An Exchange-Traded Fund (ETF) is a type of investment fund that contains various investment assets, ranging from stocks and bonds to commodities and real estate. ETFs trade on stock exchanges, like individual stocks, allowing investors to buy and sell shares throughout the trading day. ETFs are being used more and more by financial advisors as over 2,000 new ETPs have been added to advisor toolkits over the last decade, with industry AUM increasing by 5x (2014-2024). ETFs can be used to give their clients broad market exposure or to invest in specific sectors. 

“ETFs have become a transformative force in the world of investing. Over the past few decades, the global ETF market has grown exponentially— starting out in the 1990s to over 14 trillion dollars today. 1 Originally a tool mainly used by institutional investors for quick trading purposes, ETFs in many cases are now foundational in investors’ portfolios. This remarkable growth is likely driven by their liquidity, transparency, and cost-effectiveness, making ETFs an essential tool for both retail and institutional investors alike.”

Daniel Prince, CFA
iShares® by BlackRock
U.S. Head of iShares product consulting and U.S Head of iShares Core, Stylebox, and Sustainable ETFs

TABLE OF CONTENTS

• Types of ETFs
  
• ETFs vs. Mutual Funds
  
• Benefits of ETFs
  
• ETF FAQs

How Many Types of ETFs Are There?

There are many different types of ETFs. The ETF market is vast and diverse, catering to various investment objectives. As ETFs continue to gain popularity, financial advisors should educate their clients about the key aspects of these investment opportunities.

“Advisors have been shown to add value to a client’s portfolio through asset allocation, cost effective implementation and tax smart management.  ETFs are a very effective tool for advisers to use in adding value in these areas given their cost and tax efficiency and effectiveness in building diversified portfolios.” 

Tom Robinson
College for Financial Planning®—a Kaplan Company
Chair - Department of Financial Analysis and Investment Management

Below are some of the most common types of ETFs and information about what makes them unique.

Equity ETFs

Equity ETFs are commonly designed to seek to track the performance of a specific stock market index, such as the S&P 500 or the Nasdaq Composite. They can offer financial advisors a convenient and cost-effective way to give their clients broad exposure (diversification) to the stock market without having to purchase individual stocks.

Equity ETFs can also track specific sectors or industries, allowing financial advisors to give their clients the ability to target their investments based on their market outlook or risk tolerance. Two common sectors that can be tracked in Equity ETFs are Healthcare and Technology. 

• Healthcare: The healthcare sector includes pharmaceutical companies, medical device manufacturers, and healthcare providers. Some examples of healthcare ETFs include the iShares U.S. Healthcare ETF (IYH) and the Vanguard Health Care ETF (VHT).
• Technology: The technology sector includes software companies, hardware manufacturers, and internet service providers. Some examples of technology ETFs include the Invesco QQQ Trust (QQQ) and the Technology Select Sector SPDR Fund (XLK).

Fixed Income ETFs

Fixed Income ETFs offer financial advisors a way for their clients to access certain types of bonds that may be difficult for individual investors to purchase directly while maintaining the diversification benefits of equity ETFs. Some of the common types of fixed income ETFs include:

• Government bonds
  
• High-Yield bonds
  
• Corporate bonds
  
• Municipal bonds
  

Financial advisors should monitor market risks, credit fluctuations and interest rate changes. Understanding the concept of duration is also important. Duration measures the sensitivity of a bond or bond ETF’s price to changes in interest rates. Higher duration means greater price volatility. Financial Advisors should be able to explain this relationship to their clients and choose Fixed Income ETFs with duration that align with their clients’ risk tolerance and investment goals.

Another aspect for financial advisors to consider when recommending Fixed Income ETFs are the tax implications. The interest income on bonds is generally taxable so being familiar with how taxes work with different types of bonds should also be a talking point when talking with clients. 

Commodity ETFs

Commodity ETFs are a simple way to gain exposure to the asset class of commodities. These ETFs seek to track the performance of commodities, such as precious metals (gold, silver, platinum), energy sources (crude oil, natural gas), agricultural products (corn, soybeans, wheat), and industrial metals (copper, aluminum, nickel).

Another possible benefit of Commodity ETFs is the potential for inflation hedging. Commodities have historically performed well during periods of inflation.as their prices have risen alongside the general cost of living. Over the past 30 years commodities as tracked by the S&P GSCI Index have returned an average of 19.8% during years in which CPI was over 2% vs. -16.9% when inflation was less than 2% (source: Bloomberg 12/31/1995 - 12/31/2024). Therefore, incorporating Commodity ETFs into a portfolio can serve as a hedge against inflation.

Investing in Commodity ETFs does involve certain risks, such as price volatility, supply and demand dynamics, and geopolitical uncertainties. However, with thorough research and understanding of current market conditions financial advisors can help their clients make informed decisions and seek to manage risks effectively.

