What is a certified financial planner?
A certified financial planner (CFP) is a type of financial advisor who possesses one of the most rigorous certifications for financial planning knowledge. They must have several years of experience related to financial planning, pass the CFP exam and adhere to a strict ethical standard as set by the Certified Financial Planner Board of Standards.
Unlike some other types of financial advisors, certified financial planners are held to a fiduciary standard, meaning they are obligated to act in their client's best interests.
» Learn more: How to choose a financial advisor
What does a certified financial planner do?
Financial planners who earn a CFP designation must demonstrate proficiency in risk management, investment, tax, retirement, income and estate planning. This means that they can work with clients to provide comprehensive services across a broad spectrum of financial planning concerns.
CFPs who provide holistic planning can help you to create and maintain a financial plan by determining your financial goals and discussing your current financial situation and appetite for risk. They can also advise on retirement planning, saving for short- and long-term goals, choosing investments and tackling debt.
Some CFPs specialize in a certain area, such as divorce or retirement planning, while others tend to work with specific clients, like small-business owners or retirees. Because of this, it’s helpful to have an idea of the services you need before you choose a CFP.
» Want to work with a local advisor? Find a financial advisor near you
How to become a certified financial planner (CFP)
It’s not easy to become a certified financial planner, and for good reason. Helping people navigate their finances is an important job. On average, it takes between 18 and 24 months to become a CFP and can cost a minimum of $925 if you already have an undergraduate degree and can bypass the coursework requirement.
Candidates who don't hold existing financial designations typically also need to fulfill an experience requirement, which can take from 24 to 36 months to complete. Here’s what else you'll need to do:
1. Complete the education requirement
The CFP Board requires completion of specific coursework on financial planning and a bachelor’s degree or higher. Applicants have up to five years from the date they pass the exam to receive their bachelor’s degree. Those who have completed related courses in the past — or who already hold certain types of professional credentials or designations — may be eligible to skip the CFP Board–mandated coursework.
2. Pass the exam
The exam consists of 170 multiple-choice questions to be completed in a total of six hours. According to the CFP Board, an average of 68% of first-time exam-takers passed in 2022.
3. Gain professional experience
To meet the experience requirement, prospective CFPs need to complete either 6,000 hours of professional experience related to financial planning or 4,000 hours of apprenticeship that meets additional requirements. These hours can be completed either within 10 years before taking the exam and/or within five years after passing it.
4. Adhere to the ethical standard
The final steps of becoming a CFP are to sign the Ethics Declaration, in which you commit to acting as a fiduciary for your clients, and pass a background check conducted by the CFP Board.
How much does working with a CFP cost?
Not everyone needs help with their finances, but for those who do, having a CFP in your corner can be invaluable. If you aren't sure how to organize your finances, navigate investing or balance your financial priorities, a CFP can help.
The 2020 Kitces Research survey on financial planning found that CFPs charge, on average, $1,800 or $2,500 for a comprehensive financial plan, $250 for hourly services and $4,000 for flat-fee retainer services. And while there is no set fee that CFPs charge, it’s usually more than what a non-certified advisor might charge.
Online fiduciary financial advisors, some of which offer access to CFPs, typically charge a small percentage of your assets under management, often between 0.3% and 1%. (Read more about how much a financial advisor costs.)
» Learn more: Compare financial advisor options
How do I find a certified financial planner?
Some online financial planning services offer access to CFPs for less than what an in-person advisor charges. The CFP Board offers a directory of all its certified CFPs, which makes it easy to find an in-person advisor in your area. This site also allows you to check a CFP’s certification status and check for any instances of disciplinary action.
What is the difference between a CFP and a CFA?
The various designations financial advisors hold can cause some confusion. More often than not, a financial advisor who is a CFP will be able to help you with your financial planning needs, but other advisors may be able to better assist you in certain areas, such as tax planning. Some advisors even have multiple designations, making them more competitive within their field.
Here are a few common designations an advisor can have.
Chartered financial analyst: CFAs specialize in investment analysis and portfolio management. While CFPs typically help individual clients with their financial planning, CFAs often serve as financial advisors for corporations.
Certified public accountant: CPAs are a bit more distinct from some of the other financial advisory certifications. The CPA certification is common among tax preparers and accountants (even though CPA has the word "accountant" in it, not all accountants have CPA certifications). If your financial advisor has a CPA, they may be able to help you optimize your tax situation.
Chartered financial consultant: While ChFCs are less common than CFPs, the two certifications require similar coursework, and recipients of each are likely headed down the same career path: financial advisory and planning services. ChFCs may have more training in modern financial planning topics, such as behavioral finance, planning for same-sex couples and planning after a divorce, but CFPs have more stringent academic and examination requirements.
