Certified Financial Planner (CFP)

First Seen: March 2010 · Credential: CFP Board (1985+) · Status: Gold standard financial planning credential

Overview

CFP (Certified Financial Planner) is professional certification for financial planners demonstrating expertise in financial planning, tax, retirement, estate planning, and ethics.

Governed by: CFP Board of Standards
Active CFPs: 95,000+ in US (2023)

Requirements

Education: Bachelor’s degree + CFP Board-approved coursework (financial planning, taxes, insurance, estate planning, retirement)
Examination: 170 multiple-choice questions, 6 hours, ~60% pass rate
Experience: 6,000 hours (3 years) or 4,000 hours (2 years with bachelor’s in financial planning)
Ethics: Background check, adherence to CFP Board Code of Ethics
Continuing education: 30 hours every 2 years

CFP vs Other Credentials

CFA (Chartered Financial Analyst): Investment analysis, portfolio management (NOT financial planning)
ChFC (Chartered Financial Consultant): Insurance-focused, less rigorous than CFP
CPA (Certified Public Accountant): Tax, accounting (can complement CFP)

CFP is comprehensive: Covers all aspects of personal finance (retirement, tax, estate, insurance, investments)

2019 Fiduciary Standard

Major change: CFP Board required ALL CFPs to act as fiduciaries at all times (not just during “financial planning”)

Previous: CFPs could sell commission products outside “planning relationship”
Now: Must always put client interests first

Finding a CFP

CFP Board directory: letsmakeaplan.org (search by location, specialty)
NAPFA: Fee-only CFPs
XY Planning Network: Gen X/Y focused CFPs

Questions to ask:

• Fee-only or fee-based? (fee-only preferred)
• AUM percentage? (0.50-1.50% typical)
• Services included? (financial plan, tax planning, estate planning)

Value Proposition

DIY vs CFP:

• Simple situation (index funds, no debt) → DIY
• Complex (stock options, inheritance, business ownership, trust) → CFP worth considering

CFP services:

• Comprehensive financial plan
• Tax optimization strategies (Roth conversions, tax-loss harvesting)
• Estate planning coordination (wills, trusts)
• Behavioral coaching (preventing panic selling)

Criticism

Cost: 1% AUM = $5,000/year on $500K (vs $200/year DIY index funds)
Conflicts: Even fee-only CFPs benefit from growing AUM (incentive to avoid Roth conversions that reduce taxable accounts)
Unnecessary for simple finances: Bogleheads argue CFP not needed for basic index investing

Sources

• CFP Board: cfp.net
• r/Bogleheads CFP debates
• NAPFA directory