Overall, Commodity ETFs can provide a compelling investment opportunity for those seeking exposure to commodities. Their convenience, diversification potential, and potential for inflation hedging help make them a valuable addition to many investment portfolios.

Currency ETFs

Currency ETFs offer clients a way to gain exposure to foreign exchange markets without the complexities and potential risks of directly trading currencies. By investing in a currency ETF, clients can diversify their portfolios and potentially benefit from currency fluctuations without the need for specialized knowledge or trading expertise.

Currency ETFs are typically composed of a portfolio of forward contracts or spot currency holdings that aim to mirror the value of the underlying currency or index.

One potential advantage of currency ETFs is their liquidity. Unlike directly trading currencies, which can be subject to wide bid-ask spreads and limited trading volume, currency ETFs can offer clients the ability to buy and sell shares easily through traditional brokerage accounts. This potential liquidity can allow clients or financial advisors to quickly make adjustments when needed.

Currency ETFs can also provide financial advisors a way to help their clients hedge against currency risk. By investing in a currency ETF that may be negatively correlated to the home currency, advisors can offset potential losses from unfavorable currency movements. This hedging strategy is particularly relevant for clients with international exposure.

It's important to note that currency ETFs are subject to currency fluctuations, and financial advisors and their clients should carefully consider the risks associated with investing in foreign exchange markets.

Specialty ETFs

Specialty ETFs cater to niche market segments and specific investment themes, providing focused attention to clients with particular interests or objectives. These ETFs may focus on sectors like technology, healthcare, or renewable energy, or they may track broader themes such as socially responsible investing or ESG (environmental, social, and governance) factors.

In addition to offering exposure to emerging trends, specialty ETFs can also allow financial advisors to cater to their clients' values and preferences. For instance, there are specialty ETFs that focus on companies with strong environmental, social, and governance (ESG) practices, ethical investing, or gender diversity such as iShares MSCI KLD 400 Social ETF (DSI).

Specialty ETFs can also offer diversification benefits, as they are typically not tied to the performance of a single company or a small group of companies. However, specialty ETFs can also come with higher volatility and risk than broad-market ETFs.

Therefore, financial advisors should carefully evaluate their client's risk tolerance and investment objectives before discussing specialty ETFs. Additionally, advisors should conduct thorough research to identify specialty ETFs with strong track records, experienced management teams, and transparent investment strategies.

Overall, specialty ETFs can offer financial advisors a valuable tool that may help customize their clients' portfolios, align with their values and interests, and tap into emerging market trends. By incorporating specialty ETFs into their investment strategies, advisors can provide their clients with the potential for growth and diversification while addressing their unique preferences and goals. 

Factor ETFs seek to track specific investment factors, such as value, small size, momentum, or volatility. These factors have been identified as drivers of historical returns. Factor ETFs aim to capture these premiums by systematically selecting stocks that exhibit these characteristics.

One of the most common factor ETFs includes those that focus on "quality stocks" or "blue-chip stocks." They have typically been large, well-established companies with a long history of profitability and/or dividend payments. 

Some of the key characteristics of quality stocks include:

• Predictable earnings
• Strong financial performance
• Stable dividends
• Strong management
• Sustainable competitive advantage

Quality stocks have often been considered a suitable investment for clients who want to be long-term investors. 

ETFs vs. Mutual Funds

Many ETFs can offer several advantages over traditional mutual funds, including lower expense ratios, greater tax efficiency, and intraday trading flexibility. They can provide a cost-effective way to build a diversified portfolio and align investments with a client’s financial goals.

Benefits of ETFs

ETFs have emerged as a powerful tool for financial advisors seeking to enhance their clients' portfolios and streamline their investment strategies. There are several reasons financial advisors may want to consider incorporating ETFs into their practice.

Client-Centric Benefits

ETFs can offer many advantages that could directly benefit clients, including diversification, lower costs, tax efficiency, and intraday trading flexibility. By utilizing ETFs, advisors can construct portfolios that may align with their client's risk tolerance, investment goals, and financial circumstances.

Enhanced Portfolio Management 

ETFs can also give advisors a versatile, efficient way to help manage client portfolios. Their broad market exposure, sector-specific options, and diverse asset classes can enable advisors to create tailored investment solutions and adapt to changing market conditions.

Streamlined Operations

The ease of trading ETFs on stock exchanges helps simplify portfolio management and can reduce administrative burdens for advisors. This efficiency helps advisors focus more on client relationships and strategic planning.

ETF FAQs

Below are commonly asked questions and answers about ETFs.

What is the Difference Between an ETF and a Mutual Fund?

Typically, both ETFs and mutual funds pool money from multiple investors to invest in a diversified portfolio of assets. ETFs though trade on stock exchanges like individual stocks, offering intraday trading flexibility, while mutual funds are typically priced at the end of the trading day. ETFs generally have lower expense ratios and greater tax efficiency compared to mutual funds.

What is a Typical Expense Ratio Range for ETFs?