Connect with a financial advisor paired to your needs.
Want to find out how to actually retire? Datalign can help you find an advisor.
Find A Financial Advisorvia Datalign Advisory
Paid non-client promotion
What is the difference between a CFP and a financial advisor?
The main difference between a CFP and a financial advisor is that CFPs hold a certification that ensures they have several years of experience and are held to a fiduciary standard. The term financial advisor, on the other hand, does not necessarily denote a specific credential. It's an umbrella term that refers generally to the many different types of financial advisors.
Remember, if you have any doubts about your advisor’s CFP status, you can check their status on the CFP Board website.
Fee-only vs. fee-based financial advisor
It's also important to consider how exactly your advisor is getting paid. This is determined in part by whether they are a fee-only advisor or a fee-based advisor.
Fee-only advisors are solely paid by their clients, creating fewer opportunities for conflicts of interest. Fee-based advisors can receive a commission on products they sell, which can sometimes create those conflicts, such as suggesting a worse product over a better one because they would receive a commission. Bound by their fiduciary duty, CFPs have to put their clients’ needs first regardless of their fee structure (though it’s always a good idea to ask any advisor, CFP or not, what their fee structure is, and to work with a fee-only advisor if possible).
FAQs
CFPs who provide holistic planning can help you to create and maintain a financial plan by determining your financial goals and discussing your current financial situation and appetite for risk. They can also advise on retirement planning, saving for short- and long-term goals, choosing investments and tackling debt.
What exactly does a CFP do? ›
A CFP is a certified financial planner who provides financial planning advice to individuals. This includes help with investing, retirement planning, estate planning, and tax law.
Do CFPs make a lot of money? ›
Certified financial planners can expect to earn an annual income of anywhere from less than $50,000 to nearly $300,000, depending on a variety of factors including experience, location and industry. CFPs in the securities business make the most, followed by those working for lenders.
Is CFP really worth it? ›
Whether you're looking to get your CFP license or are just in the market for a financial planner, don't skimp on the CFP designation. Those three letters show that someone is qualified in financial and investment planning, and that they provide an honest fiduciary benefit to their clients.
What is the highest salary for a CFP? ›
How difficult is a CFP? ›
The certified financial planner exam is likely the hardest test you'll ever take, Dorsainvil says. "Think of the hardest exam you took in college then times it by 10." Preparing to take the CFP exam begins months or even years before you actually sit to take the test.
Is CFP job stressful? ›
It takes considerable time and effort to build a client base, and steady attention to meet the regulatory requirements of the field. And it's a high-stress job in the best of times.
What is the average age of CFPs? ›
CFP Professional Demographics
| Age | Number | Percentage |
|---|
| 20-29 | 5,463 | 5.7 % |
| 30-39 | 22,246 | 23.1 % |
| 40-49 | 24,525 | 25.4 % |
| 50-59 | 21,582 | 22.4 % |
4 more rowsIf you are considering taking the CFP exam, you've probably wondered how many hours are required to study, in order to be ready to pass the CFP exam. Well, to be truly “exam ready”, you should expect to study about 200 hours to prepare for the exam.
What is the CFP pass rate? ›
Financial Advisor IQ - CFP Exam Pass Rate Inches Up to 65% Javascript is disable in your web browser.
The pass rate for the CPA Exam was 54% overall. Comparatively, CFP is easier than CPA. The historical pass rate has been above 60%, which indicates that the tests are of a difficulty level that is considered to be moderate. The overall pass rate for the examinations that were carried out in 2022 was 64%.
Are CFP in demand? ›
The U.S. Labor Department reports that jobs in financial planning are expected to grow faster than average, at a rate of 7% through 2028. Even better, Financial Advisor was ranked #6 in Best Business jobs by U.S. News and World Report in 2023.
Why do people fail the CFP exam? ›
CFP® Exam Pass Rates
Some candidates fail because their study plan is not comprehensive enough, while others put too much emphasis on memorization and not enough on understanding how the material can play into real situations.
What pays more CFA or CFP? ›
In the U.S., CFA charterholders vary in the range of $56,500 and $120,500 per annum, with an average salary of $95,494. On the other hand, the salary of CFPs varies in the range of $62,500 and $94,500 per annum, with an average salary of $83,123.
What is better than a CFP? ›
CFAs typically work more in the field of financial analytics and investing, while CFPs usually focus on financial planning with individual clients. Keep in mind that getting a CFA is also a longer process with more exams.
