MONEY THOUGHT:

WTF is a CFP®?

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.

Nope, my caps-lock didn’t get stuck there. I’m not trying to shout at you, either. There are strict rules for using the designation. Using anything other than all capital letters is a violation of trademark law!

It’s a professional designation that says a financial advisor has gone way above and beyond the basics. Seeing the letters CFP® after an advisor’s name is one way a person can tell the difference between someone who calls themselves a “financial planner” and someone who has actually undergone rigorous coursework and testing.

There are exactly zero rules about what makes someone a financial advisor.

Most people who say they are some kind of financial professional have probably passed an exam or two on either selling stocks and bonds or selling insurance. I’ve passed three of those. But those exams focus more on how not to break the law. They aren’t testing how to give good financial advice.

Even more important than knowing your financial advisor is giving good advice? Knowing your financial advisor is giving good advice specifically for you.

Any professional using the CFP® letters or saying they are a CERTIFIED FINANCIAL PLANNER™ professional 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! The recommendation may also make really good sense for an advisor’s paycheck. This conflict can make it really tricky for people 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.

There is so much testing 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® practitioners 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 a message. Or go ahead and schedule a free consultation.

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.

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Wisconsin CERTIFIED FINANCIAL PLANNER™ professional and educator Sarah Paulson

THE AUTHOR

Meet Sarah Paulson, your
CERTIFIED FINANCIAL PLANNER

Although I’m a born-and-raised Wisconsinite – living in Appleton, Wisconsin –

I consider myself more of a world citizen.

True story: once when going through international customs in Amsterdam, the officers asked why they couldn’t find a Dutch residency permit in my American passport.

I bring a big world picture to my money management advice so you can view the wider world, too.

All written content on this site is for information purposes only.
Opinions expressed herein are solely those of Valkyrie Financial, unless otherwise specifically cited.

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