Certified Financial Planner Board of Standards

Certified Financial Planner Board of Standards, Inc. (CFP Board) is an American 501(c)(3) certifying and standards-setting organization that administers the Certified Financial Planner certification program and oversees more than 73,970 professionals[1] using the CFP certification in the United States.

Certified Financial Planners Board of Standards, Inc.
AbbreviationCFP Board
Founded1985
TypeNon-profit
Legal status501(c)(3)
PurposeCertification and standards-setting in the profession of financial planning in the United States
Professional title
Certified Financial Planner (CFP)
Headquarters
  • Washington, DC
  • formerly: Denver, CO
Area served
United States
Members
73,970
Key people
Kevin R. Keller, CEO
AffiliationsFinancial Planning Standards Board (FPSB)
Employees
51-
Websitewww.CFP.net www.LetsMakeAPlan.org

CFP Board History

CFP Board's formation took place relatively early in the development of the movement that became known as the financial planning profession. As new financial products and services evolved to meet the needs of Americans developed soon after World War II, so did the idea that people could benefit from professional assistance from a profession that integrated knowledge and practices from the many often-fragmented areas of the financial services industry.[2]

On December 12, 1969, thirteen men met in Chicago and outlined the first steps needed to establish these integrated practices as a new profession called financial planning.[3] At the meeting, resolutions were made to create a membership organization named the International Association for Financial Planners (IAFP) and a new educational institution that would be named the College for Financial Planning.[4]

Those resolutions took concrete form in 1972, when IAFP enrolled its very first group of students for the Certified Financial Planners (CFP) course offered by the newly established College.[5] The 35 members of the first graduating class formed a new membership organization, the Institute of Certified Financial Planners (ICFP), upon their graduation in October 1973.[5]

More than a decade after the introduction of the educational program that led to CFP certification, it became clear that while the College had made great strides in developing the body of knowledge that was a vital component of developing financial planning professionals, an educational institution was not the proper entity to enforce the ethical standards that were also an integral part of the developing profession. The College entered an agreement that established an independent, non-profit certifying and standards-setting organization to which it would transfer ownership of the CFP marks and responsibility for administering and enforcing the standards required to attain the right to use those marks.

In July 1985 came the announcement of the formation of the new non-profit certifying body, the International Board of Standards and Practices for Certified Financial Planners, Inc. (IBCFP), which was renamed Certified Financial Planner Board of Standards Inc. in 1994.[6] While the wording of CFP Board's mission and objectives have changed over the years, CFP Board's paramount objective is to benefit the consumer public by promoting the value of professional, competent and ethical financial planning services, as represented by those who have attained CFP certification.

In April 1995, CFP Board's certification program received accreditation from the National Commission for Certifying Agencies[7] (NCCA) of the National Organization for Competency Assurance (now the Institute for Credentialing Excellence), the first such accreditation for a non-health related certification in the U.S. CFP Board earned NCCA accreditation because it showed that its certification program is grounded in, and continues to meet, legal testing requirements and generally accepted certification standards.

In December 2007, after more than 20 years of operations in Denver, Colorado, CFP Board moved its office to Washington, D.C.[8] The decision was based on an ongoing review of how CFP Board can best respond to America's increasing need for Certified Financial Planner professionals. After careful study, the Board concluded that the future success of the organization was dependent upon its proximity to regulators, policymakers, and other industry and credentialing organizations that influence debates within the industry. As a non-profit organization that has been granted 501(c)(3) status by the Internal Revenue Service,[9] the CFP Board operates within limitations that prevent it from engaging in aggressive lobbying activities. The high standards that CFP Board maintains for those who hold CFP certification and the competent and ethical services that tens of thousands of CFP professionals provide to the American public on an ongoing basis put CFP Board in a unique position to advocate the value of personal financial planning for the public interest. In 2010, CFP Board supported the draft Financial Planners Act of 2010 to S.3271.[10]

CFP certification worldwide

In 1990, CFP Board facilitated the establishment of the International CFP Council to promote the professionalism of individuals and organizations offering financial planning services and to ensure that such services are offered in an ethical and competent manner throughout the world.

