How To Become a CFP

If you want to know how to become a CFP (Certified Financial Planner), it starts with understanding the education requirements. A CFP needs to complete the right education first. Along with education, you will need to pass the right exams. Experience is also necessary to gain access to the top certified financial planner positions.

When you want to become a CFP, there is a step-by-step process to earning this certification. Here are the most common five steps you will need to complete to become a certified financial planner.

5 Steps to Becoming a CFP

Step #1 – Gain a College Degree

You need a college degree to become a certified financial planner. Unfortunately, it’s not possible to earn this designation without an undergraduate college degree. Your degree can be in any subject, but it will be in business or finance most of the time.

You can actually start the certification process before you have graduated. You have up to five years to earn your college degree after passing the CFP exam. This means you can take it during any year you are working on in college without worry.

Some students decide to take the CFP exam early on, just in case. This leaves plenty of time to retake the exam if you don’t pass it the first time.

Step #2 – Take the Required Coursework

Before you can sit for the CFP exam, you will need to complete the CFP Board’s certification coursework. In addition, choosing from one of the 150+ registered programs across the country will be necessary.

You will need to study under a pre-approved provider from the CFP Board. It can take 12 to 18 months to complete this coursework. Some candidates with qualifying credentials may be able to use the accelerated path.

Even if you can use the accelerated path, you will need to complete the 45-hour financial plan development curriculum known as the Capstone Course. This course will be completed with a final project, which includes developing and presenting a financial plan.

Step #3 – Pass the CFP Exam

You will need to pass the CFP exam to become a certified financial planner. This is taken after completing the necessary coursework first. Three times a year, you can sit for the exam: March, July, and November. It’s offered during an eight-day window each of the three months.

The exam will be completed in two three-hour sessions, and it’s offered all across the country. This comprehensive test will cover many different topics, and it’s a pass-or-fail test. About one-third of the first-time test-takers will not pass. The right CFP exam prep course can ensure you are fully prepared for the exam.

It will cost $825 to register for the test. If you register late, you will pay an extra $100.

Step #4 – Gain Work Experience

While you can gain work experience before passing the CFP exam or after, you need real-life experience in financial planning. There are two main ways you can get the necessary experience, which include:

• Standard Pathway – Complete 6,000 hours of personal financial planning work with clients or through teaching.
• Apprenticeship Pathway – You can also choose to become an apprentice and gain 4,000 hours of experience working with clients with actual financial planning activities.

You can complete your work experience over several years. You have up to 10 years to complete the work and up to 5 years after passing the CFP exam.

Step #5 – Pass a Background Check

This is the easiest of the necessary steps to becoming a certified financial planner. First, you will need to pass a background check and sign an ethics declaration. The CFP Board will do the background check. Then, they will look into your criminal record and employment history.

Top Benefits of Becoming a CFP

Opens Up Job Opportunities

Employers like to see the CFP designation. This is a very marketable certification and appeals to employers in the financial industry.

More Credibility

If you sell financial products and services, gaining more credibility is a good thing; you want to make sure your clients trust you. In addition, you will be easier to trust with public credibility when it comes to complex transactions.

Prospective Clients Prefer It

The CFP designation shows your financial expertise. It shows you worked hard, and customers understand this designation means you can help them with their financial needs.

Higher Salary

While you can work as a financial planner without this designation, it will earn you a higher salary. CFP professionals have the ability to earn more with a corporate job or by working for themselves.

Preparing for the CFP Exam

The CFP exam is one of the biggest steps to becoming a certified financial planner. It’s necessary, and it’s an exam many first-time takers don’t pass. About 60% will pass on the first try. With the right preparation, you can pass the CFP exam the first time.

The CFP Board recommends anybody looking to pass this exam study for at least 250 hours. It’s best to start training several months before the exam. Then, with the right study plan and the best study materials, you can be well prepared for the test.

Finding a study program with practice questions you can use will ensure you’re well prepared. You should also have a strategic study plan that will help you get ready for the CFP exam.

Frequently Asked Questions About Becoming a CFP

What type of job can I get after getting my CFP certification?

When you become a CFP, you can work as a financial advisor or planner. This career will have you helping people with their taxes, investment decisions, retirement planning, insurance policies, and more. Much of what you will do is meet with clients and look at their financial information.

While many certified financial planners work for themselves, many companies will, with public credibility, hire you as well. For example, you will likely work in a financial planning firm or at a bank.

What types of topics will be covered on the CFP exam?

If you want to become a CFP, you will need to pass the CFP exam. This exam will cover many topics, including:

• Investment planning
• Income planning
• Retirement savings
• Financial planning principles
• Risk management
• Tax planning
• Estate planning
• Insurance planning
• Professional conduct
• Regulations
• Education planning

All of these topics will be covered on the exam.

How many questions will be found on the CFP exam?

A total of 170 questions will be found on the CFP exam. They are split between several sections with three sections containing 29 questions each, three containing 20 questions each, and the final two sections offering 12 and 11 questions.

What is the accelerated pathway to gain becoming a CFP?

If you already have specific industry certifications or education, you might be able to become a   certified financial planner much faster. In addition, those holding specific certifications or an advanced degree can use the accelerated path to become a CFP. These credentials include:

• Licensed attorney
• Certified Public Accountant
• Chartered Financial Consultant
• Chartered Financial Analyst
• Doctor of Business Administration
• Ph.D. in Business, Economics, or Finance

If you hold one of these, you can take the capstone course and pass the CFP exam.

How many times can I take the CFP exam if I fail?

If you don’t pass the CFP exam the first time, you can take it up to two more times over 24 months. However, if you fail both of those times, you will have to wait an entire year before retaking the exam. So you get a total of five attempts before you aren’t able to take it again.

Each attempt will cost $825, so it’s important to pass on the first try. Studying properly with a good CFP exam prep course will help ensure you pass the first time.

Do Certified Financial Planners have to take continuing education courses?

Yes. As a certified financial planner, you will have to complete 30 hours of continuing education, including 2 hours of ethics education approved by the CFP Board every two years. It’s also necessary to pay a $355 annual fee and submit a completed application form.

If you want to become a CFP, you must commit quite some time to this designation. It will also cost quite a bit of money with the college degree, coursework, and exam. Therefore, before you decide to go down this path, it’s necessary to figure out if it will be right for you.

Those with full-time jobs will need to find the time to handle the coursework. It can take a few very busy years to complete the requirements and experience. Make sure you understand the limits of the school program you enter into for the coursework.

Maybe you already work in the financial services industry. If this is the case, you can check with your employer to see if they will reimburse or pay for the coursework or the exam fees. In addition, some companies will be happy to help you gain the CFP designation.

Jordan Fabel

Covering different 'paths' that people's lives can take. Creative, foster parent, ticket dismissal, you get the idea. Exploring the requirements, certifications, exams, and obviously, approved courses along each path.