The expense ratio for an ETF depends on the type of fund and its investment strategy. Generally, ETFs with expense ratios below 0.50% are considered to be low-cost. As of 2/24/25, the average net expense ratio for U.S. domiciled ETFs was 59 bps. It's important to compare expense ratios across similar ETFs before making an investment decision.

What is the Difference Between an ETF and an Index Fund?

An index fund is a type of mutual fund that seeks to track a specific market index, such as the S&P 500. ETFs that seek to track an index are often called index ETFs. The key difference lies in how they are traded: ETFs trade on stock exchanges, while index mutual funds are typically bought and sold through a fund company. This does not happen throughout the day, but only at the close of business. ETFs, like mutual funds, can also be actively managed, so not all ETFs track an index.

What is an ETP in Crypto?

Exchange-traded products (ETPs) are a family of securities tracking the value of one or more underlying assets. ETPs can be traded on regulated exchanges in the same manner as company stocks and shares.

A cryptocurrency ETP is an ETP that invests in cryptocurrencies or cryptocurrency-related assets. These ETPs offer financial advisors’ clients a way to gain exposure to the cryptocurrency market without having to directly buy and hold cryptocurrencies. Cryptocurrency ETPs are a relatively new and evolving investment product though so they may carry higher risks compared to traditional ETPs.

Typically, crypto exchange traded products are not investment companies registered under the Investment Company Act of 1940, and therefore are not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940. Investments in these products are speculative and involve a high degree of risk.

Earn a Certificate in ETFs & Portfolio Construction

To further enhance your expertise in ETFs and portfolio construction, consider earning a specialized certificate in ETFs and Portfolio Construction. A certificate program like one from the College for Financial Planning®-a Kaplan Company and developed in collaboration with iShares® by BlackRock, one of the largest global asset managers and a leading provider of ETFs, is designed to provide financial advisors with the right tools, education, and resources to have better conversations about ETFs with their clients. You’ll gain a better understanding of ETFs and how they can be used to develop a broad range of diversified investment portfolios that help meet client needs. 

________________________________

¹BlackRock GBI. The global ETF industry had $14 trillion AUM as of 9/30/2

Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.

Buying and selling shares of ETFs may result in brokerage commissions.

Diversification and asset allocation may not protect against market risk or loss of principal.

There can be no assurance that an active trading market for shares of an ETF will develop or be maintained.

Actively managed funds do not seek to replicate the performance of a specified index, may have higher portfolio turnover, and may charge higher fees than index funds due to increased trading and research expenses.

Index funds are not actively managed and will not attempt to take defensive positions under any market conditions, including declining markets.

There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics ("factors"). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses.

Commodities' prices may be highly volatile. Prices may be affected by various economic, financial, social and political factors, which may be unpredictable and may have a significant impact on the prices of precious metals.

The price of gold and precious-metal related securities historically has been very volatile and may adversely affect the financial condition of those companies. The production and sale of precious metals can be affected by economic, financial and political factors, which may be unpredictable and significantly impact supply and prices.

Investing in digital assets involves significant risks due to their extreme price volatility and the potential for loss, theft, or compromise of private keys. The value of the shares is closely tied to acceptance, industry developments, and governance changes, making them susceptible to market sentiment. Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on their acceptance.  Changes in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges  Investing in the Trust comes with risks that could impact the Trust's share value, including large-scale sales by major investors, security threats like breaches and hacking, negative sentiment among speculators, and competition from central bank digital currencies and financial initiatives using blockchain technology. A disruption of the internet or a digital asset network would affect the ability to transfer digital assets and, consequently, would impact their value. There can be no assurance that security procedures designed to protect the Trust’s assets will actually work as designed or prove to be successful in safeguarding the Trust’s assets against all possible sources of theft, loss or damage.  

To better understand the similarities and differences between investments, including investment objectives, risks, fees, and expenses, it is important to read the products’ prospectuses. Exchange traded funds (ETFs) combine features of both mutual funds (they hold a basket of securities) and stocks (they trade on exchanges intraday at market price, which may be greater or less than net asset value). However, there are a number of key differences between mutual funds and ETFs. First, shares of ETFs are not individually redeemed from the fund, which insulates investors from other shareholder activities. Mutual funds are accessed directly from the fund company or through a select broker that has an arrangement with the fund company to sell their funds. Pricing generally occurs once a day and investors buy or redeem shares of the mutual fund at the end-of-day net asset value, less any applicable fees. In addition, most ETFs seek to track a market index, before fees and expenses. Some ETFs may be actively managed and do not seek to replicate the performance of a specified index. The structure of active and index mutual funds is the same, but the management strategy differs in that active mutual funds seek to outperform their benchmark while the goal of index mutual funds is to track their index. Finally, transactions in shares of ETFs may result in brokerage commissions and will generate tax consequences. Some mutual funds may charge sales loads or redemption fees. Both mutual funds and ETFs are obliged to distribute portfolio gains to shareholders. Certain traditional mutual funds can be tax efficient as well. Due to fund structure, mutual fund holders may be subject to taxable capital gains distributions due to other investors’ redemptions directly to the mutual fund. Taxable capital gain distributions can occur to ETF investors based on stocks trading within the fund as the ETF creates and redeems shares and rebalances its holdings.