How much does a CFA vs CFP earn? ›
CFA vs. CFP - Key Summary
| Details | CFA Charter | CFP Certification |
|---|
| Salary | $85,000 to $143,000 | $51,000 to $102,000 |
8 more rowsCandidates will find that creating a structured study schedule is critical for successfully preparing to take the exam. The general recommendation is to devote at least 10 hours per week, with a total of 150-250 hours (which means approximately 4-6 months of preparation), to study for the CFP exam.
How many times can you fail CFP? ›
You may attempt the CFP® exam a lifetime maximum of 5 times. (If you attempted the exam 4 or more times prior to January 1, 2012, you will be permitted a maximum of 2 additional attempts.)
Can you pass the CFP exam without experience? ›
Yes. Candidates can sit for the CFP® exam before meeting the experience requirement.
Why I quit being a financial advisor? ›
The most common reasons financial advisors quit are lack of fulfillment, difficulty finding clients, and burnout. Over 90% of financial advisors do not last three years, which means that there is a very low retention rate for financial advisors. To be a successful financial advisor, you need to be able to close a deal.
Becoming a Financial Advisor
| Pros | Cons |
|---|
| Unlimited earning potential | You must develop a client base |
| Low start-up costs | Marketing costs vary widely |
| Lifetime learning | You will never learn everything |
| Huge range of products + strategies | Consider a somewhat narrow focus |
5 more rowsWorkforce Development. As a growing number of financial planners retire, our profession faces a shortage of CFP® professionals to serve the increasing demand of the public. To meet this challenge, CFP Board Center for Financial Planning works to build a sustainable financial planner workforce for the 21st century.
How many levels of CFP are there? ›
A CFP® professional is likely to be a financial planner, wealth manager, or financial advisor. CFA charterholders commonly help individuals and institutions invest and allocate assets. To earn CFP® certification, you must sit for and pass one exam; the CFA Program exam has three levels.
Am I too old to become a financial planner? ›
Similar to timing, age is only shortening your ability to see funds mature. You are never too old to begin but the path for a secure financial future will be different than someone who elects to begin planning and managing their wealth at an earlier age.
Does a CFP need a Series 7? ›
The CFP and the Series 7 are two qualifications that may be of interest to financial professionals. In fact, a CFP could also look to complete the Series 7 exam. However, they serve different purposes. The CFP is for experienced financial planners looking to set themselves apart from the competition.
What happens if you fail a CFP course? ›
Retake Policy
If you fail the CFP® exam and elect to retest, you are required to retake the entire exam and to pay the applicable exam fee for each retake.
How many questions is the CFP exam? ›
The CFP® exam is a 170-question, multiple-choice test that consists of two 3-hour sections during one day. Each section is divided into two distinct subsections.
How many people pass the CFP first time? ›
Certified Financial Planner Board of Standards, Inc. (CFP Board) today announced the results of the November 2022 CFP® Certification Exam. The exam was administered during a November 1-8 testing window to 3,204 candidates, with 4% of candidates testing remotely. The pass rate for the November exam was 64%.
What happens after you pass CFP exam? ›
You can earn your degree up to 5 years after passing the CFP® exam. You must complete the certification coursework through a CFP Board Registered Program before you can take the CFP® exam.
What is the hardest part of the CFP exam? ›
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.
The Most Difficult (And Important) Part of The Test
- Nearly everybody who has taken the exam agrees that the case studies are the most difficult portion of the test.
- The exam has 170 multiple-choice questions, with some based on case-studies or scenarios. ...
- Case studies describe a hypothetical client's scenario.
While both credentials are widely recognized in the financial services industry, CFP® certification is the standard of excellence in personal financial planning. It signifies that you are trained and experienced in comprehensive financial planning that helps your clients chart a course for a secure future.
Which company pays financial advisors the most? ›
12 high-paying companies for financial advisers
- Morgan Stanley. Salary: $60,812 per year. ...
- UBS. Salary: $68,390 per year. ...
- Equitable Advisors. Salary: $69,580 per year. ...
- Northwestern Mutual. Salary: $80,179 per year. ...
- Baystate Financial. Salary: $93,350 per year. ...
- Citi. ...
- Strategic Wealth Designers. ...
- Anchor Financial Group.
CFP® Professional Requirements
- Complete a CFP Board Registered Education Program. ...
- Sit for the CFP® exam. ...
- Hold or earn a bachelor's degree from an accredited university or college within five years of passing the CFP® exam. ...
- Demonstrate financial planning experience. ...
- Pass CFP Board's Candidate Fitness Standards.
In some cases, they'll charge clients an “advisory” fee based on assets under management or a flat-fee method. In other cases, they can sell products and earn a commission.
