Certified Financial Planner (CFP): What It Is, How To Become One

Certified Financial Planner (CFP) is a formal recognition of expertise in the areas of financial planning, taxes, insurance, estate planning, and retirement saving.

Owned and awarded by the Certified Financial Planner Board of Standards, Inc., the designation is awarded to individuals who successfully complete the CFP Board's initial exams, then continue ongoing annual education programs to sustain their skills and certification.

CFPs are there to help individuals manage their finances. This can include a variety of needs, such as investment planning, retirement planning, insurance, and education planning. The most important aspect of a CFP is to be a fiduciary of your assets, meaning that they will make decisions with your best interests in mind.

CFPs are all-encompassing, particularly when compared to investment advisors. CFPs will usually start the process by evaluating your current finances, including any cash, assets, investments, or properties, to come up with an estimate of your income and net worth. They also take a look at your liabilities, such as mortgages and student debt.

From this point on they work with you to come up with an individualized financial plan. For example, say you are nearing retirement, the CFP will create a financial plan that can see you through your retirement years. Or perhaps you have a child that will be starting college. The CFP can help create a financial plan to manage that cost.

A CFP is a financial adviser who has earned a certification that indicates in-depth knowledge of financial planning. The requirements to become a CFP are some of the most difficult and stringent in the financial industry.

All CFPs are held to the standard of fiduciary duty. That means they must always put your interests as a client ahead of their own. For example, if they would more money selling one product over another, but the product that made them less money was better for you, that is the product they must recommend.

A CFP's fiduciary duty is clearly laid out by the CFP Board and states "At all times when providing financial advice to a client, a CFP professional must act as a fiduciary, and therefore, act in the best interest of the client."

The board goes on to state that three duties must be met by an adviser with a fiduciary duty. These are (1) duty of loyalty, (2) duty of care, and (3) duty to follow client instructions.

Earning the CFP designation involves meeting requirements in four areas: formal education, performance on the CFP exam, relevant work experience, and demonstrated professional ethics.

The education requirements comprise two major components. The candidate must hold a bachelor's or higher degree from an accredited university or college. Second, the candidate must complete a list of specific courses in financial planning, as specified by the CFP Board.

Much of this second requirement is typically waived if the candidate holds certain accepted financial designations, such as a chartered financial analyst (CFA) or certified public accountant (CPA) designation, or has a higher degree in business, such as a master of business administration (MBA).

As for professional experience, candidates must prove they have at least three years (or 6,000 hours) of full-time professional experience in the industry, or two years (4,000 hours) in an apprenticeship role.

Lastly, candidates and CFP holders must adhere to the CFP Board's standards of professional conduct. They must also regularly disclose information about any involvement in criminal activity, questions by government agencies, bankruptcies, customer complaints, or terminations by employers. The CFP Board conducts an extensive background check on all candidates before granting the certification.

Even successful completion of the above steps doesn't certain receipt of the CFP designation. The CFP Board has final discretion on whether to award the designation to an individual.

The CFP test includes 170 multiple-choice on more than 100 courses related to financial planning. The scope includes professional conduct and regulations, financial planning principles, education planning, risk management, insurance, investments, tax planning, retirement planning, and estate planning.

The various syllabu areas are weighted, and the most accurate weighting is available on the CFP Board website. Further questions test the candidate's expertise in establishing client-planner relationships and gathering relevant information, and their ability to analyze, develop, communicate, implement, and monitor the recommendations they make to their clients.

Here's some additional information on the administration, costs, and scoring of the CFP exam:

Though a certified financial planner (CPA) and a chartered financial analyst (CFA) may sound similar, they are different certifications with different job functions and clients. A CFP works with individuals, often retail clients, helping them achieve their financial goals. This includes help in investing and retirement planning.

A CFA works with corporations performing investment analysis. CFAs focus on financial reporting, analysis, and portfolio management. They can trade financial products, such as derivatives, and help in mergers and acquisitions. CFA's usually work for investment banks and hedge funds.

If you are just looking to invest money in stocks and bonds, a CFP probably isn't needed.

If you are looking to manage your finances, investment choices, estate planning, and retirement planning, a CFP can help you with all of those needs.

A CFP is a step above a non-designated financial advisor and has demonstrated expertise in financial planning.

How much a CFP costs will depend on your specific needs.

On average, a CFP charges between $1,800 and $2,500 for preparing a full financial plan. You also should expect $4,000 for a flat-fee retainer or $250 per hour for hourly services.

No, CFP and CFA are not the same.

A CFP is a certified financial planner who provides financial planning advice to individuals. This includes help with investing, retirement planning, estate planning, and tax law.

A CFA is a chartered financial analyst who may work for an investment bank or hedge fund and performs financial analysis, modeling, trading, and portfolio management services.

