How Do You Become a Financial Planner?

Financial PlannersThe path to become a financial planner is relatively straightforward. A financial planner is an accredited investment professional that helps people and companies reach their financial goals. The majority of these financial specialists obtain a Certified Financial Planner (CFP) accreditation through the CFP Board. The CFP accreditation demonstrates that the financial planner is a capable and educated professional.

Who is the CFP Board?

The Certified Financial Planner Board of Standards (CFP Board) is the premier organization that accredits financial planners. They provide resources and advocacy support for financial planners everywhere. For example, they have a consumer outreach program that works with public interest organizations to promote the benefits of financial planning. Part of this program offers free financial help for consumers. Additionally, their Public Policy Council and Advocacy Center play an active role in supporting legislative and regulatory reform for financial planning professionals. The CFP Board offers the pathway to becoming a Certified Financial Planner.

What is the Pathway to Become a Financial Planner?

According to the CFP Board, the process begins with creating an online CFP Board account. Next, candidates must provide proof of education, such as transcripts or a copy of their degree. Candidates generally have a bachelor’s degree, but the education requirement can be satisfied through completing CFP Board registered program. Candidates with select approved licenses may bypass this requirement. After this, the exam candidates must provide proof of three years of employment as a financial planner.

The CFP Exam Content

Then, candidates must pass the computer-based CFP exam, which is designed to prove that financial planners are competent in every major area of financial planning. There are 170 questions that cover eight Job Task Domains. These include, establishing the client-planner relationship, gathering information and analyzing the client’s financial status. They also include developing, communicating, implementing and monitoring the recommendations. In addition to this, exam questions also cover the CFP Board’s eight Principle Topics. These include insurance, investment, estate, retirement and income tax planning. There are also general principles, interpersonal communication and professional conduct. Exam candidates are allowed six hours to finish the test. Besides multiple choice question, the exam contains case studies and financial scenarios that require written responses.

The Final Steps

After the candidate successfully passes the exam, they must complete an Ethics Declaration and pass a background check. This is referred to as the Fitness Standards for Candidates and Professionals Eligible for Reinstatement. Current CFPs renew their certification every year through a recertification fee and through taking 30 hours of continuing education coursework every two years.

How to Become a Financial Planner

Financial planners can choose to either work for a private company or start their own business. Being an independent financial is possible through teaming up with another CFP, attorney or Certified Public Accountant (CPA). Financial planners must choose to either provide fee-based services or work on commission, which tends to pay more. The CFP’s personality also plays a role in choosing a financial planning career path. That is, analytical personalities may work best from home crunching numbers while their partner meets with clients. Conversely, outgoing financial planners may enjoy salesmanship and traveling to client’s locations.

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Students who wish to learn more about becoming a financial planner can visit the websites of the Financial Planning Association (FPA) and the National Association of Financial Advisers (NAPFA). In a nutshell, students can become a financial planner through obtaining the right degree and CFP certification.