Transactions in shares of ETFs may result in brokerage commissions and may generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Similarly, the material does not constitute, and should not be relied on as, legal, regulatory, accounting, tax, investment, trading, or other advice. Any financial, tax, or legal information contained herein is included for informational purposes only.

This material contains general information only and does not take into account an individual's financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial professional before making an investment decision.

iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. and its affiliates. BlackRock is not affiliated with Kaplan or The College for Financial Planning.

iCRMH0325U/S-4236757

Demand for “responsible” investment options has never been higher. In fact, at the end of 2019, more than one out of every three dollars that were being professionally managed in the United States—$17.1 trillion or more—was invested according to sustainable, responsible, impact (SRI) strategies. Industry experts also confirm that a majority of investors want their investments to incorporate environmental, social, and governance (ESG) criteria.

For financial advisors, this demand presents several challenges. 

First, how can they acquire the insight and expertise to competently guide their clients towards ESG investments that fit their priorities? Second, how can they provide those clients with tangible evidence that they have genuine SRI expertise? 

Recognizing these challenges, the College for Financial Planning®—a Kaplan Company created the Chartered SRI Counselor (CSRIC®) professional designation program for personal financial advisors who provide advice to help individuals manage their money and plan for their financial future. This article provides an overview of the program.

Becoming a Chartered SRI Counselor 

Developed in partnership with US SIF, The Forum for Sustainable and Responsible Investment, the CSRIC® designation program is a unique program that blends SRI foundational knowledge and scenario learning. As a leading major financial credential dedicated specifically to SRI, the CSRIC® designation is supported by top financial firms. 

Who Should Enroll in the CSRIC® Professional Designation Program?

The CSRIC® Professional Designation Program is for advanced financial advisors who wish to obtain foundational knowledge and best practices for advising clients on SRI to help individuals manage their money and plan for their financial future, including

• Experienced advisors who desire financial planning credentials to advance their career
• Advisors who wish to specialize in SRI investing for new or existing clients
• Advisors who wish to pursue a Master of Science degree at a later date

Students enrolled in the program will learn the history, definitions, trends, portfolio construction principles, fiduciary responsibilities, and best practices of SRI investments.

The CSRIC® Program Curriculum

The CSRIC® Professional Education Program is a graduate-level course. 

The seven-course modules, which are offered as Live Online or OnDemand are:

• The Foundations and History of SRI
• Approaches to SRI 
• Shareholder Advocacy, Community Investing, and Corporate Responsibility
• Portfolio Construction and Incorporating SRI into Financial Advising
• ESG Performance, Risk, and Rating Metrics
• The Fiduciary Standard and Communicating the Value of SRI
• Current and Future Opportunities

How Long to Study for the CSRIC® Professional Designation Program

The typical student should expect to spend approximately 135 hours in course-related activities to study and prepare adequately for the program’s examination. The CSRIC® program also does “double-duty” for professionals who are considering a master’s degree: designees receive direct credit for one course in the College’s MS in Personal Financial Planning program, saving them time and money while pursuing multiple credentials.

Certificate in ESG Investing vs. CSRIC® Professional Designation Program

Start Earning the CSRIC® Professional Designation Today 

U.S. SIF members receive a 15 percent discount on the CSRIC® course and course-related materials. In addition, many leading financial advisory firms endorse the CSRIC® designation and will reimburse advisors for course-related expenses.

Financial analysts are important jobs in the world of finance, responsible for evaluating economic trends, assessing the financial health of companies, and providing valuable insights to guide investment decisions. To succeed in this competitive field, aspiring financial analysts must possess a strong foundation of technical skills and soft skills.

TABLE OF CONTENTS

• Required Skills
  
• Degrees
  
• Frequently Asked Questions

What Skills Are Required To Be A Financial Analyst?

The skills required to excel as a financial analyst include understanding the basics of finance, having experience using financial models, being fluent in data analysis strategies and terms, being detail-oriented, being good at building client relationships, and knowing how to develop actionable presentations.

Financial Knowledge

A financial analyst’s skills should include a strong grasp of the financial knowledge used in accounting, financial statement analysis, and the various techniques used to determine the value of an asset or company.

When finance analysts evaluate a company’s financial statements, they are usually trying to determine the financial health of that company. Some of the most common financial statement analysis techniques include ratio analysis, trend analysis, and common-size analysis.

Determining the value of an asset or company is also an integral part of some financial analyst positions. Being able to effectively use valuation methods like the discounted cash flow method or the market multiple method can help financial analysts demonstrate their value to their employers and clients.