No, a CFP is not equivalent to an MBA.

A certified financial planner (CFP) is qualified to advise individuals on financial planning.

The holder of a master of business degree has studied the way businesses operate.

The career paths differ. A CFP works in financial consulting or wealth management. An MBA may be a business manager, portfolio manager, financial analyst, financial strategist, or even an entrepreneur.

The CFP test requires a lot of preparation and covers a wide range of courses in depth. The best way to ensure you pass the CFP test is by preparing for it well in advance and sticking to a study schedule.

Becoming a CFP takes education and experience, as well as a strong grasp of financial ethics. The test to gain this distinction is comprised of 170 questions and is split into two three-hour sessions.

Even if candidates pass the test and meet all the requirements, the CFP Board still has the final say about whether to award this distinction. Given the stringent requirements, CFPs can be assumed to have an in-depth understanding of financial planning.

Closinglock Announces SOC 2 Type II Certification

Closinglock maintains the highest security standards for protecting against wire and identity fraud in real estate transactions

AUSTIN, Texas–(BUSINESS WIRE)–August 21, 2023–

Closinglock, a leading provider of fintech and fraud prevention solutions for the real estate industry, today announced its SOC 2 Type II certification. This certification is an independent audit that verifies the company’s security policies, procedures, and controls.

“Achieving SOC 2 Type II certification is a major milestone for their company,” said Andy White, CEO of Closinglock. “It demonstrates their commitment to providing their customers with the highest level of security and assurance. They are confident that this certification will provide their customers the peace of mind they need to combat the growing threats of wire and identity fraud facing their industry.”

The settlement industry handles a lot of sensitive information, and because of that, it should only trust vendors with the highest security standards in place. This certification confirms that Closinglock meets those standards.

The SOC 2 Type II audit was conducted by a third-party auditor who Tested Closinglock’s security policies, procedures, and controls in accordance with American Institute of Certified Public Accountants (AICPA) standards for SOC for Service Organizations, also known as SSAE 18. The auditor found that Closinglock has implemented effective security controls and practices to ensure the confidentiality, integrity, and availability of its systems.

“We are proud to have achieved SOC 2 Type II certification,” said Cesar De La Garza, Head of IT & Compliance of Closinglock. “This certification is a testament to the hard work and dedication of their team. They are committed to continuously improving their products and security controls to protect their customers against fraud.”

About Closinglock

Closinglock offers a wide range of fraud prevention solutions built specifically for the real estate industry, including bank account owner authentication, driver’s license verification, payoff verification, and a proprietary Good Funds payment system that removes fraud from wire transfers and real-time payments. The company currently protects billions of dollars each month with its software, and is trusted by thousands of settlement companies, title agents, law firms, attorneys, lenders, real estate agents, home buyers and sellers.

Learn more at closinglock.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230821222598/en/

Abigail WhiteVP of Communications(512) 270-3917press@closinglock.com

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover their Briefings.

Hello IRS? How billions of dollars changed calling the tax man in one year

The IRS is now answering the phone when you call.

That may seem like the lowest of bars to clear, but it was a task that the agency was consistently failing as recently as last year.

The changes come thanks to a wave of new funding, which was signed into law one year ago this week and was designed to usher in a decade-long transition at America’s tax collector. The tens of billions have begun to work and allowed the agency to hire 4,000 new customer service representatives this year alone.

However, more work remains. To mark the anniversary, Yahoo Finance embarked on a test and called the agency multiple times in accurate weeks to get a sense of the experience for customers.

The results were mixed.

In one instance, they called to get information about the child tax credit. They were pleasantly surprised when a live agent picked up within 20 seconds. But in the end, they hung up in frustration after 40 minutes with their question unanswered.

A sign outside the Internal Revenue Service building in Washington D.C. (Patrick Semansky/AP Photo)

The experience is not unique. Feedback from the American Institute of Certified Public Accountants (AICPA) shows that even once its members get through to the IRS, 38% said they didn't get an answer to what they needed. On top of that, over half still reported troubles getting through consistently during the accurate busy tax season.

“So the numbers are mind boggling, right?,” Melanie Lauridsen, vice president of tax policy and advocacy at AICPA, said in a accurate interview. “That speaks to the quality of the service of what you're getting.”

Others who interact with the IRS on a regular basis point out that the changes are at least a step in the right direction. Larry Pon, a CPA based in the San Francisco Bay Area, is thrilled by the shorter wait times, but agrees that the system remains far from perfect.

“It is hard to know which menu option to pick, so you end up getting transferred around,” he said recently, but added he is often able to get more concrete information now than in the past.

“Since I knew what I was looking for, they were able to assist me,” he said.

The experience for curious taxpayers, however frustrating, is still significant progress for a department that didn’t even answer up to 90% of calls in accurate years.