In 2004, responsibility for administering the CFP certification program outside the U.S. was transferred from the CFP Board and the International CFP Council to an independent organization, the Financial Planning Standards Board (FPSB),[11] established to further foster the internationalization of the CFP marks. A nonprofit, international standards-setting body, FPSB manages, develops and operates certification, education and related programs for financial planning organizations so that they may benefit and protect the global community by establishing, upholding and promoting worldwide professional standards in personal financial planning. FPSB's commitment to excellence is represented by the CFP and CERTIFIED FINANCIAL PLANNER and CFP (with flame logo) trademarks, which FPSB owns outside the United States. The FPSB works in conjunction with its members to develop and promote rigorous international competency, ethics and professional practice standards for CFP professionals in member countries/regions to ensure that consumers looking for qualified personal financial planners understand and value CFP certification.

As of April 2010, FPSB has members and associate members from 23 territories around the world, including CFP Board, which joined FPSB in 2008.[12] Collectively, FPSB members have authorized more than 126,000 individuals to use the CFP marks in their respective countries and regions.

CFP Board’s certification requirements

CFP Board awards CFP certification in the United States to individuals who meet its initial and ongoing certification requirements. Initial certification requirements include the “4 E’s”:[13]

  • Education: More than 200 institutions across the United States offer educational programs that satisfy CFP Board's education coursework requirement and qualify individuals to take the CFP Certification Examination.[14] Applicants for CFP certification must also hold a qualified bachelor's degree.
  • Examination: The CFP Certification Examination[15] is offered three times a year at more than 50 locations across the United States. Approximately 3,000-4,000 individuals take the exam each year, and the pass rate for each exam administration has varied from 56% to 66% over the past decade.[16] The comprehensive 10-hour exam was introduced for CFP certificants in 1991; prior to that point, those applying for certification were only required to complete examinations for the individual course units.[17] In November 2014, the CFP exam was being converted from a paper-based exam to a computer-based exam, and the duration cut from 10 hours down to 6, with the number of questions similarly being reduced by 40% from 285 to 170.[18]
  • Experience: Applicants for CFP certification must complete at least three years of full-time experience delivering all or part of the financial planning process to clients. As an alternative, beginning on September 1, 2012, applicants can satisfy the experience requirement with a 2-year "apprenticeship" period, which must include experience in the personal delivery of all six elements of financial planning under the direct supervision of a CFP professional.[19]
  • Ethics: Applicants for CFP certification must agree to abide by CFP Board's Standards of Professional Conduct and consent to CFP Board's authority to enforce those standards.

CFP certification must be renewed biannually by completing ongoing certification requirements, including continuing education and continued adherence to CFP Board's Standards of Professional Conduct.[20] CFP Board's certification requirements are amended from time to time.

In March 2010, the CFP Board adopted a new “Financial Plan Development Course” requirement. Future applicants must take a new course that demonstrates the ability to deliver professional and competent financial planning services to the public.[21] This "Capstone" course requirement took effect for all students with matriculation dates after January 1, 2012, and for those who apply for "Challenge" status after March 2012;[22] with changes announced in December 2014, though, the Capstone requirement will no longer apply for Challengers after July 1, 2015.[23]

Standards of professional conduct

Individuals who hold CFP certification agree to abide by a set of documents collectively referred to as CFP Board's Standards of Professional Conduct (the Standards), including a Code of Ethics and Professional Responsibility, Rules of Conduct, Financial Planning Practice Standards and Candidate Fitness Standards.

The CFP Board adopted its first code of ethics in 1986. In 2006, the CFP Board's release of proposed changes to the Standards generated controversy within the financial planning profession by introducing a fiduciary standard of care that was negotiable. Following two public comment periods, the Board adopted a set of revisions that included a non-negotiable fiduciary standard of care for financial planning services[24]

The CFP Board enforces the Standards through a process outlined in its Disciplinary Rules and Procedures. Hearings for cases involving alleged violation of the Standards are held by CFP Board's Disciplinary and Ethics Commission, which can impose discipline where appropriate. Disciplinary actions taken by CFP Board, in order of increasing severity, include private censures, public letters of admonition, suspensions, and permanent revocations. Information about the disciplinary history of CFP certificants is available online.[25]

The Financial Planning Coalition

In December 2008, CFP Board entered into a collaboration with the Financial Planning Association[26] and National Association of Personal Financial Advisors[27] (NAPFA) to create the Financial Planning Coalition[28] with the goal of representing financial planners as the U.S. government works to reform the financial services industry.