For example, in the investment management industry, a financial analyst might use their understanding of financial statements to identify undervalued companies with strong growth potential, recommending them as attractive investment opportunities to portfolio managers. 

Financial Modeling

Financial models are mathematical representations of a company's financial performance. They are used to forecast outcomes and make business decisions.

In investment management, financial modeling plays a crucial role in portfolio construction and risk management. Successful financial modeling requires a strong understanding of financial principles, proficiency in spreadsheet software (such as Excel), and the ability to interpret and analyze complex data. Analysts must also be able to adapt models to changing market conditions and communicate their findings effectively to stakeholders.

Types of Financial Models >>

Data Analysis

Common data analysis skills for financial analysts include proficiency in MATLAB, the programming language R, Python, and SAS. Financial analysts use these tools to collect, clean, and organize large datasets to identify trends and patterns, and ultimately develop meaningful insights to support their financial recommendations.

Specific data analysis skills used by financial analysts include:

• Ratio analysis
• Trend analysis
• Regression analysis
• Sensitivity analysis
• Scenario analysis

Risk Management & Compliance

Financial analysts should also be familiar with industry-specific regulations and compliance requirements. This knowledge helps them ensure that their analyses and recommendations adhere to legal and ethical standards, protecting both their clients and their employers from potential risks. 

Analytical Thinking

Analytical thinking is probably one of the most fundamental skills financial analysts should have. Analytical thinking helps them make informed decisions, which clients and employers demand. It’s the foundation for solving problems and making recommendations, which ultimately determine the success of a financial analyst.

Presentation Skills

Presentation skills are important for financial analysts because they need to be able to communicate their ideas and recommendations clearly. These skills can be difficult to attain for financial analysts because they are typically taught in arts and design courses which financial analysts may only take a few of during their formal education.

For example, knowing which color combinations are most ADA-compliant, which fonts and sizes are easiest to read, and which types of visualizations to use to describe a particular trend or topic are all important skills that financial analysts should learn to develop throughout their careers.

Degrees for Financial Analysts

Most financial analysts earn a bachelor's degree in Finance, Accounting, Economics, Mathematics, or Statistics. However, it’s also common for financial analysts to continue their education while employed, especially if they desire to progress in their careers. 

Master’s in Financial Analysis

Financial analysts who want to continue to develop their skills and master advanced competencies in financial analysis will benefit from pursuing a Master’s of Science in Financial Analysis. 

Not only will they gain important knowledge and skills and be well-positioned for the field of financial analysis but they will also be prepared to become a CFA® Charterholder or a CAIA® Charterholder. Both are prestigious professional designations for financial analysts. 

Get Access To An OnDemand Webinar About Earning An M.S. in Financial Analysis

Financial Analyst Skills FAQs

Here are some frequently asked questions about starting a career in finance, including how the skills you've learned as a financial analyst can be applied to entry-level roles.

What are the 5 Components of Financial Analysis?

The five components of financial analysis used by financial analysts involve assessing a company's (or clients) financial health through liquidity, solvency, profitability, efficiency, and market analysis. These analysis techniques include looking at various financial factors such as economic growth, interest rates, inflation, debt-to-equity ratios, and gross profit margins. 

How Does a Financial Analyst Help a Business?

A financial analyst helps a business by making good recommendations and financial decisions for their clients and their company. Financial analysts can use their analysis skills to determine which investments should be pursued and which should not.  

What Makes a Good Financial Analyst?

What makes a good financial analyst is a combination of technical skills (financial knowledge, modeling, data analysis) and soft skills (analytical thinking, communication, presentation). They are detail-oriented, able to understand and adhere to industry regulations, and capable of making sound financial recommendations. 

Learn About The Benefits of a Master’s in Financial Analysis

The online Master of Science in Financial Analysis (MSFA) program at the College for Financial Planning® — a Kaplan Company is all about taking your financial analysis skills to the next level.  We're here to help you become a top-notch financial professional by focusing on important things like critical thinking, ethics, and always learning something new.

The graduate program is part of the CFA Institute University Affiliation Program. It is recognized by CFA Institute as embedding at least 70% of the CFA® Program Candidate Body of Knowledge™ (CBOK) from the CFA Program into our curricula.

The CFP^® exam is challenging...the overall pass rate for the March 2023 exam was just 65 percent. If you failed the exam, there are several things you can do to increase your chances of passing the next time. One helpful CFP^® exam retake strategy that is often overlooked is taking time to reflect on why you were not successful.

Understanding the reasons you failed the CFP^® exam will help you avoid the same pitfalls and manage your time more efficiently during your next attempt. Here are five reasons we commonly see for why people fail the CFP^® exam.

1. Failed to study enough hours

Without a doubt, the most common reason we encounter is simply not studying enough. Getting CFP^® exam-ready requires a large time commitment. CFP Board recommends you spend at least 250 hours studying for the exam. While that sounds overwhelming, the time goes pretty quickly between pre-study, the Candidate Handbook, required education courses, question bank time, review, practice exams, and your own preparations.

