By FPA member Amy Jo Lauber, CFP®
Last Updated: March 22, 2010
As a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional, I often get questions about the designation and what it means to a consumer. There are so many designations available to those in the financial planning industry, it's hard to know who's who! Below I've highlighted the details of a few of widely known and used designations in the financial planning industry.
CERTIFIED FINANCIAL PLANNER™ (CFP®) credential is granted by the Certified Financial Planner Board of Standards, Inc., to individuals who complete a comprehensive curriculum (including the fundamentals of financial planning, insurance and risk management, investments, taxation, retirement planning and employee benefits and estate planning) and successfully pass a challenging 10-hour comprehensive exam (typically the pass ratio hovers around 52 percent). In addition, CFP® practitioners must have at least a bachelor's degree and have at least three years of experience in the financial services industry. CFP® certificants must obtain 30 hours of continuing education every two years, including two hours of ethics. CFP® professionals are held to a fiduciary standard of care, meaning they must always act in the best interest of their clients. They must provide a contract for any financial planning services, as well as a disclosure form including all conflicts — or potential conflicts — of interest, methods of compensation, and other parties that may affect the crafting of a client's financial plan.
Of note, on March 9, the CFP Board adopted a new Financial Plan Development Course requirement that raises the education standards for the prestigious CERTIFIED FINANCIAL PLANNER™ certification. Following implementation of the new requirement at educational programs registered with CFP Board, individuals who wish to attain CFP® certification will be required to demonstrate their ability to prepare and deliver a comprehensive financial plan through completion of this new course.
The Chartered Financial Analyst (CFA®) designation is offered by the CFA Institute (formerly the Association for Investment Management and Research [AIMR]). Candidates for the CFA designation must successfully complete three exams (covering such topics as accounting, ethical and professional standards, economics, portfolio management and security analysis) and possess at least three years of relevant work experience. Typically, individuals who possess the CFA designation provide investment analysis and selection for institutional money management firms, but some may be involved with individual clients.
Chartered Financial Consultants (ChFC®) possess vast and thorough knowledge of financial planning. The ChFC program is administered by the American College. Similar to individuals with the CFP® designation, candidates for the Chartered Financial Consultant designation study multiple areas of financial planning (including income tax, insurance, investment and estate planning), complete an examination, and have a minimum of three years experience in a financial industry position. ChFCs are also required to obtain 15 hours of continuing education annually.
The Chartered Life Underwriter® (CLU) designation is issued by the American College which provides an extensive 10-course program of study (covering the fundamentals of life, disability, long-term care and health insurance, pension planning, insurance law, income taxation, investments, financial and estate planning and employee benefit programs) and corresponding examinations. Those who hold this designation mostly work as insurance agents. They are required to uphold certain ethical standards and obtain continuing education annually to maintain their designation.
Personal Financial Specialist (PFS) A Certified Public Accountant (CPA) may take an additional course of study in financial planning (provided by the American Institute of Certified Public Accountants) and pass an exam to be accredited as a PFS. CPAs must possess experience in financial planning before sitting for the exam. PFSs must obtain continuing education to maintain their designation.
The person you select to help you attain your goals will be someone who not only has a designation, but who also possesses a breadth and depth of knowledge, wisdom and experience, and most importantly, understands you, your situation, your goals and objectives, your fears and concerns, and who will keep your interests in the forefront.
FPA member Amy Jo Lauber, CFP®, is the Director of Financial Planning for Harold C. Brown & Co., LLC. She is a past president of the Western New York chapter of the FPA.