A Certified Financial Planner, or CFP, is someone who meets the qualifications specified by the Certified Financial Planner Board of Standards, Inc., and those qualifications are:
- Pass an Exam: They must complete the CFP Board’s certification examination.
- Years of Experience: They must have 3-5 years of financial planning-related experience.
- Adherence to Ethics: They must voluntarily ascribe to the Code of Ethics and suffer disciplinary action if they violate those rules.
- Continuing Education: They must get 30 hours of continuing education every two years in body of knowledge related to financial planning.
You can check if someone is a CFP by using the CFP Board’s searching function. If they do not appear, they simply may not be in the system. If they do appear, you can be reasonably assured they are certified. You can also use that search form to locate a CFP in your area.
Okay, after all that mumbo jumbo, you now know what it means for someone to have that CFP designation next to their name. But what does it actually mean for someone to be a CFP? A CFP has to be education in numerous financial areas, such as in estate issues, retirement, investment, tax issues, and varieties of insurance. You can turn to a CFP if you’re looking for planning advice. What insurance should you get? What retirement accounts should you consider?
Get a fee-only CFP. Some CFPs are paid a commission on certain products so they are inherently biased, even if they say they aren’t. The solution is to seek out fee-only planners, those planners that are paid by you for their time, rather than a sales commission. Fee only is the only reasonable way to guarantee that you get unbiased advice. This is not to say that commission based CFPs are biased, it’s just that you can see where the confusion lies.