Financial Planners

Certification or Licensing

Education alone will not motivate clients to easily turn over their finances to you. Many financial professionals are licensed on the state and federal levels in financial planning specialties, such as stocks and insurance. The U.S. Securities and Exchange Commission and most states have licensing requirements for investment advisers, a category under which most financial planners also fall. However, most of the activities of planners are not regulated by the government. Therefore, to show credibility to clients, most financial planners choose to become certified as either a certified financial planner (CFP) or a chartered financial consultant.

To receive the CFP mark of certification, offered by the CFP Board, candidates must meet what the board refers to as the four E's, which comprise the following:

Education: To be eligible to take the certification exam, candidates must complete a CFP Board–registered program in financial planning that includes the following courses: Professional Conduct and Regulation, General Principles of Financial Planning, Risk Management and Insurance Planning, Investment Planning, Tax Planning, Retirement Savings and Income Planning, Estate Planning, Psychology of Financial Planning, and Financial Plan Development. Applicants also must earn a bachelor's degree in any discipline from an accredited college or university.

Examination: Once candidates have completed the education requirements, they may take the certification exam, which tests knowledge on various key aspects of financial planning. The CFP Board says that the exam "includes stand-alone and scenario-based questions, as well as questions associated with case studies."

Experience: Either before or after passing the certification exam, candidates 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.

Ethics: After candidates have completed the education, examination, and experience requirements, they must voluntarily ascribe to the CFP Board's Code of Ethics and Standards of Conduct and Financial Planning Practice Standards to be allowed to use the CFP mark. This voluntary agreement empowers the board to take action if a CFP licensee violates the code. Such violations could lead to disciplinary action, including permanent revocation of the right to use the CFP mark. You must also undergo a background check by the CFP Board.

The American College of Financial Services offers the chartered financial consultant (ChFC) designation and other credentials. To receive this designation, candidates must complete certain course work stipulated by The American College, complete examinations, meet experience requirements, and agree to uphold The American College's Code of Ethics.

To maintain the CFP and the ChFC designations, professionals will need to meet continuing education and other requirements as determined by the CFP Board and The American College.

Two other organizations offer certification to financial planning professionals. Fi360 offers the accredited investment fiduciary and accredited investment fiduciary analyst designations. The Investments & Wealth Institute offers the following designations: certified investment management analyst, certified private wealth advisor, and retirement management advisor. Contact these organizations for more information.