Certified Financial Planner Board of Standards Inc.owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER ™, and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
CFP® is short for CERTIFIED FINANCIAL PLANNER ™ professional and is a designation conferred by the Certified Financial Planner Board of Standard. An individual holding this designation has met a series of stringent education, examination, relevant experience, and ethics requirements.The CFP® professional core body of knowledge focuses on the six areas of financial planning, which are; financial statement preparation, risk management and employee benefit planning, investment planning, income tax planning, retirement planning, and estate planning. A CFP® certificant has developed this knowledge through a rigorous course work (typically three years) requirement covering the six areas and then is capped off with a two day board examination. The pass rate as of the November 2015 exam was 49.8% In addition to the initial certification requirements, all CFP® professionals are required to meet bi-annual continuing education requirements or they lose their certification.The continuing education requirements serve as an additional method of keeping the CFP® professional refreshed on the industry topics and trends
When engaging with a CFP®professional, a client can expect variations on a six step process that involves the following.
- Establishing and defining the client-planner relationship
- Gathering client data including goals
- Analyzing and evaluating the client’s current financial status
- Developing and presenting recommendations and/or alternatives
- Implementing the recommendations
- Monitoring the recommendations
The process, while simple and straightforward, is the cornerstone of a prudent financial plan. It is important to note that not every engagement with a CFP® professional will reach each of the steps listed above because formal planning is not required or desired by every client. However, knowing that a CFP® professional has the capability and training to engage in the processes is important, especially given the term "advisor" is used by many industry professionals, regardless of formal training.
Hopefully this post has helped you understand what a CFP® professional is and how one can assist you in your financial planning needs. Don't hesitate to ask your current advisor if they are working toward their CFP® certification or if one is available at the firm if needed.