During the past five years, I have been sharing my thoughts and knowledge with you and have recommended seeking advisors holding the CFP certificate when assistance is needed. I would like to take today to share why.
First, CFP® is the abbreviation for Certified Financial Planner. There are two organizations most financial planners are associated with when they hold this certification. First is the organization that owns the mark, Certified Financial Planner Board of Standards, Inc. This group manages the exams and requirements, as well as disciplinary actions if necessary. The Financial Planning Association (FPA) is also a national organization where most members hold the CFP certificate, and this organization has area chapters throughout the country. While they also handle disciplinary actions when necessary, they primarily provide education to its membership.
Both of these organizations oversee their membership and have specific requirements each member must complete. First, members must follow their code of professional conduct and code of ethics. The CFP Board updated its code in May 2007. You can review it on the board’s site, www.cfp.net. Thus, by working with a CFP holder, the first benefit is working with an individual of high ethical standard and has agreed to abide by these rules or lose the benefit of holding the CFP mark.
Another benefit is the planner’s education. Holders of the CFP are required to complete continuing education every two years. The courses must meet minimum board standards, and I can attest to the benefits when taken. Holders of the CFP have also completed extensive courses and exams in retirement plans, insurance, taxes, estate planning, and investments as well as a multi-day comprehensive exam. Additionally, all CFP holders are required to have at least three years of experience in the financial industry.
One might ask why is there added value when a planner has obtained additional titles like the CFP, when licenses are required in order to be in the industry? Shouldn’t the fact an individual holds a license be sufficient proof that they are knowledgeable in the field? Unfortunately, the answer to this is no. The clearest example is the insurance profession. Speaking about life and health only, the passage of the exam has nothing to do with expertise in the financial industry. There are many courses available that teach students how to pass the exam but do not teach the details of the insurance industry. While FINRA’s security exams are more comprehensive, having the license is not enough today due to the complexity and importance of the tasks being asked of financial planners.
There are many professional designations that can follow a person’s name. On FINRA’s web site, (www.finra.org) it has an extensive list of designations, many of which require no experience, maintains no disciplinary records or actions, permits open book exams, and does not require continuing education. Thus, prior to working with someone who indicates they hold a particular credential, take the time to confirm they do in fact hold the credential and whether any significance should be granted to the particular designation. Turning over several hundred thousand dollars to an individual to manage should not be taken lightly, and not all designations warrant the trust.
The fact a professional has obtained the CFP also indicates they are dedicated to their profession. They have taken the time to earn a valuable credential as well as having made an annual commitment to maintain their education in the field.
There are many professionals in the insurance and securities field that do not hold any credential beyond their licenses. This should not imply they are not capable or talented. However, for me to encourage the general public to use professionals, I would rather they seek those individuals who have taken the time to earn a valuable and meaningful credentials as well as promised to uphold professional standards of conduct.
For help with managing investment assets, contact me at Quality Financial Concepts or one of the other Certified Financial Planners in our area. To continue a personal quest for education, you can also view our website, www.goqfc.com. There you will find articles on a variety of topics, on-line seminars, calculators, as well as a host of other tools all available for free.