It’s important to think of preparing for the CFP^® exam like training for a marathon. It’s not a situation where you can sprint (or cram). There’s just too much to learn, and you’ll need to be able to apply it to case studies. To be properly prepared for the exam, you need to have the space in your life to dedicate the necessary hours to study. You can find more information about how to make time here. 

2. Inefficient study plan

Not only is dedicating enough hours crucial to your success on the CFP^® exam, but you also should create a strategic study plan. Spending too much or too little time on any one activity can be detrimental to your preparations.

We recommend you create your study plan based off the exam weighting. CFP Board updates the weighting based on regular job task analyses, so it’s good to verify what the weighting is for the exam you are taking. While it is tempting to start off by studying the most heavily weighted topics in depth, we recommend you learn the basics of each category first. Then work deeper into the categories based on weight and your familiarity, so you can absorb more detail and application.

Preparing for the CFP^® exam? Download this free eBook to learn how to create a CFP® exam study plan that works for you.

3.  Focused on memorization and not learning

Many individuals who take the CFP^® exam have already gone through a few rounds of exams for insurance and securities licensing. Sometimes this sets false expectations of what the CFP^® exam is really going to be like. While insurance and securities licensing exams both heavily focus on memorization, the CFP^® exam is all about applying knowledge to real situations you could encounter on the job.

The CFP^® exam includes two important case studies with 8-12 questions per case study typically. They require you to analyze a hypothetical client situation and determine the best next steps. Memorization alone won’t cut it in this section. You need mastery of the material and the ability to apply your knowledge to the given client information and scenarios to do well.

4. Too much cramming right before the exam

Studying too hard the day before the exam can really hinder exam-day performance. A grueling day before the exam and a poor night’s sleep will leave you mentally tired walking into the exam hall. Tired candidates are more likely to make mistakes.

Try to be at your mental peak for the exam. We recommend you use the day before the exam to reread some of the more wordy areas of the curriculum, like Ethics. Do not take full practice exams the day before, which can mentally drain you. Few people get a particularly great night’s sleep before an exam, so make sure you get into a good sleep pattern the week leading up to the exam. That rest, along with some exercise and relaxation, will help you get through exam day in good form.

5. Not enough practice

Even with good technical knowledge, you can still fail the CFP^® exam if you struggle to apply the knowledge to the exam questions. The more you practice, the more familiar you will become with how to apply your knowledge. In addition, using questions at the same difficulty level as the actual exam will help you identify whether you have truly mastered a particular domain.

You should attempt and review the solutions of the following questions before taking the real CFP^® exam:

• Prep provider end-of-chapter questions
• Prep provider question bank quizzes
• Prep provider practice exams
• CFP Board practice exams

The more you practice questions before the exam, the more opportunity you have to identify mistakes you made and why you made them. This will prevent you from making similar mistakes in the real exam.

If you are a retake candidate, we recommend you concentrate heavily on practice questions in your next attempt. We strongly suggest attending a review course as well, so you can better identify where key gaps in your knowledge remain. Once you identify your gaps, you can get some additional help from experienced instructors on how to break down the questions and apply proven exam techniques to your exam strategy.
___

Now that you know the most common reasons people fail the CFP^® exam, ensure that you pass with Kaplan Financial Education. Choose a CFP^® exam prep package that suits your study needs now.

The differences between a financial advisor and a financial planner are nuanced but significant. Generally, a financial planner takes a more holistic approach to a client’s finances and has a higher earning potential compared to a financial advisor. These distinctions influence the range of services offered and the methods used to help their clients achieve their financial objectives.

TABLE OF CONTENTS

• Financial Advisors
• Financial Planners
• Fiduciaries Explained
• Financial Advisors vs. Financial Planners
• Career Outlooks
• Certifications
• Frequently Asked Questions

What is a Financial Advisor?

A financial advisor is someone who can work independently or within a financial institution like a bank or brokerage. Their focus can be more specific than financial planners and their job duties can specialize in many different areas including:

• Investments
• Retirement
• Taxes
• Estate Planning
• Insurance 
• Debt Management

How to Become a Financial Advisor >>

What is a Financial Planner?

A financial planner most often works at a brokerage or investment firm and very rarely works in a bank or a credit union. Their focus is broader than a financial advisor, meaning they will help you develop a comprehensive financial plan for the short and long term. The top five services provided by financial planners are:

• Wealth management/Investment Planning
• Comprehensive Financial Planning
• Retirement Planning
• Estate and Tax Planning
• Risk Management/Insurance Focus

Important Skills For Financial Planners >>

What is a Fiduciary Financial Advisor?

A fiduciary financial advisor is someone who is legally and ethically obligated to act in the best interest of their clients when helping them with their finances. Being a fiduciary financial advisor means they need to put their client's needs above their own, or their firms, and avoid all conflicts of interest at all costs.

