CFP Requirements | CFP Exam & Education Requirements

What Are the CFP Requirements?

Becoming a Certified Financial Planner is a great boost to a financial professional’s business and reputation. The CFP requirements are comprehensive but straightforward, and the CFP certification requirements are broken down into the four E’s: education, examination, experience, and ethics.

As the highest standard in the financial planning industry, the CFP education requirements are mandated to ensure that all of those who meet the CFP designation requirements are well-equipped to confidently and competently provide financial advice to the public.

This article will outline the CFP education requirements in addition to the CFP exam requirements.

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CFP Requirements: CFP Education Requirements

The CFP education requirements are very particular. For starters, applicants must go through college or university-level coursework offered by a program that is registered by the CFP Board. These courses are vetted to ensure they provide all of the necessary information on areas like financial management and estate planning. The CFP’s Job Analysis Study identifies these subject areas. The CFP course requirements are a mandatory step before taking the exam and applying for membership.

The education requirements cover the following topics:

General principles of financial planning
Insurance planning
Investment planning
Income tax planning
Retirement planning
Estate planning
Interpersonal communication
Professional conduct and fiduciary responsibility

In addition, one of the CFP education requirements is to take a capstone course in financial planning development.

Introduced in 2012, the capstone CFP course requirement is meant to enhance the knowledge learned from the CFP education requirements as well as to properly assess an applicant’s acquired skills. Applicants are supposed to take the capstone course once all of the coursework has been completed since it is meant to bring together everything that has been learned.

In addition to meeting the CFP course requirements, one of the other Certified Financial Planner requirements is to hold at least a bachelor’s degree at a school that is recognized by the U.S. Department of Education.

CFP Requirements: Exception to the CFP Education Requirements

The CFP education requirements are perhaps the most frustrating part for many applicants. The Certified Financial Planner requirements are notoriously inflexible.

Holding at least a bachelor’s degree is a mandatory part of the CFP certification requirements, but it is one separate component of the CFP education requirements. A person with a bachelor’s degree in economics or finance or a master’s degree in business administration is still required to complete the CFP course requirements.

There are a few exceptions, but those CFP education requirements exemptions are reserved for those with either very specific or extremely high-level qualifications. Those who qualify for exemption from the CFP course requirements are eligible for what is known as “Challenge” status.

Individuals who have “Challenge” status can bypass the CFP education requirements and go on to pursue the other CFP requirements. Those who qualify for the CFP course requirements exemption are people who hold the following standings:

PhD in business or economics*
Doctor of Business Administration*
Licensed attorney – inactive license acceptable**
Licensed Certified Public Accountant (CPA) – inactive license acceptable**
Chartered Financial Consultant (ChFC)
Chartered Life Underwriter (CLU)
Chartered Financial Analyst (CFA®)
CFP certification from the Financial Planning Standards Board Ltd. (FPSB) Affiliate located in your territory of residence outside the U.S.

*Degree must be from a regionally-accredited U.S. college or university.

**If you are fulfilling the education requirement on the basis of an inactive CPA license or law license, you will need to provide a letter from the applicable licensing board stating that you are in good standing with that authority (from the CFP website).

If you have one or more of these qualifications, you automatically meet the education component of the CFP exam requirements and can register for the CFP exam after completing the capstone course.

The CFP education requirements are meant to ensure that candidates gain the knowledge outlined in the CFP’s principal knowledge topic categories outlined earlier. Each topic gets a certain amount of focus and attention: professional conduct and regulation (7%), general financial planning principles (17%), education planning (6%), risk management and insurance planning (12%), investment planning (17%), tax planning (12%), retirement savings and income planning (17%), and estate planning (12%).

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CFP Requirements: Specific Educational Categories

The section of the CFP course requirements, Professional Conduct and Regulation, deals with the ethical considerations and responsibilities that a CFP professional is obligated to make and follow throughout his/her career as a financial planner.

These components of the CFP education requirements discuss the CFP Board’s Code of Ethics and Professional Responsibility and Rules of Conduct, Financial Planning Practice Standards, and Disciplinary Rules and Procedures. This CFP course requirement also examines the regulation and function of financial institutions and looks at consumer protection laws as well as the concept of fiduciary duty.

For the general principles of financial planning, the CFP course requirements teach students the financial planning process, how to understand financial statements, economic concepts, and financing strategies. It also covers cash flow management, debt management, and the time value of money concepts and calculations. The CFP education requirements are designed to help its members become as competent and communicative as possible, which is why the general principles of the financial planning section also deal with client and planner attitudes and values and biases in addition to covering the principles of communication and counselling.

