How to Become a CFP

Peter Griffin:  "Brian, there's a message in my Alphabits!  It says, 'Ooooo'"
Brian:  "Peter, those are Cheerios."

Unfortunately, the alphabet soup that is the business of financial planning/selling investments is quite a bit more complicated than Peter's Alphabit cereal.

How do I become a CFP?  Should I become a CFP?  What about CFA?  ChFC, CLU, CMFC?  Should I take the series 7?  There are likely more varied certifications and desnigations in the business of financial planning, and all other professions that loosely fall under this category than any other industry.  The reason for this seems to stem from a business that is highly regulated, but also highly divergent.  There are insurance people, estate planning attorneys, stock brokers, financial planners, investment advisors, and others who call themselves vague titles, such as, "financial consultant."  It's okay, that was once my title.  You're not supposed to know exactly what it means.  All of these professions may overlap, compete, collude, or one person can be all of the above.

Insurance salespeople may sell mutual funds, variable annuities, or bonds.  Estate planning attorneys may sell insurance, annuities, or financial plans.  Stock brokers may sell life insurance for estate planning purposes, limited partnerships, or wrap manager accounts.  Of course, each requires another license, certification or designation.

Somehow, amid all the madness, the Certified Financial Planner designation (CFP) has risen to the top of recognition among the financial advice giving professions.  CFA is often seen as more prestigious due to a higher level of difficulty and time to complete, however, most CFAs do not deal directly with the end client.

I am currently in the process of obtaining the CFP designation.  I received an email inquiring about the process, so instead of answering privately, I'll post what I know here.  You can read about it at the CFP official website, however, I'll give my perspective as someone going through the process.  The CFP board lists six steps to obtaining the CFP status. They are:

1. Complete Education Requirement.  The list of approved programs is lengthy, and the right one will be up to you.  There are major universities such as UCLA, Duke, Georgetown, and other NCAA Tournament teams.  There are smaller colleges, and there are specialty schools, which operate like trade schools, such as The College for Financial Planning.  Some offer bachelors, masters or even Phd. programs if you are interested in pursuing that level of education in this field.  Many offer distance learning programs (on-line), others are classroom only, and many offer a combination of the two.  Talk to several schools before you enroll in a program.  The costs, time commitment, teaching style, and even difficulty may vary considerably.  If it is not right for you, you will likely not finish the program.  Also to consider, you can challenge the educational requirement if you currently hold a CPA, CFA or other designation listed on the website.
2. Pass the CFP exam.  This is a tough test, with a passing rate of approximately 56%.  Each school will tell you that their passing rate is above the national average, but that's not possible right?  You can also take a review class, much like you did for the SAT.
3. Meet the Experience Requirement.  Three years of qualifying experience are necessary.  The website explains what is required to call it qualifying.  Suffice it to say, it should be in the field of financial advice giving.
4. Adhere to a Code of Ethics and pass a Background Test.  This should be self explanatory.  If you have anything in your background that you are worried may cause a problem, contact the Board, and they will give you more information.
5. Pay them.  The initial cost is $100, and another $360 every other year.
6. Receive Authorization to use the CFP Designation.  This isn't really a step.  Basically, you're done.

Once you are a CFP Professional, you must meet Continuing Education requirements.  This is much like most professional desnigations and licenses.

I am enrolled in the College for Financial Planning program. The cost was reasonable, appx $3300 for the on-line/self study version.  They recommend that you study two hours per day in order to complete the education in just over a year.  However, I'm too busy blogging to study that much!

In the program that I am in, there are five classes.  Each is passed by passing an on-line test.  You are given four hours, and need a 70% to pass.  I have only completed the first class, but I can tell you that they are not easy.  It is not terribly complicated, but there is a lot to learn.  Even if you have worked in this business for years, it is likely that the breadth of learning is much more broad than what you deal with on a daily basis.

In order to keep up with my studies without cutting back on my blogging, I'll put up posts once in a while explaining some of the course material.  The first class was about insurance, which is infinitely boring to me.  I am currently in the second class, which is on Investments.  This will be far more interesting.

I'll keep you posted!

Comments

[Finance Junkie]

Can any of the 3 years experience required for CFP be covered by personal finance blogging? I doubt it, but i'm hopeful.

Considering CFP as a long term certification; however, I feel that I cannot get direct experience while i'm in the military

[Leiyah]

Hello,

Thank you for the plain and simple information you present here!

I am looking into the CFP as well, and been surfing around to find a program that is online and not too costly. I've seem programs that claims I can do this in 30 days. After reading your blog, I am very skeptical if 30 day would ever be enough. Particularly, I saw the 30 day program from Boston U, which is an online program. I would be interested to know if you have come across such programs, or know their ligitimacy.

Thanks and good day!

[Tim MMF]

So...how did you meet the experience requirement? What are some ways of getting the right experience?

[lamoneyguy]

Hey Tim,
I've been working as a Financial Adviser for a number of years. The definition is not too strict though. For example, I'm pretty sure selling life insurance for a few years or being a stockbroker would qualify.

[Austin Neary]

I was just notified that I passed the March 2007 CFP exam. I am an Info Technology professional who has written investment software. I want to focus on the "wealth generation/preservation" aspects of Financial Planning. Any advice on the type of firm I should seek (Brokerage, Asset Mgmt, Boutique).
Austin Neary

[JM]

hi. i am a senior in college and am interested in becoming a financial advisor and obtaining my CFP. i was just wondering if anyone has any advice and i see that you need 3 yrs of experience so does this mean i must become a financial advisor first and wait 3 yrs????

[JWE]

What are the requirements to becomme a CFP? Is there any way to get around the 3 year "Practice" commitment?

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