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My CFP® card recently arrived in the mail. It signifies to others that I am a legitimate CERTIFIED FINANCIAL PLANNER™ professional just in case I ever needed to prove my CFP® status with documents. It even comes with an official number identifying me as one of the more than 90,000 CFP® professionals working in America.
While the physical card itself is rather meaningless, what it represents has particular significance.
When I tell clients and others I meet that I am a CFP® professional, I tell them this means “I take a comprehensive financial planning approach to how I work with clients”. That’s a fancy way to say I am a financial planner and not just a product peddler or a sales rep for a giant company beholden to its shareholders.
Note: the CFP® Board has strict rules on the use of the CFP® and CERTIFIED FINANCIAL PLANNER™ marks. Hence, the frequent use of words like “professional”, “practitioner”, “certificant”, or “mark” as well as the use of the appropriate symbols. Since this is a post about the high ethical standards held by the CFP® Board and CERTIFIED FINANCIAL PLANNER™ certificants, I’ll do my best to comply with the rules.
More to the point, a CFP® designation matters for these reasons:
- CERTIFIED FINANCIAL PLANNER™ professionals have made becoming a CFP® professional designation a priority and worked hard to become one. These days, to qualify for the CFP® designation, one must be a college graduate, pass a rigorous course of study and pass a lengthy series of exams including a comprehensive final exam that go along with it. The general CFP® curriculum takes about 18 months to complete (or more, in my case). Then, once those requirements are met, you must have three years of professional experience before you can include the letters CFP® behind your name or on your business card.
- It’s no small feat, which is why it is considered the top professional designation for our industry. For more information about the CFP® certification process, view this video from the CFP® board
- CFP® professionals are required adhere to fiduciary guidelines and are held to strict ethical standards. Fiduciary status has been quite the buzzword for our industry over the past several years. Managing assets for a fee requires that you act in your clients’ best interest at all times. But it does not require that you are a CFP® practioner. Likewise, you can be a CFP® professional and offer commission-based products like insurance to your clients.
No matter how you work or the products and services you offer, being a CERTIFIED FINANCIAL PLANNER™ certificant requires that you work in the client’s best interest in all situations at all times. - Ever wonder if your advisor is held to fiduciary standards? Just look at their professional designations. If they include the CFP® or CERTIFIED FINANCIAL PLANNER™ mark behind their name, then they are.
- The CFP® mark requires that you take a comprehensive, financial planning approach to the work you do for clients. It’s not just a line we tell our clients. Financial planning is the cornerstone of every thing we do for our clients and it’s one of the key reasons why we are able to develop long-term relationships with them.
Like me, most CFP® professionals feel that to provide accurate, meaningful advice it is necessary to have a complete understanding of your personal as well as financial situation. This of course, means understanding your goals and knowing more about your financial resources. But it also means understanding your fears and concerns, knowing more about your background and what motivates you. It’s only by doing a comprehensive financial plan that includes tax and estate planning, goal planning for college and retirement, assessing your insurance needs and the threats to your financial security that an advisor can really understand you and provide the best advice.
- The CFP® mark behind your advisor’s name suggests a higher commitment to his or her career and the needs of her clients. Of course, there are plenty of professionals who do wonderful work for their clients despite not being a CERTIFIED FINANCIAL PLANNER™ professional, as well as a few CFP® professionals who do not. But I always wonder... If you really put your clients interests first and you are truly committed to doing the best work possible, why would you not want to hold this important designation?
- Credibility. Earning the right to use the CFP® mark doesn’t guarantee that your advisor is the right advisor for you or that they are not a well-dressed wolf in a business suit. However, in a world in which many can call themselves a “financial advisor” how else do you differentiate between a professional who is committed to a career as a financial planner from one who is simply selling insurance or mutual funds as a side job or an inexperienced advisor that may or may not be around for the long-term?
According to the Financial Industry Regulatory Authority (FINRA), over 600,000 registered representatives are licensed to sell securities in the United States. Of those, only 28% are CERTIFIED FINANCIAL PLANNER™ professionals. Even among Independent Registered Investment Advisors (professionals who charge a fee to manage money), only 34% hold the CFP® or CERTIFIED FINANCIAL PLANNER™ mark (Aite Group’s survey of 400 U.S. financial advisors).
I can’t say why more financial advisors, people who make a living managing money and providing financial advice to others, aren’t CFP® professionals, but wouldn’t you want to work with an advisor that is?
To discuss any of the topics in this blog or to learn more about how we can help you Cross The Bridge To A Confident Retirement, please contact me through my web site mikebranch.net, call me directly at 651-379-3935 or email me at mpbranch@focusfinancial.com.