and estate planning.
Topic areas are weighted and available on the CFP Board website. Further questions test the candidate’s expertise in establishing client-planner relationships, gathering relevant information, and analyzing, developing, implementing, and monitoring the recommendations they make to their clients.
- Timing: Candidates sit for two three-hour sessions on a single day. Exams are typically offered in three eight-day windows in March, July, and November.
- Cost: $925 for an exam administered at a U.S. test site, with a discount for early applications and a surcharge for late ones.
- Passing score: Performance is measured according to a set level of required competency, rather than against the scores of other individuals.
- Retaking the test: Those who fail can retake the test up to two more times within a 24-month period.
Continuing Education
After becoming a CFP, the homework and studying aren’t over. CFPs must complete 30 hours of continuing education every two years. This is to ensure they stay updated on the latest financial planning rules and strategies.
CFP vs. CFA
Though CFPs and chartered financial analysts (CFAs) have designations that are just a letter off, they are different certifications with different job functions and clients.
CFPs typically work with individual clients. Meanwhile, CFAs are often employed by investment management companies such as mutual funds, hedge funds, and private equity firms. A CFA’s job is to analyze the growth and profitability of companies as well as their creditworthiness and the amount of debt they carry.
In addition, CFAs are qualified to do personal financial planning and wealth management. As such, like CFPs, they often advise clients on investing given their specific goals, finances, and risk tolerance.
When Do You Need a CFP?
A CFP helps individuals manage their finances, investment choices, estate planning, and retirement planning. A CFP is a step above a non-designated financial advisor and has demonstrated expertise in financial planning.
How Much Does a CFP Cost?
How much a CFP charges depends on a client’s specific needs. In 2024, CFPs were estimated to charge $1,800 to $2,500 for preparing a full financial plan. Individuals may pay $4,000 for a flat-fee retainer or $250 for hourly services.
Is a CFP Equivalent to an MBA?
No, a CFP is not the same as an MBA. A CFP is qualified to advise individuals on financial planning. The holders of MBAs have studied how businesses operate—and the quality of their degree differs significantly from one university to the next. Their career paths usually diverge. A CFP works in consulting or wealth management, while an MBA may be a business manager, portfolio manager, financial analyst, financial strategist, or entrepreneur.
The Bottom Line
A CFP is a professional invested heavily in becoming an expert you can trust. Behind those three letters are years of education, rigorous testing, real-world experience, and a commitment to putting clients’ interests first.
Whether planning for retirement, saving for your kids’ college, or just trying to make savvier money moves, a CFP brings expertise and the ethical commitment to help guide your financial journey.