The title of “Certified Financial Planner” is an indicator of fiduciary trust to prospective clients. Arguably the most recognized distinction in financial services, a CFP Certification will open up doors for you professionally and provide you new opportunities to scale your firm. It also gives you a competitive advantage, as only 20% of financial planners in the United States are certified. In this post, we’ll review the requirements and benefits of a CFP certification for advisors.

Education, Experience, and Testing for CFP Certification

Nothing good in life comes for free. CFPs are viewed as elite in their profession because of the level of work they need to complete to become certified. In addition to earning a bachelor’s degree, you are also required to complete a CFP Board-registered education program.

If you hold a CPA, CFA, or Ph.D. in finance, business, or economics, you can bypass most of the coursework in the CFP Board educational requirement. Those who qualify for this exemption will still need to complete a financial plan development Capstone course.

Once you’ve fulfilled the educational requirements, you can sit for the CFP Exam. This is a six-hour pass/fail test administered by the CFP Board three times per year. Applicants are then required to put in 6000 professional hours and pass a background check.

Benefit #1: CFPs have Knowledge and Experience

It requires three years, working forty hours a week, to complete the experience requirement for CFP certification. CFP board-registered education programs usually take between eighteen and twenty-four months. You can earn a bachelor’s degree in three to four years.

Applicants are allowed to take the CFP Exam prior to earning a bachelor’s degree, but there’s a five-year window to obtain that degree after passing the test. You’ll still need to complete the CFP Board-registered education prior to sitting for the exam.

The knowledge and experience that a CFP candidate gains during this process are two of the key benefits of a CFP certification. This time spent learning the trade can help you to perform improved services for your clients while instilling trust in your clients.

Benefit #2: CFPs are Trusted Fiduciaries

The term “fiduciary” is tossed around quite a bit, but not all financial advisors have earned the right to use the moniker. In financial services, a fiduciary is defined as a person who has a legal or ethical obligation to his or her clients. CFPs fit that description.

The final step in the CFP certification process is a criminal and employment background check, coupled with an agreement to adhere to the professional and ethical standards of the CFP Board. This is a legal and binding contract, designed to ensure that a CFP is a trusted fiduciary.

We live in a world where consumer confidence is low. Distrust of Wall Street is at an all-time-high. Clients are searching for trusted fiduciaries and many know that CFPs fit that description. By completing the CFP certification course, you can join that trusted group.   

Benefit #3: CFPs have a Competitive Advantage

Knowledge, experience, and fiduciary status give you a clear competitive advantage over financial planners who have not completed CFP certification. Once you’ve satisfied all the requirements and passed the test, you can proudly display “CFP” next to your name.

The distinction doesn’t just set you apart from the rest of the field. It positions you as an authority in financial planning. Clients won’t be the only ones seeking out your services. Your peers will also look to you for leadership and guidance.

Practices that are owned by or employ CFPs scale faster. If you’re not planning on taking the exam yourself, consider hiring a CFP to enhance client services at your firm. Advisory firms average 44% more revenue when they add a CFP to the team.    

Benefit #4: CFPs Get Paid More

According to a recent study by the Aite Group, CFPs on average earn 14-33% more than non-CFPs during the course of their career. Higher fees are not the primary reason, though they are justified. CFPs earn more because they work primarily with HNW clients.

Prospects with over $1 million in liquid assets don’t want just anyone handling their money. Retirement isn’t a simple matter of taking 401(k) disbursements. There’s typically real estate, hard assets, tax issues, and succession plans to deal with. CFPs can handle all of those correctly.

Another reason that CFPs make more money is the number of channels they have to prospect for new clients. There are networks and professional organizations, for instance, that only accept CFPs. Each of these is a potential lead source. Increased lead generation leads to higher revenue.         

Benefit #5: Clients Need Financial Planning

Clients care about their investment portfolio, but what they really need is financial planning. Becoming a CFP puts you in the driver’s seat to capture some of that business.

With current market volatility, you don’t want to be judged by portfolio performance alone. Planning will add value to your service offering, whether you’re a CFP or not. If you choose to forego CFP certification, consider outsourced financial planning with Good Life Companies.

Grow Your Practice

Looking for ways to get a competitive edge and grow your practice? Good Life Companies is an independent financial advisor network offering a full suite of services and tools to transition, support, and grow independent financial advisor practices. Contact us today to learn more.



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