For example, in the investment industry, it’s common for finance professionals to earn money from the fees and commissions associated with their client’s investments. A fiduciary financial advisor cannot legally recommend their client buy or sell anything that would directly benefit them or their firm's interest over their clients.

A financial advisor can become a fiduciary by becoming a Certified Financial Planner™ (CFP^®) which requires members to adhere to a code of ethics that includes fiduciary duties or a Registered Investment Advisor (RIA).

The fiduciary duties of a financial advisor include:

• Loyalty, meaning they must put their client's interests ahead of their own.
• Care, meaning they must perform their duties with competence and thoroughness. 
• Good Faith, meaning they must be honest and fair. 
• Full Disclosure, meaning they must be transparent about fees or conflicts of interest and provide clear communication when covering these topics. 
• Ongoing Management, meaning they must continuously monitor their client's performance and be proactive. 

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Differences Between Financial Advisors and Financial Planners

The differences between a financial advisor and a financial planner are subtle but financial planners are usually more distinguished and earn more than financial advisors. Sometimes financial advisors' professional education can start broader and later focus more on a specific financial service like taxes, whereas becoming a financial planner usually requires specific work experience, certifications, and adherence to ethical standards.    

Education Differences

There is a lot of overlap between the education that is required for a financial planner and a financial advisor. They both typically have bachelor's degrees in finance, economics, business, or accounting.

Financial advisors will typically pursue licensing like the Series 7 or Series 63 exams, which is often required for advisors to work in certain states. Financial advisors may also pursue becoming a CFP Professional or a CFA Charterholder although it’s not required.

Financial planners will often pursue the CFP designation because of how credible and widely respected the designation is. Clients usually want their financial planners to be CFPs because it’s very common in the industry and signals that the financial planner is someone who can be trusted. 

Service Offerings Differences

Think of a financial planner as the one who designs the plan for your entire financial future whereas a financial advisor is someone who specializes in a specific aspect of your plan like your investment portfolio.

Financial planners will focus on the big picture, and take a holistic approach to your financial future. They will help their clients define their financial goals and develop the strategies to achieve them.

Financial advisors can specialize in specific areas of finance like investments or insurance and typically have access to large data sets. They can develop financial models and make recommendations based on their current financial markets and economic trends.

Typical Duties of a Financial Advisor >>

Earning Differences

Financial advisors are typically compensated based on a percentage of the assets they manage or commissions they earn by selling their company's financial products. For example, they can sell mutual funds, which are large investment pools that hold various stocks and bonds.

This means that financial advisors have the potential to earn large amounts of money based on commissions and how much money their clients have to invest. It also means their salaries can fluctuate quite a bit based on market conditions. 

Many Financial planners are paid the same way as financial advisors. They earn a fee on the assets that are invested under a management plan, typically called Assets Under Management (AUM). On top of AUM fees, they will also earn a planning fee.

Some financial planners on the other hand may have their earnings capped at a certain rate based on a fee associated with their product (a financial plan). These are called “fee-only financial planners”. They charge their clients an hourly rate or even a retainer fee, similar to how a law firm will charge a fee for their firm to be on retainer.

According to the latest data from the CFP Board, the median 2022 total compensation for a financial planner was $198,500 USD. This includes a financial planner's base pay, variable pay, company profits, and profit shares.

Source: CFP Board Compensation Study

The latest median salary for a personal financial advisor is $99,580 per year according to the U.S Bureau of Labor and Statistics.

Career Outlooks for Financial Advisors and Financial Planners

The latest job outlook for a personal financial advisor is strong and expected to grow by 13% in the next 10 years,  which is much faster than the average according to the U.S Bureau of Labor and Statistics.

Most people at some point in their lives will need the assistance of a financial advisor or planner to help them with retirement or their taxes.

According to the U.S Bureau of Labor and Statistics, each year, an average of approximately 25,600 openings for personal financial advisors are projected over the decade. Many of these openings are anticipated to arise from the need to replace workers who transition to different occupations or leave the workforce, such as through retirement.

Commonly Held Certifications for Financial Advisors and Financial Planners

Below is a list of the most common certifications financial advisors and financial planners will pursue at some point in their careers. 

Certified Financial Planner (CFP^®)

The Certified Financial Planner (CFP^®) designation is a certification that financial planners earn through the Certified Financial Planner Board of Standards. The CFP^® certification is considered one of the most rigorous certifications for financial planners. This designation is a great fit for financial planners who want to specialize in accounting and investments.

Chartered Financial Consultant (ChFC^®)

The ChFC^® designation is a certification for financial advisors to earn through the American College of Financial Services. The ChFC^® designation is considered one of the most prestigious certifications a financial advisor can have. This designation is a great fit for financial advisors who want to specialize in insurance, investments, and estate planning.

Certified Public Accountant (CPA)

The CPA designation is a credential that indicates an accountant is licensed to audit financial statements, prepare tax returns, provide financial advice, and perform forensic accounting services in the United States. CPA licenses are administered by individual state boards of accountancy and the American Institute of Certified Public Accountants. Both financial advisors and financial planners are good fits for becoming a CPA if they plan on specializing in accounting and taxation.   

