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What exactly is a Certified Financial Planner™️? Financial adviser and Certified
Financial Planner™️ are definitely not the same thing. Continue listening and I'm
going to tell you what it takes to earn the CFP® designation.
Hey I'm Colin Exelby, Certified Financial Planner™️and in this short video I'm gonna explain
what a CFP® is and why we are different from all the others who call themselves
financial advisors. A few months ago I was interviewed for a story about
choosing a financial advisor. FitSmallBusiness.com put together a list of 25
questions to ask a potential financial advisor. Asking if they're a CFP® was number
one. and you can check out that article in the link below. I tell people all the
time that anyone can manage their personal finances if they have these
three things. You must have a reasonable amount of knowledge or a desire to learn
about personal finances. You must have the time to devote to managing your
finances. and third you have to have a level head. Do you have the ability to
act unemotionally and rationally about your finances at all times? What I found
is that many Americans don't have all three. So, for those who decided their
finances have become complicated enough that they'd like to hire somebody. Where
do you turn? it can be really confusing. There's so many titles.
if you don't know the
difference don't worry it's really confusing and as more and more people in
the advise community call themselves financial planners it's important to
understand the differences between a Certified Financial Planner™️and a
financial planner or financial advisor. If you want to be a financial adviser
all you have to do is get a job at an investment firm or an insurance company
working with the public. You don't need a college education, you don't need any
industry experience, and you don't need to show
any understanding of basic finance. That is pretty scary. Now I started off my
career as a financial advisor in 2000 right out of college. I had to pass the
series 7 exam which is really a pretty basic finance exam.
I just finished investments and economics exams in college, so passing the 7 was a
breeze. I like to joke that the exam just keeps out those who truly have no
concept of what a stock is, what a bond is, and how to multiply, divide, add, and
subtract. That exam does absolutely nothing to confirm that you know how to
give financial advice. However to become a Certified Financial Planner™️there are
a large number of requirements. It truly takes financial advising to a whole
other level and can literally take years to fulfill the obligations to become a
Certified Financial Planner™️. True financial planning involves cash flow
and debt management, investments, insurance and risk management, retirement
and college planning, estate planning as well as tax planning. The CFP® ensures
that its designees really do understand basically anything that's
related to personal finances. So, why doesn't every financial consultant
broker and financial advisor get to call themselves a CFP®? Well let's look at what
it actually takes to become a Certified Financial Planner™️. First you must have a
bachelor's degree from an accredited university in order to call yourself a
CFP®. You can have the degree before sitting
for the exam or you must get a degree within five years of passing the exam.
Second, you must complete a financial plan development course registered with
the CFP® board that covers over 100 integrated planning topics. Certain
advanced designations like the CFA the CPA or the CLU may allow you to bypass
some of that coursework. You can do these classes virtually or as part of a real
life class. Myself, I did virtual classwork
over the course of two years and past five separate exams focusing on each
part of the financial planning process. I then took a crash course style exam prep
in the evenings and weekends over the course of three months that finished up
with a live class from 8 a.m. to 6 p.m. over four straight days. That brings us
to the next step you have to pass the CFP® exam. It's a grueling six-hour exam
that has multiple choice questions as well as case studies. They give you pages
and pages of sample client data and then you have to determine what's going to be
the best financial planning options for the client. That exam is by far the
HARDEST exam I've taken in my life. It was so comprehensive, covering so many
different areas of financial planning. and the key is you have to know how to
apply the information not just to get a suitable solution. You have to get the
best solution. There's often multiple right answers but you must get the best
solution right. So, now you passed the exam, you get ready to call yourself a CFP®
right? Nope, not yet. Before you can call yourself a CFP®, you have to meet the
experience requirement. You can't just be a CFP®, a Certified Financial Planner™️
right out of college or as a second career right away. You must have worked
in the financial planning industry providing financial planning advice for
at least 6,000 hours or you must have been an apprentice for at least 4,000
hours. So, you must have life experience working with clients, analyzing data and
then presenting it. The final part is the ethical responsibility of a Certified
Financial Planner™️. CFP®s follow a strict code of Professional Conduct that
outlines our responsibilities to the public, our clients, and our employers.We
are held to a higher standard than brokers, financial advisors, financial
consultants and any bloggers that are giving financial advice. You've heard me
mention suitability earlier as it relates to the exam. Most brokers and
advisors just have to do what's suitable for their clients. Meaning they could
give less than ideal advice but because it's suitable it's completely fine.
Certified Financial Planners™️ are held to the fiduciary standard which means we
need to provide advice that's in our clients best interests.
You can go onto CFP.net and find out anything about a potential financial
adviser that you're getting ready to hire that says they're a CFP®. You can see if
there's been anything filed against them. So for example, have they filed
bankruptcy, has anyone filed a complaint against
them. Ff the advisor isn't listed on CFP.net then they are not a CFP®. It doesn't
end there though. There's also a continuing education requirement to keep improving
your knowledge over time and you must complete that every two years. A
financial adviser, consultant, broker, or a blogger doesn't have to go through all
the scrutiny... all this education or all the experience. In my opinion, if you're
looking to hire a financial advisor I'd encourage you to make hiring a CFP®
mandatory. If the person providing you financial advice doesn't have a CFP®, I
would ask them why not? And, if you don't like the answer you get... look somewhere
else. Thanks for taking the time to learn about what makes a CFP® different. Ff you
have more questions, feel free to reach out to me. And, make sure to follow me on
YouTube and on my blog, SeetheForestThroughtheTrees.com
