Interested in a career that combines finance, planning, and wealth management? Becoming a certified financial planner (CFP) might just be the perfect fit.
This comprehensive guide will break down the CFP certification process, covering everything you’ll need to know. Whether you’re starting from scratch or looking to pivot from a related field, we’ll give you the tools and information necessary to embark on this rewarding career path.
Let’s get started.
What Does a CFP Do
A CFP is a trusted financial advisor who provides expert guidance to individuals and families to help them achieve their financial goals. These professionals undergo rigorous training in order to gain expertise in a wide range of financial planning areas, making them a valuable resource for people seeking comprehensive financial advice. These topic areas include:
- Income and Savings: CFPs help clients understand their income and expenses, offering strategies for effective budgeting and savings. They can assist clients in setting realistic financial goals, finding opportunities for increased savings, and planning for large expenses like buying a home or funding a child’s education
- Tax Planning: With their deep understanding of tax laws, CFPs can help clients optimize their tax strategies. They may recommend tax-efficient investments, suggest ways to minimize tax liabilities, and help clients plan for events that could have significant tax implications, (e.g., selling a property or receiving an inheritance)
- Investment Planning: A CFP will assess a client’s risk tolerance, investment goals, and time horizon to create a tailored investment strategy. They’ll recommend suitable investment options, including stocks, bonds, mutual funds, and real estate as well as monitor the portfolio’s performance to ensure it aligns with the client’s objectives
- Retirement and Estate Planning: CFPs assist clients in planning for retirement by considering factors like their income sources, retirement expenses, and desired retirement lifestyle. CFPs can recommend retirement savings vehicles, such as individual retirement accounts (IRAs) and 401(k) plans, and help clients develop an estate plan to protect and distribute their assets according to their wishes
By providing financial advice and comprehensive planning services, CFPs empower clients to make informed decisions and achieve financial security and independence.
Interested in getting started? We recommend Kaplan’s online study packages, which come with a performance tracker, stackable credits that count toward a master’s in personal financial planning, and flexible pricing.
How to Become a CFP
In order to become a CFP, you will need to complete certain education, examination, experience, and ethical standards requirements.
Let’s take a more in-depth look at these below.
To become a CFP, you will need to complete a CFP Board Registered Program.
Those with certain credentials or degrees — such as a certified public accountant (CPA) or chartered financial analyst (CFA) designation — may qualify for the CFP Board Accelerated Path that allows them to skip most coursework and proceed to the capstone course and exam.
The coursework encompasses various financial planning topics, including:
- Income and savings strategies
- Tax planning
- Risk management and insurance
- Investment planning
- Retirement and estate planning
Alongside the coursework, you will need to submit an official transcript of a bachelor’s degree or higher (in any discipline) from an accredited college to the CFP Board. This must be done within five years of passing the CFP exam.
After completing the necessary coursework, you will need to pass the CFP exam.
The exam includes 170 multiple-choice questions — spanning two three-hour sessions in one day — and assesses your financial planning knowledge and competence.
Ideally, we recommend spending between 150 and 250 hours preparing for your exam in order to ensure that you pass on your first attempt.
In order to satisfy the CFP board’s experience requirement, you will need to complete either 6,000 hours of professional experience related to financial planning or 4,000 hours of apprenticeship experience with additional requirements.
This hands-on experience is meant to ensure that you are adequately prepared and able to provide competent financial planning services without any supervision.
Note: The experience requirement must be completed within 10 years before — or five years after — the successful completion of the CFP exam.
Ethical Standards Requirement
As a final step, candidates and CFP designation holders must adhere to the CFP Board’s standards of professional conduct.
This requires them to act as fiduciaries and disclose information related to any criminal activities, government inquiries, bankruptcies, customer complaints, or employment-law disputes.
Accelerated Path to CFP Certification
For candidates with certain advanced degrees or professional certifications, the Certified Financial Planner Board offers an accelerated path that allows them to expedite their journey to CFP certification.
Eligibility for the accelerated CFP path requires you to hold one of the following designations and/or licenses:
- Certified Public Accountant (CPA)
- Licensed Attorney
- Chartered Financial Analyst (CFA)
- Doctor of Business Administration, Financial Planning, Finance, or Economics
- Chartered Financial Consultant (ChFC)
- Chartered Life Underwriter (CLU)
- CFP Certification from outside the United States (e.g., from the Financial Planning Standards Board affiliate located in the candidate’s territory of residence)
Recommended Course: Interested in getting started? We recommend Kaplan’s online study packages, which come with a performance tracker, stackable credits that count toward a master’s in personal financial planning, and flexible pricing.
Becoming a CFP can have a significant impact on your career and earning potential. According to the CFP Board, CFP-certified financial planners earn approximately 26% more in compensation than their non-licensed counterparts.
The table below lists the average annual salary for CFPs in each state.
|State||Annual Salary ($)|
As shown in the table above, CFP salaries vary by state with Washington leading the way with an average annual salary of $104,331. This variation stems from a variety of factors, such as the cost of living, local job markets, and the specific types of services each CFP offers.
For more information, check out our CFP Salary article.
CFP Certification FAQ
How many years does it take to become a CFP?
Becoming a CFP typically takes three to four years because the process involves completing a CFP Board-approved education program, gaining the required work experience, passing the CFP exam, and meeting ethical requirements. For more information, see our CFP Certification article.
Is the CFP harder than the CPA?
The difficulty of the CFP and CPA exams can be subjective and depends on an individual’s background and strengths. Both are challenging exams with rigorous study requirements. The CFP exam covers topics like the financial planning process and investments while the CPA exam focuses on accounting, auditing, and tax regulations. Check out our CPA vs CFP article for an in-depth overview.
Can a CFP make a lot of money?
Yes, a CFP can earn a substantial income. Having said that, their earning potential often depends on factors like their location, years of experience, client base, and employer. If you’re interested in a more in-depth overview, we recommend having a look at our CFP Salary article.
Is the CFP designation difficult to get?
Obtaining the CFP designation requires dedication and effort. It involves meeting education and experience requirements, passing a comprehensive exam, and adhering to ethical standards. While challenging, the process is achievable with proper planning, studying, and commitment. We recommend having a look at our CFP Exam article for more information on this designation’s difficulty.
Do financial advisors need certifications?
Yes, financial advisors often need certifications to demonstrate their competence and adhere to industry standards. Having said that, the exact certification(s) you’ll want to obtain will be highly dependent on how you want to operate (i.e., in what capacity). For more information, have a look at our How to Become a Financial Advisor article.