CFP Board and the public

CFP Board provides the public with information and resources designed to allow them to make quality decisions when seeking professional financial planning services. In 2006, the Board hosted its first Financial Planning Clinic, providing people in the Los Angeles area with the opportunity to attend workshops and hold private consultations with volunteer CFP® professionals at no cost. Since 2006, additional Financial Planning Clinics have been held in Boston, Chicago, Detroit, Las Vegas, Miami, Oakland, San Francisco and Washington, D.C.[29]

Certifications, designations and degrees

The CFP® mark is a "Board Certification" or professional designation offered to those who meet the requirements for certification and who pass the CFP® exam. CFP Board of Standards does not award degrees or a diploma; however, CFP Board works with degree granting educational institutions worldwide. CFP Board has a registered provider system of colleges that offer the financial planning courses. Those registered programs that offer CFP® educational courses are listed on CFP Board's website.[30] There is a College for Financial Planning that is a degree granting body.[31]

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References
  1. "CFP Board Statistics". January 31, 2015. Retrieved February 8, 2015.
  2. Board, C. F. P. (August 3, 2015). Financial Planning Competency Handbook. John Wiley & Sons. ISBN 978-1-119-09466-1.
  3. "Texas Tech University :: A New Home for Financial Planning Archives". Depts.ttu.edu. April 8, 2010. Retrieved June 6, 2010.
  4. "College for Financial Planning Home Page". cffp.edu. Archived from the original on September 16, 2010. Retrieved June 6, 2010.
  5. E. Denby Brandon, Jr.; H. Oliver Welch (2009). The History of Financial Planning: The Transformation of Financial Services. Wiley. p. 278. ISBN 978-0-470-18074-7. Retrieved June 4, 2010.
  6. "Certified Financial Planner Board of Standards Inc. - About Us". Cfp.net. Retrieved June 6, 2010.
  7. "Accredited Certification Programs". Credentialingexcellence.org. Archived from the original on February 1, 2010. Retrieved June 6, 2010.
  8. "CFP Board Moving HQ To Washington". Fa-mag.com. April 17, 2007. Retrieved June 6, 2010.
  9. "Exemption Requirements - Section 501(c)(3) Organizations". Irs.gov. December 7, 2009. Archived from the original on July 19, 2011. Retrieved June 6, 2010.
  10. |S.3271
  11. "Financial Planning Standards Board". FPSB. Retrieved June 6, 2010.
  12. "CFP Board". FPSB. November 6, 2007. Retrieved June 6, 2010.
  13. "What is a CFPÂ Professional?". Fpanet.org. Retrieved June 6, 2010.
  14. Horowitz, Jed (March 8, 2010). "CFP Board hikes requirement for certification exam". Investment News. Retrieved June 6, 2010.
  15. "Certified Financial Planner Board of Standards Inc. - CFP Certification Examination". Cfp.net. Archived from the original on January 29, 2011. Retrieved June 6, 2010.
  16. "Exam Statistics". www.cfp.net.
  17. http://www.cfp.net/about-cfp-board/about-cfp-board/history/certification-milestones#examination CFP certification exam milestones
  18. "CFP Board Moving to Computer-Based Testing For CFP® Certification Examination". CFP Board. January 9, 2014. Retrieved January 18, 2014.
  19. "Certified Financial Planner Board of Standards Inc. - CFP Certification Experience". Cfp.net. Retrieved October 12, 2012.
  20. "2003 prof stds1" (PDF). Retrieved June 6, 2010.
  21. Horowitz, Jed (March 8, 2010). "CFP Board hikes requirement for certification exam". Investment News. Retrieved June 6, 2010.
  22. "Resources for Registered Programs". www.cfp.net. Retrieved July 4, 2020.
  23. "CFP Board Softens Experience Requirements For New CFPs". December 31, 2014.
  24. "In Defense Of The CFP Mark". Fa-mag.com. Retrieved June 6, 2010.
  25. "Certified Financial Planner Board of Standards Inc. - Search for a CERTIFIED FINANCIAL PLANNER Professional". Cfp.net. November 12, 2007. Retrieved June 6, 2010.
  26. "Financial Planning Association – Information & Resources for Financial Planners". Fpanet.org. April 19, 2010. Retrieved June 6, 2010.
  27. "Home Page - NAPFA - The National Association of Personal Financial Advisors". NAPFA. December 3, 2009. Retrieved June 6, 2010.
  28. "Home". Financial Planning Coalition. Retrieved June 6, 2010.
  29. "Certified Financial Planner Board of Standards Inc. - CFP Board's Financial Planning Clinics". Cfp.net. Retrieved June 6, 2010.
  30. "Find an Education Program". www.cfp.net.
  31. "Archived copy". Archived from the original on September 16, 2010. Retrieved June 6, 2010.CS1 maint: archived copy as title (link)
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