What Is A Certified Financial Planner (CFP)?

A certified financial planner (CFP) is a type of financial advisor who has completed specific coursework and training to earn the CFP designation.

When you work with a CFP, you get an individually-tailored financial plan and money advice on anything from choosing investments to retirement planning. And you get peace of mind knowing they’re acting in your best interest since CFPs are bound to the fiduciary duty.

We’ll take a closer look at the role CFPs play and help you decide if you could benefit from working with a CFP professional.

What is a Certified Financial Planner?

A certified financial planner is a professional who has been accredited by the Certified Financial Planner Board of Standards.

To get certified, these financial professionals have to complete rigorous coursework, get years of experience under their belts, take the CFP exam, and adhere to a strict code of ethics.

One of the standards of conduct they have to meet is the fiduciary standard, which requires them to act in their client’s best interest and disclose any conflicts of interest that might come up.

They take a holistic approach, gathering information on all of your personal finances, understanding your goals and dreams, and constructing a comprehensive financial plan to help you get where you want to be.

They’re equipped to help clients with a long list of topics in their financial life, including:

  • Tax planning: Financial advisors help you minimize your tax liability, find deductions, and employ tax-efficient investment strategies.
  • Investment planning: CFPs can also help you identify your risk tolerance, goals, and investing timeline, then manage your portfolio.
  • Budgeting: They’ll also help you enhance your day-to-day to day finances, from building a budget to stocking your emergency fund.
  • Insurance planning: CFPs can help you weigh the pros and cons of different insurance products and choose the right coverage for your needs.
  • Retirement planning: Additionally, your CFP can advise you on your retirement accounts and help keep your retirement goals on target.
  • Estate planning: CFPs develop comprehensive estate plans that include strategies to minimize tax liabilities, protect assets, and ensure a smooth transfer of wealth to your beneficiaries.


How to Become a Certified Financial Planner

The CFP certification is considered the standard of excellence in the financial planning world. To demonstrate their competency, CFPs go through a thorough certification process.

  1. Education requirement: This is a two-part requirement. CFPs have to complete specific coursework on financial planning and hold a bachelor’s degree or higher from an accredited college or university.
  2. Exam requirement: After completing the coursework, prospective CFPs have to pass the CFP exam, a 170-question multiple-choice test that covers the financial planning process and principles, tax planning, income and retirement planning, estate planning, and more.
  3. Experience requirement: CFPs need to complete either 6,000 hours of professional experience related to the financial planning process or 4,000 hours of apprenticeship experience with additional requirements.
  4. Ethics requirement: The final requirement is signing the Ethic Declaration, committing to act as a fiduciary, and meeting other high ethical and conduct standards. The CFP Board also conducts a background check before granting the certification.

CFPs are required to renew their certification every year and complete ongoing education requirements every two years. The continuing education (CE) requirement involves 30 hours of coursework and a two-hour, CFP Board-approved ethics CE course.


There are several types of financial advisors:

  • Certified Public Accountants (CPAs)
  • Chartered Financial Consultants (ChFCs)
  • Certified Financial Planners (CFPs)
  • Chartered Financial Analysts (CFAs)

Certified financial planners (CFPs) and chartered financial analysts (CFAs) sound alike and perform some similar roles, but they have some key differences.

While CFPs take a holistic approach to financial advice, helping clients with personal financial planning and individual investments, CFAs tend to help corporations and institutions, with a heavy focus on investment analysis.

Similar to CFPs, CFAs have to meet several certification requirements and meet high fiduciary standards to maintain their professional designation.

Benefits of Working With a CFP

There are a handful of benefits to working with a CFP:

  • You can reach your financial goals faster: A CFP will provide you with a personalized financial plan to reach all of your money goals. Over time, as you build a relationship with your advisor, they’ll further understand your dreams and ambitions and can help you achieve them.
  • It saves time and stress: Money is complex, and most of us aren’t taught anything about personal finance in school. A CFP can help you navigate complex financial situations and tough money conversations with family. They’ll give you peace of mind and save you the time of researching everything yourself.
  • You’ll avoid costly mistakes: Besides ensuring you follow through with your financial plan, an expert can help you avoid major money mistakes, like panicking and selling your investments when the market goes down suddenly. They can also prevent you from making risky investments that could derail your financial future.
  • You can trust them: Since CFPs are held to the fiduciary duty, you can be sure they’re going to put your needs first rather than making investment recommendations that might benefit them but not be the right call for your finances.


While there are many benefits to working with a CFP, they’re not for everyone. If you’re a new investor and simply need help building a portfolio, a robo-advisor might be all you need right now.

Or, if you’re a high-earner with a lot of assets, you might want to hire a registered investment advisor (RIA) to manage your portfolio. (RIAs are also held to the fiduciary standard.)

How Much Does It Cost to Work With a CFP?

It’s typically more expensive to work with a CFP than with a non-certified advisor. That said, a CFP’s expertise and adherence to a high ethical standard can be well worth it.

The cost of working with a financial advisor depends on their fee structure. Before hiring any type of financial advisor, it’s important to understand exactly how they charge.

  • Fee-only: A fee-only advisor makes money based on the services they provide and never earns commissions. They may charge an assets-under-management (AUM) fee, in which they take a set percentage (typically 1%) of the assets they’re managing for you. The more money an advisor manages for you, the lower the AUM fee tends to be.
  • Fee-based: Fee-based advisors charge an upfront fee (an AUM or flat fee), but can also earn commissions for any financial products they sell, including securities, annuities, or insurance products.
  • Commissions: Commission-only advisors make money when they buy or sell an investment for you—and their earnings, which can be anywhere from 1-6% of your investment, come from your wallet. It’s typically a good idea to avoid advisors who charge commissions, as there’s more potential for conflict of interest when they’re offering advice.

If you’re working with a CFP, they must put your needs first regardless of their fee structure—but it’s still good to know how they make money before hiring them.

Keep in mind that many advisors require an account minimum, sometimes as high as $250,000, to get started with them. However, there are some more accessible options.

J.P. Morgan Personal Advisors service is available for account balances as low as $25,000.

How to Find a CFP

Here are a few pointers to help you choose a financial advisor.

  • Virtual vs. in-person: If you decide you want to hire a CFP, your first step is to decide between working with one virtually or in-person. More and more online financial planning services are offering virtual access to advisors, which is typically cheaper than working with an in-person advisor.
  • Vet candidates: If you want to work with a professional in person, use the CFP Board’s website to search for CFPs in your area and verify their certification and background.
  • Interview CFPs: Once you have a few names of potential advisors, you can meet with them and interview them to make sure they’re a good fit. Ask questions about their fee structure, investment philosophy, and fiduciary duty.

Bottom Line

Certified financial planners meet rigorous standards and have obtained the qualifications they need to provide comprehensive financial advice.

When you choose to work with a CFP, you get peace of mind knowing that you’re receiving expert guidance, whether you’re trying to retire early, launch a side hustle, or create better spending habits.

Investing in the services of a certified financial planner can be a wise decision to help you navigate the challenges of your financial life and meet your goals strategically.

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