It is a much more rigorous process now which I approve of. However, the testing is still on the level of the SAT because it’s a standardized test. It doesn’t test knowledge as much as memorization and how to do the test. The test is also graded to purposely fail about 66% of the takers. The passing score changes from year to year depending on how well the entire pool test.

The modules required before the test takes a couple of weeks per module to do. There are 6 of them that you can take online. Most people spend more time studying how to take the test than the materials on the pre test unless you studied through a college program.

One of my friends runs a 6 six week program for people to cram for the CFP test and she cautions long time professionals all the time to stop using their brain when studying and taking the test. CPAs tend to fail the tax section. Lawyers tend to fail the legal section. This happens because they apply real life instead of just reading the test question and only answer within that scope even if it is wrong for real life.

Even with the drawbacks, it is still better than nothing. At least it exposes people to all the different arenas that they need to consider when giving advice.

The BA requirement is new as of 2009, I think. (Can’t remember the year without checking.) Before that, you didn’t need anything including a high school diploma. They also added a requirement of a few years in the financial industry before you can take the test.

I think it gives people a great foundation to start from if they are planning to work in the industry.

What would be more interesting is to see how many existing CFPs would fail the test if they have to retake it every two years.

Thanks for the additional tips. Computers are great, but most people have unique situations that require an additional human element and decision making. I’ll keep this in mind when I go seeking a financial advisor!

“Some financial planners can examine and plan for every aspect of your financial life, including deposit accounts, investments, taxes, retirement and estate planning and more.” (emphasis mine).

The only line item in the article not specifically mentioned in your comment is risk management.

The definition given in the article on my site is also similar to the definition found at the U.S. Securities and Exchange Commission.

While the SEC is not the authority source regarding professional designations, it is generally respected as an authority for other laws and regulations in the financial industry and is full of valuable information for financial professionals and lay people alike. I highly recommend spending a few moments at the SEC website when you get the opportunity.

I would also like to point readers to the Financial Industry Regulatory Authority (FINRA), which is a highly respected organization in the financial industry.

“Financial Analyst, Financial Adviser (Advisor), Financial Consultant, Financial Planner, Investment Consultant or Wealth Manager are generic terms or job titles, and may be used by investment professionals who may not hold any specific designation.” (Understanding Professional Designations – FINRA)

It is important to note FINRA does NOT approve or endorse any professional designation; this list is merely provided to educate individuals regarding generic, but official sounding, titles. The list provided by FINRA is by no means inclusive of all generic financial professional designations. One notable example of a generic title that was left off the list on the FINRA website is the term “financial services professional,” which is used by many individuals of varying levels of qualifications and/or certifications.

Michael J. Sloan, CRPC, thank you for taking the time to comment on my website. The additional research carried out to answer your response should help many individuals understand the difference between official financial designations, and self-proclaimed titles such as, “financial services professional,” which are more or less titles that sound nice, but have no real meaning.

By the way, I would like to point out an area of improvement on your website, which provides the following definition for a financial planner, “A person who helps you plan and carry out your financial future.”

“Financial planners are investment professionals who help individuals assess their long-term financial goals and then make recommendations for investment products and services that will accomplish those goals along with a detailed plan of action.”

A financial planner will evaluate and advise on 5 key areas of your finances.
1. Risk Management- do you have adequate and appropriate life, health, disability, property casualty insurance coverage etc.

2. Investments–Do you have an investment plan that is suitable to your specific goals and risk tolerances

3. Taxes– are you taking advantage of all appropriate tax saving possibilities

4. Retirement Planning– helping you develop and implement a retirement strategy depending your whether you are saving for retirement or in retirement and need help designing an retirement income strategy

5. Estate Planning– helping you design a plan that will transfer your assets to to your heirs and beneficiaries in a timely and efficient manner both through gifting while alive and at death.

I say this not to diminish the work of investment advisers but to inform the public that there is a huge difference between just advising someone on their investments and being a true Financial Planner.

However, if you are looking for things outside the box, a financial planner might be a good option. Things like private REITs, certain municipal bonds, etc maybe instruments you want to work with a financial planner on.

Just as a background info, back in the early years when the CFP group was trying to establish themselves, they were hawking the CFP credentials to anyone who was willing to pay a few hundred dollars a year. No experience or training required. They mailed flyers to every financial advisors in the industry. Many of those CFPs are still around because all they need to do is to renew the fee every year.

It’s still buyer beware when it comes to credentials.

Investors should also ask what does the planner bring to the table? Are they just going to spit out a plan from a computer program and does the planner understand all the concepts. If so, the planner needs to be savvy enough to challenge the calculations from the computer. Even the top of the line program in the industry has mistakes in their coding and calculations. They will fix it if someone brings it to their attention.

There are many bitter people out there who uses a $10,000 plan from a CFP as a doorstop.