How many Cfps are there in the US? ›
The CFP Board boosted its total number of professionals to 95,137 in 2022, while touting increases in the percentage of female and racially and ethnically diverse professionals (though these numbers continue to significantly lag the country's demographics as a whole).
How long is the CFP exam break? ›
You will have two 3-hour test sessions separated by a scheduled 40-minute break. An exam clock is available to allow you to monitor the time remaining. Please note that you will not be able to review or alter answers from section one of the exam during or after the 40-minute break.
What is the starting salary of a CFP in the US? ›
How much does a CFP make? The national average salary for a CFP is $72,256 in United States. Filter by location to see CFP salaries in your area. Salary estimates are based on 10 salaries submitted anonymously to Glassdoor by CFP employees.
What is the average salary of a CFP in the US? ›
Salary Ranges for Certified Financial Planner (CFP)s
The salaries of Certified Financial Planner (CFP)s in the US range from $39,300 to $187,200 , with a median salary of $124,870 .
Does CFP count towards Masters? ›
If you completed your required education for CFP® certification through the College, you may qualify for up to 15 hours of transfer credit toward the Master of Science in Personal Financial Planning program, which could put you halfway toward earning your master's degree.
What is the CFP Qualification? The Certified Financial Planner (CFP) qualification is offered by CFP Board in the US, and Financial Planning Standards Board (FPSB) outside the US. It is a masters degree equivalent credential and a globally recognized benchmark for excellence in financial planning.
Should I get CFA or CFP first? ›
It's more common for someone with a CFA charter to decide to sit for the CFP® exam, especially since CFP Board waives much of its education requirements for CFA charterholders. But, earning the CFP® mark first has worked well for some investment analysts with CFA charters as well.
How long does it take to get a CFA? ›
How long does the CFA® Program take to complete? With Level I exams in June and December and Level II and III exams in June, it is possible to complete the CFA Program in two years. However, with a recommended study time of 300 hours per exam level, it takes most people three to four years to complete the full program.
Should a financial advisor get a CFA? ›
While the CFA is the best designation to pursue in terms of investment knowledge, it certainly does not cover all of the aspects of financial planning. In very general terms, however, the CFA designation may help those in the corporate world more than those starting their own financial planning business.
What is the difference between a CFP and a financial advisor? ›
A financial planner holds the Certified Financial Planner (CFP) designation and can help clients develop plans to reach goals by considering the entirety of their financial health and standing. A financial advisor focuses on their clients investments and how they can use them to build wealth.
What is the difference between a CPA and a CFP? ›
A CPA is a certified public accountant who performs audits or prepares complex tax returns for an organization. A Certified Financial Planner (CFP) has expertise in the areas of financial planning, taxes, insurance, estate planning, and so forth.
Which is better CFP or CFA? ›
While both of these certifications are common, CFP is the more common certification for a financial advisor because it is more tailored to financial planning with individuals.
What is the difference between a fiduciary and a CFP? ›
Again, CFPs have a more ongoing duty to their clients. A fiduciary has a higher standard to meet. It's an ongoing standard. They have to ensure that your investments are hitting certain targets on a regular basis.
Does CFP make you a fiduciary? ›
Fiduciary Duty
At all times when providing Financial Advice to a Client, a CFP® professional must act as a fiduciary, and therefore, act in the best interests of the Client.
Is CFP or bar exam harder? ›
The CFP® Certification Examination is equally as challenging as the CFA® exams, the CPA® exam, and bar exam. Every year, thousands of candidates go through this rigorous certification testing, but not everyone makes it to the finish line. However, you can pass the exam.
Salaries can vary widely for both CFAs and CPAs based on location, experience level, and company size. That being said, according to Payscale the average salary for a CFA is $102,000 and the average salary for a CPA is $94,000.
Who is the best financial advisor? ›
The Best Financial Advisors of 2022
- Best Overall: Fidelity Investments. ...
- Best for Mixing Robo-Advice with a Human Touch: Vanguard Personal Advisor Services. ...
- Best for Commission-Free Advisors: Zoe Financial. ...
- Best for Low-Cost Unlimited Access to Advisors: Betterment.
It's recommended that you use a fiduciary financial advisor in most scenarios. Not only are they usually more affordable, they are legally and federally held to high ethical standards. Their role, by nature, is designed to serve your best interest and maximize your financial benefit and not their own.
How can I tell if my financial advisor is a fiduciary? ›
The easiest way to verify that a potential advisor is a fiduciary financial advisor is to simply ask and then verify their status. To check that they're registered with the SEC, use FINRA's BrokerCheck database.
