While many industries have their own acronyms, abbreviations, and jargon, the financial industry seems to really enjoy imposing their shortcuts on everyone else. This series will aim to de-mystify WTF the alphabet soup means and how it applies to your life.
In the world of personal finance, the letters CFP® stand for CERTIFIED FINANCIAL PLANNER™ certification. No, my caps-lock didn’t get stuck there and neither am I trying to shout at you, there are strict rules for using the designation. Anything other than all capital letters is a violation of trademark law! It’s how a consumer can tell the difference between someone who calls themselves a “financial planner” and someone who has undergone rigorous coursework and testing.
Any professional using the CFP® letters or stating they are a CERTIFIED FINANCIAL PLANNER™ practitioner has taken an oath of ethics to be a fiduciary for their clients. It means CFP® certificants always put their clients’ interests first when giving financial advice. You may be thinking, “Um, Sarah, aren’t all financial professionals supposed to think about my interests first?” and the answer to that is: not legally they don’t. Most financial advisors operate under what is called a suitability standard. Everything most advisors recommend has to make reasonable sense for your situation, but it may also make really good sense for an advisor’s paycheck. This conflict can make it very difficult for consumers to judge whether the advice they are getting is the best thing for them. You should always ask your advisor whether they have to adhere to the fiduciary standard. And GTFO if they say anything other than “yes”.
Other than being a fiduciary, what makes CFP® professionals so great? In order to use those letters after their name (just like a doctor! No, financial advisors don’t have an ego at all.), an advisor must have a Bachelor’s degree, at least 2 years of prior planning experience, and have passed an intense exam. Studying for the exam takes on average between 18-24 months. Even after that much studying, only about 65% of hopefuls pass. The exam thoroughly tests our knowledge of the planning process, evaluating investment options, estate planning, retirement planning, and taxes. So much on taxes. I always say that even though I can’t legally give tax advice, thanks to the CFP® exam I know enough to be very dangerous.
After the initial exam, CFP® certificates don’t stop learning. All CERTIFIED FINANCIAL PLANNER™ practitioners must complete at least 30 hours of continuing education every 2 years in order to keep using our marks. This makes sure we stay sharp on any law changes that might affect your money and what is going on in the world.
As you may have gathered throughout this post, I hold the CFP® designation. If you have a money question you need guidance on, feel free to send me an email at firstname.lastname@example.org or go ahead and schedule a free consultation here: https://calendly.com/valkyriefinancial/consult
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.