The next section of the CFP education requirements is called Education Planning. It covers education needs analysis and education savings vehicles as well as financial aid options, gift and income tax strategies, and education financing. Helping people organize their finances and prepare to pay for an education – whether it’s for themselves or their children – is a common task for financial planners, which is why it is included in the CFP requirements.

The CFP course requirements also teach students through its risk management and financial planning section what to do when the unexpected happens. This topic deals with the principles of risk and insurance, the analysis and evaluation of risk exposure, health insurance and health care cost management for individuals, disability income insurance for individuals, and long-term care insurance for individuals.

This section of the CFP education requirements also covers annuities and individual life insurance as well as business uses of insurance, how to analyze a person’s need for insurance, how to select an insurance policy or company, and the different kinds of property and casualty insurance.

Helping people and families handle the financial burdens of the unexpected is another way that finance and intimacy intersect in a financial planner’s job. However, the CFP education requirements also touch on another characteristic of a good financial planner: ensuring his/her clients are already protected if the unexpected happens.

This is why part of the CFP course requirements is figuring out how to manage and analyze risk. It is difficult to predict what may happen, but there are strategies for determining which events different people should prepare for and what products will best protect them. This is a job best reserved for financial planners because they have the tools and the skills necessary to make responsible yet unbiased decisions about insurance and risk management. The CFP education requirements are diligent about making sure CFP members are prepared to handle this.

CFP Requirements: Investment Planning

People also look to their financial advisor to figure out how they can make their money work most effectively for them, particularly when it comes to saving up for a particular goal, like a home or a child’s education. The most obvious way to do this is through investments. The CFP education requirements also include an entire section on investment planning. It tackles different types of investment risk, the taxation of investment vehicles, quantitative investment concepts, the measures of investment returns, portfolio diversification and asset allocation, and bond and stock valuation concepts.

Knowing where to invest and how much to invest in what is challenging. The CFP course requirements prepare CFP professionals with the skills they need to understand clients’ financial situations as well as consider their risk horizons and financial goals in order to put together a portfolio that is best-suited for them.

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CFP Requirements: Handling Death and Taxes

Two things are inevitable in life: death and taxes. Financial planners help people navigate and prepare for both, and the CFP education requirements ensure that they can.

The Tax Planning section of the CFP course requirements covers a client’s relationship with Uncle Sam. Topics that CFP applicants are meant to become familiar with over the course of their studies include fundamental tax law, income tax fundamentals and calculations, the income taxation of business entities, trusts and estates, AMT, tax reduction and management strategies, tax implications of property transactions, tax consequences of unique circumstances, and tax deductions that clients are eligible for through their charitable contributions.

The CFP education requirements also cover estate planning, including post-mortem planning techniques, the taxation of trusts, and how to handle estate-planning documents. In addition, the CFP course requirements develop students that are well-versed in retirement savings and income planning, especially Social Security and Medicare, Medicaid, the different types of retirement plans, tax-advantaged retirement plans, and retirement income and distribution strategies.

CFP Education Requirements: Evaluating Varying Contexts

The CFP education requirements also prepare students to apply those core principles in a variety of different financial contexts like the following (list & information is taken from the CFP website):

Family Status (traditional family, single parent, same-sex couples, blended families, widowhood)
Net Worth (ultra-high-net-worth, high-net-worth, mass affluent, emerging affluent, mass market)
Income Level (high, medium, low)
Life or Professional Stage (student, starting a career, career transition, pre-retirement)
Other Circumstances (health issues, divorce, change of employment status, aging parents, special-needs children)

The CFP course requirements are meant to produce candidates that are diverse, flexible, and can quickly assist clients with any financial situations life may throw at them.

CFP CE Requirements: CFP Exam Requirements

The certification examination requirements, also known as the CE requirements, are straightforward. The remaining 2016 test windows are July 26–30 and November 15–19 (a previous window took place from March 15–19).

The topics covered on the exam are determined through the CFP’s Job Analysis Process that makes sure the exam’s content is reliable and relevant to the industry’s present state. The CFP CE requirements recommend taking the exam after all of the CFP course requirements have been met; however, students can register for the exam before they’ve completed their CFP education requirements.

Even though students can register for the exam before they have finished their CFP course requirements, they cannot write the exam until they have completed all of the requirements. This means that if the CFP organization does not receive confirmation of completion of the CFP education requirements, the applicant will be withdrawn from the exam and subject to a $100 withdrawal feel. Due to this, CFP students should be very mindful of the CFP exam requirements.

The CFP requirements are quite comprehensive, and, to some, they may be a huge time investment. However, the status that the Certified Financial Planner accreditation enjoys makes the CFP certification requirement understandable. If you are hoping to take your financial planning career to the next level or want to make a career change and need a program that will give you the credibility you need to get started, the Certified Financial Planner designation may be the choice for you.

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