March 10, 2021

Why Hire a CFP?

Earning and maintaining the Certified Financial Planner designation is no easy task. It’s the mark of someone who’s put in the time and energy to prove they know what they’re doing. Learn more here.

“I love managing my finances. It’s so simple and straightforward,” said no one, ever.

The reality is, managing your finances is difficult and time consuming. But finding someone who can handle your hard-earned money for you comes with its own set of problems. 

You need someone who’s knowledgeable, easy to work with, and trustworthy. Who has a deep understanding of financial planning and a savvy investment strategy. You need them to be dedicated to helping you achieve your goals and always willing to put you first. And that’s a tall order to fill. 

So how do you find a financial advisor with all of that criteria? One way to narrow down the prospective field is to find someone with a CFP.

What is a CFP?

The CFP or Certified Financial Planner designation is a formal certification awarded by the Certified Financial Planner Board of Standards to financial advisors who’ve shown they have extensive expertise in areas like financial planning, taxes, estate planning, retirement and insurance. 

As you might imagine, earning and maintaining the CFP designation is no easy task. It’s the mark of someone who’s put in the time and energy to prove they know what they’re doing. 

Why Does a Certification Matter?

At first glance, it may seem like a certification is just an extra thing financial advisors do to seem credible. But, the truth is, it actually separates finance experts from a sea of “advisors” who simply manage money and make investments for others. 

What’s the difference? Experience. Financial advisors with certifications have spent the time and gained the necessary experience to guide you through the complexities of investing and financial planning. Other advisors have not. 

This isn’t to say that every advisor without a certification has bad intentions, though. The vast majority of advisors mean well. But when it comes to managing your money, meaning well isn’t enough. You need someone who knows what they’re doing. A certification ensures that they do. 

Why a CFP Over Other Designations?

It makes sense that you would want an adviser who earned a certification. But why does it matter which certification?

The simple answer is that not all certifications are created equal.

There are over 100 different certification options for financial professionals, but some hold more weight than others. While certain certifications require little more than mailing in a check, the CFP demands that you pass exams, spend hours working professionally and have a relevant degree. 

The other advantage to the CFP designation is its comprehensiveness. Many designations – like the CDFA or Certified Divorce Financial Analyst designation – only showcase expertise in one specific area. That means the advisors who hold them aren’t well-suited to serve everyone. And they aren’t able to support their clients in every stage of their lives. They’re only certified to help people during a divorce.  

Now, there’s nothing wrong with working with an advisor who has a certification like the CDFA, especially if you’re in need of a more specialized skill set. But this specialized background should be in addition to a comprehensive financial planning background.  

Earning a CFP

A CFP stands out from other certifications largely because of the effort required to earn it. It takes years to hit all of the requirements. And the professional has to excel in four distinct areas, before they can receive it: formal education, CFP exam, work experience, and professional ethics. 

Let’s break them down here. 


In order to earn the CFP designation, you must have a bachelor’s degree from an accredited university. During your time at the university, you must complete certain financial planning courses that cover: 

  • financial plan creation
  • risk management
  • taxes
  • estate planning
  • other general topics relating to financial planning. 

The CFP Board makes exceptions for this financial planning coursework requirement only if you can prove that you’re already knowledgeable in these financial planning areas, such as by having a CFA, CPA, MBA, or other high-level business degree. 

And it doesn’t stop there. Even after you earn the CFP designation you’re still expected to continue learning. CFP certification renewal occurs every two years and requires thirty hours of continuing education for the renewal to be approved.

This educational requirement is key, because it means you can’t earn a CFP simply by being a good test-taker. You need a sound educational background that teaches theoretical and practical financial planning skills.

Work Experience

As with most things in life, no matter how excellent an education you received, it can’t compete with experience. That’s why the CFP also has a three-year minimum work experience requirement, or 6,000 hours of real-world financial planning.

The CFP Exam

This is the most well-known requirement of earning a CFP. And for good reason. The ten-hour test is taken over the course of two days and covers dozens of financial planning topics. It includes plenty of theoretical information, but it also asks questions applying that theoretical knowledge to real life situations.  

The numbers vary, but typically only 55 to 60 percent of test takers pass -- even though all those taking the test have worked in financial planning for at least three years and have taken financial planning coursework.

And for those who don’t pass, the wait time to the next exam is pretty long. In fact, the exam is only offered three times a year.

Professional Ethics

Finally, earning the CFP designation requires you to agree to a strict code of ethics. This includes a commitment to act as a fiduciary. 

The CFP Board also runs a background check and requires you to disclose information regarding your involvement in various areas.

While this may not sound as impressive as taking a comprehensive exam, it may be even more important. That’s because a fiduciary is required to act in your best interest at all times. And that’s not a requirement of all financial advisors.  

The Takeaway

A certification can’t guarantee a good experience – which is why it should be one of many factors you consider. But if you’re looking for a financial planner who’s knowledgeable and trustworthy, finding one with a reputable certification, such as a CFP, is a great place to start.

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