If you want to become a CFP (Certified Financial Planner), you need to understand the education requirements. First, you need to complete the right education. Then, you will need to pass the right exams. Experience is also necessary to gain access to the top certified financial planner positions.
Earning certification as a CFP is a step-by-step process. Here are the five most common steps to becoming 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 degree. Your degree can be in any subject, but it will usually be in business or finance.
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 it if they don’t pass 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 and choose from one of the 150+ registered programs across the country.
You will need to study under a pre-approved provider from the CFP Board. Completing this coursework can take 12 to 18 months. 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
To become a certified financial planner, you must pass the CFP exam. This exam is taken after completing the necessary coursework. You can sit for the exam three times a year: March, July, and November. It’s offered during an eight-day window each of the three months.
The exam is offered nationwide and is completed in two three-hour sessions. It is comprehensive and covers many different topics. It is a pass-or-fail test. About one-third of 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 good; you want to ensure your clients trust you. In addition, public credibility makes you easier to trust in 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, but many first-time takers don’t pass it. About 60% will pass on the first try, and with the right preparation, you can pass it 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 to help you prepare 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 involves helping people with their taxes, investment decisions, retirement planning, insurance policies, and more. You will often meet with clients and examine 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 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 in the exam.
How many questions will be found on the CFP exam?
The CFP exam has 170 questions. They are split into several sections: three sections containing 29 questions each, three containing 20 questions each, and the final two sections offering 12 and 11 questions, respectively.
What is the accelerated pathway to 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 initially, you can take it up to three times within a 24-month period. If you fail all three attempts within that timeframe, you must wait a full year (three exam cycles) before registering again. You have a lifetime maximum of five attempts.
Each attempt will cost $825, so passing on the first try is important. 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. To become a certified financial planner, you must complete 30 hours of continuing education, including 2 hours of ethics education approved by the CFP Board every two years. You must also 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. The college degree, coursework, and exams will also cost a lot. 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. Ensure 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.
