What Is a Certified Financial Planner?

The certified financial planner, or CFP, designation is often considered the standard of excellence for financial planners. It's a mark of an advisor's commitment to providing the best holistic advice to clients, one that requires extensive study and experience.

"The CFP is the most comprehensive financial planning designation and demonstrates a broad knowledge of topics ranging from investments to taxes and estate planning," says Bryan Koslow, a CFP and principal of Clarus Group. With certificants adhering to rigorous studying, testing and ethical standards to hold the CFP mark, it can be a good way of differentiating them from the pack.

Current financial professionals can become CFPs, as can students or career-changers looking to enter the financial planning field.

Wherever you start your CFP journey, it's important to know what it means to be a CFP and what it's like becoming and working as one before you start. Here's what to know about earning your CFP.

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What Is a CFP?

A CFP is a financial professional who has met the training and experience requirements of the CFP Board, passed the CFP certification exam and committed to the CFP Board's ethical standards, which require them to put their clients' interests first.

Of the five professional designations Kasey Gartner, a CFP and wealth management advisor at Northwestern Mutual, has received, she says the CFP is "by far the most valuable." It's been one of the "greatest gifts" to her career, she says.

"Initially, holding the CFP designation served as a differentiator among other advisors," she says. "Now, I consider it almost a baseline for advisors looking to do true planning for their clients, and for clients looking for a holistic and comprehensive advisor."

[ SEE: 6 Pros and Cons of Choosing a Fee-Only Financial Advisor. ]

How to Become a CFP

To become a CFP, you must complete the CFP Board's "Four Es:" education, exam, experience and ethics.

The education component requires applicants to have a bachelor's degree and complete a CFP Board registered program. The bachelor's degree can be in any discipline as long as it's from an accredited university. Most people take 12 to 18 months to complete the CFP coursework requirement, according to the CFP Board. While advisors have to finish the CFP Board's coursework before taking the exam, they have five years from when they pass the exam to get their bachelor's degree.

CFP applicants also have five years from when they pass the exam to fulfill the experience requirement of either 6,000 hours of professional experience related to financial planning or 4,000 hours of apprenticeship experience under the direct supervision of a CFP professional.

While you can take the exam before getting industry experience, having several years of experience in the industry first can be beneficial, says Andrew Schultz, a CFP and partner and wealth management advisor with Clarity Financial Planning Group, a Northwestern Mutual private client group. "There isn't a substitute for time invested and firsthand experience working with clients through various planning situations."

The CFP exam is a six-hour test taken in two three-hour sessions during a single day. It consists of 170 multiple-choice questions, including stand-alone, scenario-based and case-study questions. In July 2021, 62% of exam-takers passed the test.

"Studying for the exam is a major commitment and is usually done while maintaining a full-time work schedule," Schultz says. Be prepared to spend many evenings and weekends studying.

"You can leverage technology by listening to audio recordings while driving and taking online prep courses," he says. "It's important to really immerse yourself in the content in order to be properly prepared for the exam."

Gartner took an intensive review course between completing her coursework and taking the exam. She strongly encourages any CFP candidates to do the same. She also recommends creating a calendar with deadlines for when you intend to complete each of the required courses and a target date for taking the exam.

"It's not enough to work in financial services for years and complete the coursework," she says. "You must prepare for the exam and structure your environment for success."

The final step in becoming a CFP is to meet the ethics requirement and pass the CFP Board's background check. Applicants will be required to sign the CFP Board ethics declaration and commit to the CFP Board's Code of Ethics and Standards of Conduct. These are an expansion of the fiduciary standard, which requires advisors to always act in their clients' best interests.

"Being held to a fiduciary standard as a CFP professional allows for clients and prospects to trust our process even more, knowing we will always put their needs first," says Gartner, who worked as a fiduciary before becoming a CFP.

[ Read: CFA vs. CFP: What They Are and How They Differ ]

What Do CFPs Do for Work?

CFPs can work at large banking or financial institutions or at smaller, independent firms. Some CFPs choose to start their own practices, while others prefer to work under the umbrella of a larger firm.

CFPs can fill many roles within the financial field, both in financial planning and investment advising roles. Some of the most common financial planning positions held by CFPs include personal financial planners, client services advisors, associate advisors and wealth management advisors. On the investment side, CFPs may serve as portfolio managers, financial analysts or investment managers.

Regardless of the job title, almost all financial planning CFP jobs involve working closely with clients to construct holistic financial plans.

"We work intimately with people to plan some of their biggest life decisions such as whether to start a family, make a career change, take care of aging family members and when to retire," Koslow says. "Every day is different because every set of client circumstances is unique."

In many ways, working as a CFP is no different than working without the designation, Schultz says. "People still need your help, and the products and services you can offer are often the same. The biggest difference is the knowledge you gain allows you to better understand the various elements of someone's financial situation and how they all fit together."

The typical salary for a CFP varies by job role. For instance, in salary-based compensation models, analysts typically earn between $47,000 and $62,000, while lead advisors or managing directors earn between $125,000 and $262,000, according to an InvestmentNews compensation and staffing study. These roles may also include bonuses or other compensation, such as a percentage of revenue.

As a mentor for aspiring CFPs, Koslow encourages applicants to follow their passion and see what areas of financial planning interest them most. "There are so many ways that CFPs can help clients," he says. "It's a lot easier to be successful in this business if you love what you do."