Issued by the Certified Financial Planner Board of Standards (CFP Board), the certified financial planner (CFP) designation is a prestigious credential within the financial services industry.
The role of a CFP involves advising clients on their financial planning strategy, investments, taxes, retirement, and other money-related issues. So, what’s the typical salary of a CFP?
This article will examine the factors that can impact the average CFP salary, the various career paths it can make available, and how you can get certified.
CFP Salary Overview
Many CFPs work as salaried employees of financial advisory firms, banks, or other financial institutions. In such cases, they may earn a fixed salary along with performance bonuses.
Some CFPs work on a commission basis, earning money based on the financial products they sell or recommend, while other CFPs may choose a fee-based model in which they charge clients a flat fee for their services or a percentage of the assets under their management.
According to the US Bureau of Labor Statistics, financial advisors make a median annual wage of $94,170. In addition, recent industry data suggests the average salary of a CFP is approximately $88,000 per year.
Those new to the industry and who just received their certification typically start with a lower earning potential. As CFPs accumulate more years of experience and grow their client base, they can see a substantial increase in their income. It’s not uncommon for experienced CFPs — especially those who specialize or have a large client base — to earn $128,000 or more per year.
According to a CFP Board survey, CFP professionals boast high job satisfaction with their decision to pursue the CFP certification. The survey also found that CFPs earn 26% more than their non-licensed counterparts.
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For a more detailed overview of the CFP qualification, check out our CFP Certification article.
Factors Influencing Salary
A variety of factors can influence the salary of a CFP, including:
- Experience: Experienced CFPs often boast more skills for complex financial planning, which allows them to attract a larger, wealthier client base and thereby earn higher fees and salaries
- Location: Salaries often vary by location due to factors like the local cost of living and demand for financial planning services. CFPs in larger cities or financial hubs likely will earn more than those in smaller towns or rural areas
- Employment Type: A CFP’s decision to work for a firm or for themselves can significantly impact their earning potential. Salaried positions may offer more stability, but they often cap earning potential. In contrast, self-employment or freelance work allows for greater flexibility albeit with its own set of financial risks and responsibilities
- Specialization: CFPs can specialize in certain areas, such as retirement planning, estate planning, or tax optimization. Those with a niche focus can often command higher fees for their specialized expertise
- Client Base: The size and wealth of a CFP’s client base also can play a big role in determining their salary. Financial planners who advise high-net-worth individuals often earn more
Understanding these factors will give you a more comprehensive view of what can influence a CFP’s salary and help you make more informed decisions about your potential earnings and career trajectory.
CFPs have a range of career options available to them due to their specialized skills and comprehensive understanding of financial planning. Here are some common CFP roles — each with their own job description:
- Financial Planner: This is the most direct application of the CFP certification. Certified financial planners — also known as personal financial advisors — provide personal finance planning, insurance, and estate planning services to individuals and families
- Wealth Manager: These CFPs specialize in managing the finances of high-net-worth individuals. They focus on investment management, estate planning, tax optimization, and more
- Estate Planner: Focused on advising clients on wills, trusts, and estate taxes, these CFPs help secure their clients’ financial future for themselves and their heirs
- Retirement Planner: These CFPs specialize in planning and advising clients on how to achieve financial security in retirement
- Tax Advisor: Though not a substitute for a certified public accountant (CPA), a CFP who specializes in tax planning can offer clients valuable advice on how to optimize taxes through investments, deductions, and other strategies
- Investment Advisor: A CFP in this role guides clients on investment opportunities and risk management
Each of these roles has its own set of responsibilities, challenges, and rewards as well as a different earning potential. That makes the CFP certification a versatile qualification for a variety of career paths.
How to Get Your CFP Certification
To attain the CFP designation, you must fulfill specific educational prerequisites, pass an exam, get relevant professional experience, and follow ethical standards.
To become a CFP, you’ll need to have:
- A bachelor’s degree (or higher) from an accredited college or university; and
- Three years of full-time personal financial planning experience or the equivalent part-time experience. (Note: 2,000 hours equals one year of full-time experience)
After you meet the above prerequisites, you must complete a CFP Board Registered Program. This coursework includes various financial planning topics, including:
- Income and savings strategies
- Tax planning
- Investment planning
- Retirement and estate planning
- Risk management and insurance
For individuals who already possess certain advanced degrees or professional credentials, the CFP Board provides a fast-track option to expedite the CFP certification process.
To qualify for this accelerated route to CFP certification, you must have one of these designated licenses or credentials
- Certified public accountant (CPA)
- Licensed attorney
- Chartered financial analyst (CFA)
- Doctorate in 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)
After completing the necessary coursework or meeting the accelerated path requirements to CFP certification, you must register and pass the CFP exam.
Note: All candidates must comply with the CFP Board’s guidelines for professional conduct. This requires you to operate in a fiduciary capacity and disclose information about yourself pertaining to any criminal conduct, government investigations, bankruptcies, customer complaints, or disputes related to employment law.
Exam Preparation and Procedure
Preparing for the CFP exam can seem daunting given its comprehensive nature and the depth of understanding required in a variety of financial planning topics.
Here are some tips to help you maximize your chances of passing the exam on your first try:
- Understand the exam structure. The exam includes 170 multiple-choice questions split across two, three-hour sessions — both conducted within a single day
- Develop a study plan. Outline a comprehensive study plan several months in advance of your exam date. Break down the syllabus into manageable portions and allocate specific time slots for each section. As a best practice, you should allocate between 150 and 250 hours for your exam preparation
- Use official study materials. Make sure to use the official study materials and guides provided by the CFP Board. Tailored specifically for this exam, these resources often include practice questions and case studies that mirror the exam format
- Take practice exams. Regularly taking full-length practice exams can help you gauge your exam readiness, identify weak areas, and get used to the exam format. Time yourself during these mock exams to simulate the real test conditions
By following these tips, you’ll be better equipped to tackle the CFP exam with confidence.
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.
CFP Salary FAQ
Can a CFP make a lot of money?
Yes. The average income of a CFP can range from $88,000 for entry-level positions to more than $128,000 for experienced professionals. The median wage is around $94,170 per year. Note that the average certified financial planner salary depends on a variety of factors, such as experience, location, and specialization. For more information, see our CFP Salary article.
What pays more, a CFP or CFA job?
Both the CFP and chartered financial analyst (CFA) designations offer lucrative job prospects, but their earning potential can differ based on the roles and industries they target. CFAs often work in investment banking or asset management, which typically offer higher salaries. CFPs, however, have diverse income models like fee-based advising — an option that also can prove quite lucrative.
Is it worth becoming a CFP?
Having a CFP certification can open doors to a variety of career paths, enhance your professional credibility, and lead to a higher earning potential. It’s most beneficial for those interested in comprehensive financial planning and advising individual clients. The rigorous training also equips you with valuable skills for personal financial management.
How long does it take to become a CFP?
The time required to become a CFP can vary, but generally takes around four to five years. This includes completing a bachelor’s degree, fulfilling the CFP Board’s educational requirements, gaining at least three years of professional experience in financial planning, and successfully passing the CFP exam. Candidates with certain advanced degrees or professional credentials may take an accelerated path to shorten this timeline.