Certified Financial Planners (CFPs) work for independent financial planning firms and large financial organizations. Financial planners assist both individuals and businesses. For Financial Industry Regulatory Authority (FINRA) Series 7 and 63-licensed financial salespeople, the Certified Financial Planner® designation provides financial planning knowledge and marketing credentials.
The Certified Financial Planner Board of Standards certifies a qualified student as a Certified Financial Planner (CFP®). Certified Public Accountants (CPAs), attorneys (including those with inactive licenses), Chartered Financial Analysts (CFAs), Charted Financial Consultants (ChFC®), Chartered Life Underwriters (CLU®), doctors of business administration, and Ph.D.s with economic or business specializations may take the CFP exam without additional study. Applicants for the CFP exam must satisfactorily submit to a background check.
Requirements. CFPs have a bachelor’s degree from a qualified institution. After passing the 10-hour CFP exam, the Certified Financial Planner Board of Standards requests a qualifying transcript. Prior to taking the CFP examination, a written application and fee must be received by the Certified Financial Planner Board of Standards by stated deadlines. CFPs use CFP® and the CFP marks on business cards and stationery. CFP students must understand financial principles and investments. The exam covers:
- financial planning concepts, such as analysis of financial statements, cash flow and financing
- educational plans
- special situation plans (such as financial plans for divorce)
- investment and portfolio theory
- employee benefit plan administration and laws
- insurance products
- income tax
- retirement and estate plans
How CFPs Work. Financial planners develop goal-based plans for their customers. Their work involves trust and the ability to form mutually beneficial relationships with others. Competition for investor assets remains intense, and CFPs distinguish themselves from other securities and insurance salespeople. Their work focuses upon the achievement of financial objectives, not securities sales. Financial planners receive compensation through fees, including
- flat rate fees (usually a one-time fee paid prior to the development and delivery of the plan)
- percentage of assets in account (either personal balance sheet assets or the portion of assets managed by the planner)
- hourly rate (or billed hours against a retainer)
Financial planners also receive compensation from financial products and services they sell, including
- Commissions for a one-time-only sale, such as front-end load mutual funds, unit trusts and payments that occur from the sale of some life insurance products
- Service payments, such as managed portfolio programs, paid to the planner on a quarterly or annual basis; or for some insurance products
- Transactional commissions, such as those paid for the purchase and sale of securities
Average Annual Compensation. Certified Financial Planners earn between $46,000 and $77,000 per year according to PayScale.com.