A year ago, President Biden signed the Inflation Reduction Act into law, which is now being felt across the American economy from green energy to healthcare. Included in the massive bill was $80 billion in funding for the IRS that was approved in large part to fundamentally reshape the experience of interacting with the agency.

That influx of funds, which ended up being pared back in this spring’s debt ceiling deal, is also set to be used to catch more tax cheats, dig out of a sizable backlog of unprocessed returns, and update the agency’s often shockingly outdated technology.

But the customer service piece is what Commissioner Daniel Werfel and other officials have promised would be the easiest win and an area where the money would be most quickly felt.

As the one year anniversary of the law approaches on Aug. 16, that promise is coming to fruition. The overall satisfaction with IRS taxpayer service has dramatically increased. The level of satisfied members increased to 24% in 2023 from 7% last year, and the level of dissatisfied respondents dropped to 44% from 74%, according to the AICPA member survey.

“Those are real numbers, real swings,” Lauridsen said.

Treasury Secretary Janet Yellen, who oversees the IRS, recently traveled to an IRS paperless processing facility in Virginia to tout measures that show how service has improved. She said the agency was achieving its goal to “drastically transform the level of customer service that taxpayers can expect through the phone.”

She lauded an 87% response rate to taxpayer queries during the 2023 filing season, a more than fivefold increase from 2022. But the real headline grabber was the change in the IRS call waiting time, which was "cut to 3 minutes from 27 minutes," Yellen said.

Treasury Secretary Janet Yellen delivers remarks on the Internal Revenue Service and the Inflation Reduction Act after visiting a new paperless processing initiative in Virginia on Aug. 2. (Stefani Reynolds/AFP via Getty Images)

Yahoo Finance’s test confirmed that the wait times are indeed way down, but it also underlined an array of issues that remain.

Our 40-minute initial query on the child tax credit led to being transferred three times. They waited about 25 minutes to reach someone at the so-called general department that would answer taxpayer questions. However, the representative said he only specializes in the Affordable Care Act. They were then transferred to the child tax credit branch. But the agent there said they reached the incorrect department, and then patched us back to the main IRS phone line with an estimated wait time between 15 and 30 minutes.

A second attempt to get the same question answered was more successful. An agent picked up the phone almost immediately, and this time they were transferred twice before connecting with an agent who walked us through the instructions on the child tax credit tax form.

The agent said she is part of the Affordable Care Act tax team, and she was available to help us with their specific question about how to report the child tax credit if the parents were separated.

The total call time on the second try was 12 minutes.

President Joe Biden signs the Inflation Reduction Act at the White House on Aug. 16, 2022. (Drew Angerer/Getty Images)

Of course, if the agency can continue to make progress in the years ahead is an open question.

One clear challenge coming from Washington is whether these additional new funds will continue to be available in the years ahead as power changes hands.

For instance, soon after the last tax-filing season, the debt ceiling deal between President Biden and House Republicans clawed back about a quarter — or $21.4 billion — of the $80 billion that the agency had been counting on for the coming decade.

Republicans remain deeply critical of the new funding for the IRS, with Congressional Republicans putting forth proposals to roll it all back. The agency is also a regular target of derision on the 2024 campaign trail.

Aviva Aron-Dine, a deputy director of Biden’s National Economic Council, underscored in a accurate call with reporters that the $21.4 billion in rescissions were part of a compromise and unfortunate in the administration’s view. But she nevertheless insisted that “the IRS will still be able to move forward” on its various priorities while warning that further cuts could be damaging to those efforts.

An anti-IRS poster is seen outside of the office of Rep. Mike Kelly (R-Penn.) in Washington, D.C. (Kent Nishimura / Los Angeles Times via Getty Images)

The IRS could also have a challenge in maintaining its response rate improvements if more people get word the phones are being answered and begin to call the agency in the years ahead.

In a accurate report, National Taxpayer Advocate Erin Collins found that the rosy response rates from this accurate filing season were at least in part due to a sharp drop in the number of calls that the agency is receiving.

"[the short wait times] are all great and positive things," Collin told Yahoo Finance, "but IRS does not have an enterprise-wise case management system. So as a customer service representative, you have to open one application close it out, open another application, close it out, and it's just clunky and not efficient."

"As a result that is causing challenges for getting taxpayers the right answer," Collins added.

The IRS received just 32 million calls in the first four months of 2023, down from over 73 million calls during the same period last year. The agency did answer more calls in total, picking up the phone 11 million times in that period this year, compared to just 7.5 million times in 2022.

“This is something they need to celebrate because they are moving in the right direction,” Lauridsen said, “But it has to continue, it can't just stop.”

Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA). Ben Werschkul is a Washington correspondent for Yahoo Finance.

Click here for politics news related to business and money

Read the latest financial and business news from Yahoo Finance