Everything you should know about Certified Financial Planners™(CFPs®)

A Certified Financial Planner™ (CFP®) professional is accredited by the Certified Financial Planner Board of Standards as having demonstrated financial planning technical knowledge, experience, and adherence to a client-centered code of ethics.

Certified Financial Planner Board of Standards, Inc. (CFP Board) is a non-profit organization that fosters professional standards in personal financial planning through its setting and enforcement of the education, examination, experience, ethics, and other requirements for CFP® certification.

The mission of the Certified Financial Planner Board of Standards is “to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.”

CFP® certification has become the recognized standard of excellence for personal financial planning because of its rigorous educational, experiential, and ethical requirements.

The “best financial advisor” is going to be different for each person. You need to find the best financial advisor for you and your unique situation (see “How to choose the right financial advisor”). A fee-only CFP® is the best financial planner for many because a fee-only CFP® is competent and unbiased by commissions for the sales of financial products.

Only an estimated 12%-15% of financial advisors hold a fiduciary duty to their clients. Their fiduciary duty requires these advisors to always act and make recommendations that are in the best interests of the client. Breach of fiduciary duty is a very serious offense with major legal implications so advisors must take this responsability seriously.

The remaining 85%-87% of advisors that hold no such fiduciary duty can make financial recommendations that aren’t in a client’s best interests but that bring the advisor more income, often in the form of commissions or kickbacks from financial companies. These non-fiduciary advisors just need to follow a “suitability” standard of care.

The CFP® designation is one of many financial planner credentials, but it is often thought of as the gold standard, or “standard of excellence” of the industry. This is because of the rigorous education, examination, experience, and ethics requirements for Certified Financial Planner™ certificates. While passing the exam is only one of the many requirements, less than 70% of test takers accomplish that feat.

66% of test takers passed the July 22 CFP® exam, but the pass rate is usually lower, around 62%. The test is offered three times per year and the most recent test’s pass rate was the highest since July 2016. (See historical CFP® exam stats).

Most examinees that have taken the certified financial planner (CFP) board exam agree that the case studies are the most difficult and important portion of the test.

There are 93,940 Certified Financial Planner™ Professionals (CFP®s) in 2022 according to the CFP Board of Standards. 76.5% are male, 23.5% female and 0.1% non-binary. See more CFP stats.

Certified Financial Planner™ professionals develop theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering financial planning curriculum registered with the Certified Financial Planner Board of Standards. To maintain certification, CFP®s must complete a minimum of 30 hours of financial planning continuing education every two years. Two of these hours must be spent studying the CFP Board’s Code of Ethics and Professional Responsibility or Financial Planning Practice Standards. Certified Financial Planner™ continuing education requirements are among the strictest of all financial planner credentials and help CFP®s better serve clients and stay current with developments in the financial planning profession. 

CFPs® must pass a 170-question, multiple-choice test that consists of two 3-hour sessions over one day. The exam includes stand-alone and scenario-based questions, as well as questions associated with case studies to test their ability to apply financial planning knowledge to real-life financial planning situations. This comprehensive exam ensures that CFP® professionals are highly qualified to develop holistic plans for their clients' finances.

The exam covers the general principles of financial planning, insurance planning and risk management, employee benefits planning, investment planning, income tax planning, retirement planning, and estate planning. 

Individuals seeking to obtain CFP® certification must complete either 6,000 hours of professional experience related to the financial planning process or 4,000 hours of apprenticeship experience that meets additional requirements. These CFP®experience requirements can be fulfilled either before or after taking the exam and include the supervision, direct support, teaching, or personal delivery of the personal financial planning process to a client.

As a final step to certification, CFP® practitioners must pass an ethics review and agree to abide by the CFP Board’s Financial Planning Practice Standards and a strict code of professional conduct, known as the CFP Board’s Code of Ethics and Professional Responsibility. The Code of Ethics states that CFP practitioners are to act with integrity, offering professional services that are objective and based on client needs.

Some benefits of working with a fee-only financial advisor are that you can trust they are unbiased in their advice, they have a fiduciary duty to you, and they aren’t incentivized to sell non-ideal financial products because since they never receive commissions or kickbacks for sales of certain products. Instead, fee-only advisors most often charge a small percentage (around 1%-1.5%) of assets under management. With advisor-client interests aligned, a fee-only advisor is free to make the best recommendations for your unique situation.

Yes, all CFP®s are required to act as fiduciaries when providing financial advice. The CFP Board’s new Code and Standards became effective on October 1, 2019 and requires CFP® professionals commit to act in the best interest of their clients not just during the financial planning process, but at all times when providing financial advice. The fiduciary duty is defined in detail and includes a Duty of Loyalty, Duty of Care and Duty to Follow Client Instructions. The Duty of Loyalty states, among other things, that a CFP® professional must either avoid conflicts of interest or fully disclose material conflicts of interest to the client, obtain the client’s informed consent, and properly manage the conflict.