CPFA vs. CFP: Which Financial Advisor Do You Need?

Certified Plan Fiduciary Advisor (CPFA) and Certified Financial Planner (CFP) are two common types of credentials that financial advisors earn. Of the two, CFP requires significantly more education and experience. CPFAs primarily advise employer-sponsored retirement plans. CFPs have a more general scope of practice but may specialize in retirement planning. Here are the key differences. A financial advisor who holds a certification in a specific area can help you address those needs and goals.

What Is a CFP?

The CFP certificate is overseen by the CFP Board, which requires candidates for the designation to demonstrate a sizable quantity of education and experience as well as the ability to pass rigorous exam. CFPs also must follow a strict code of ethics including acting as a fiduciary for their clients.

CFP candidates must first pass a background check and disclose any prior criminal cases, customer complaints, disciplinary actions and employment problems. They also must possess a four-year college degree. Another prerequisite is at least 6,000 hours of professional experience working in the financial services business.

Except for some people such as licensed attorneys and Certified Public Accountants, CFP applicants also have to complete a separate CFP Board-approved college-level course in financial planning. Each of the multiple modules in the course has its own exam. This course requires another one to three months of study.

After the CFP coursework comes a challenging examination. The CFP exam consists of more than 170 questions that must be answered within six hours. The questions cover all the bases of providing financial advice, from creating a financial plan and saving for retirement to managing an investment portfolio, protecting assets with insurance and tax and estate planning.

Passing applicants next must agree to follow the code of ethics covering confidentiality, integrity, fairness and other matters. The code requires them to adhere to a standard of fiduciary duty, which means they will put their clients’ interests before recommending investments.

Many CFPs are fee-only advisors, meaning they are compensated only by fees charged to their clients for preparing financial plans and overseeing investment portfolios. These fees may be flat fees for service or a percentage of assets under management. Some CFPs also receive commissions on investments purchased by their clients.

What Is a CPFA?

The CPFA certification is overseen by the National Association of Plan Advisors, which is part of the non-profit American Retirement Association. The CPFA certificate is for advisors who work with retirement plans.

The association doesn’t specify any particular education or experience prerequisites to get a CPFA certificate. The NAPA does recommend applicants complete the online prep course. This is a 10-hour course that prepares applicants to answer questions on the four-part exam focusing on managing and providing investment advice to retirement plans under ERISA, the federal law governing retirement plan administration.

In addition to passing the exam, people with the CPFA designation must adhere to the ARA’s code of ethics. And when giving investment advice to retirement plans, CPFAs are legally required to follow the fiduciary standard and act only in their clients’ best interest. They may be compensated by fees, commissions, 12b-1 mutual fund marketing fees and other sources.

CPFA vs. CFP: Key Differences CPFA vs. CFP Comparison Key Areas CPFA CFP Professional Focus Retirement plans, investment advice Broad range of financial advisory services from budgeting and saving to funding retirement and estate planning Prerequisites None Background check, four-year college degree, 6,000 hours of financial industry work experience, college-level financial planning course Examination 75-question exam 150-question multiple choice exam Conduct Code ARA code of ethics, fiduciary standard CFP code of ethics, fiduciary standard Continuing Education 10 hours annually 30 hours every two years Bottom Line

CPFA and CFP are two certifications that may be displayed by financial advisors. The CFP designation is a widely known and well-established credential for all-purpose financial planning that requires certificate holders possess significant amounts of relevant education and experience, plus pass a rigorous examination. The CPFA is much less rigorous and focuses on retirement plans. Both credentials require holders to act only in their clients’ best interests.

Tips for Finding a Financial Advisor

• After familiarizing yourself with financial advisor certifications, you still have to select an individual advisor. Finding an advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Getting good answers to some important questions can tell you more about an advisor than any specific certification. Some of the key questions to ask anyone you are considering hiring as an advisor cover fiduciary duty, past disciplinary actions, specific services provided, investment minimums and other topics.

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