Certified Investment Management Analyst (CIM^®)

The Certified Investment Management Analyst (CIM^®) is a certification for financial professionals who manage investment portfolios, specifically in Canada. The Canadian Securities Institute awards the CIM® designation and is considered one of the most prestigious certifications Canadian financial advisors can hold.  

Series 7 and 63 Licenses

The Series 7 and Series 63 licenses are required for finance professionals working in the United States securities industry. Financial advisors will typically earn these certifications and use them to demonstrate their expertise in federal and state-specific securities regulations. Financial advisors will need both licenses to be fully qualified for roles, especially if they advise their clients on investment products. 

Frequently Asked Questions

Below are commonly asked questions about financial advisors and financial planners. 

Can You Be a Financial Advisor Without a Degree?

Yes technically you can be a financial advisor without a degree but you will need to possess a college degree or enough professional work experience to get hired at a firm. You will also have a hard time earning licenses and certifications without a degree because most of them also require a college degree in a related field and enough professional work experience to earn them. 

Who Needs a Financial Advisor?

Someone who needs advice from a finance professional about a complex financial situation like a business owner or someone who is going through a life transition such as retirement are great examples of someone who can benefit from hiring a financial advisor. 

Can a CPA Be a Financial Advisor?

Yes, a financial advisor can be a CPA. A financial advisor who is also a CPA is someone who specializes in accounting and taxation and can help navigate retirement planning and business operations. 

Can Financial Advisors Give Tax Advice?

Yes, but financial advisors should be careful when providing tax advice because they could be held liable for any penalties or interest that result from their advice. Financial advisors often discuss tax-related strategies with their clients within the scope of their client's financial planning efforts. Financial advisors do not prepare tax returns rather they help their clients evaluate tax-efficient investment options like IRAs. 

Can a Financial Planner Prepare a Will?

No, a financial planner cannot prepare a will because a will is a legal document that requires specific legal expertise from a lawyer. Instead, financial planners will help their clients make plans about how assets will be distributed after a death but they can't prepare the actual legal document. 

Is a Certified Financial Planner a Fiduciary?

With personal financial advising projected to be one of the top fastest growing occupations, getting your CFP^® mark can help set you apart in the industry. Let’s take a look at what a CFP^® professional is and what it takes to earn the financial planning certification.

Key Highlights

1. To become a CFP^® professional you will need to posses relevant professional experience including a bachelors degree.
2. You will also need to complete a CFP® Board Registered Education Program and pass the CFP^® exam.
3. After passing the exam, you'll need to agree to adhere to the CFP Board's Ethical Standards and pass a background check.

TABLE OF CONTENTS

• About CFP^® Professionals
• Requirements
• Exam Cost
• How to Study
• Tips for Passing
  
• Certification Renewal Process
  

What is a CFP^® Professional?

A CFP^® professional works with clients to create comprehensive plans for meeting their long-term financial goals, such as retirement, college tuition, business start-up, a home, and so on. The U.S. Department of Labor Occupational Outlook Handbook predicts 15 percent job growth in the financial advising field through 2031, making it an excellent career option for young financial professionals.

Many CFP^® professionals work in large financial or insurance firms, although some choose to have their own businesses. To become one, you have to meet certain requirements. 

According to a recent College for Financial Planning report, 82% of CFP^® professionals are more satisfied with their financial planning career after earning their CFP^® mark.*

What Does a Certified Financial Planner Do?

A Certified Financial Planner spends a lot of time meeting with clients to discuss their financial goals. Some of their roles and responsibilities including analyzing their clients financial situations, and crafting personalized plans for them.  One key responsibility CFP^® professionals have is to act as a fiduciary, meaning they are legally obligated to prioritize the client's best interests over all else.

CFP^® Requirements - How To Become a CFP^®

To become a CFP^® professional, you must complete these five general steps:

Step 1: Complete a CFP Board Registered Education Program

You can choose from several options for your education. CFP Board must be notified when you’ve completed it. Many of the coursework providers can do that for you.

CFP Board Registered Education Program >>

Step 2: Sit For the CFP^® Exam

You can do this once CFP Board has been notified of your education completion. The CFP^® exam is offered three times a year in March, July, and November. You must take the exam within the 8-day window at one of the approved locations provided by CFP Board. You are permitted to register for the exam before you complete your program, but CFP Board must receive verification of your education completion by the education verification deadline.

Step 3: Hold or Earn a Bachelor’s Degree From an Accredited University or College Within Five Years of Passing the CFP^® Exam

You can sit for the exam beforehand, but you need to make sure you complete your degree in that 5-year window.

Step 4: Demonstrate Financial Planning Experience

This can be professional experience (6,000 hours) in relevant personal financial planning activities, or apprenticeship experience (4,000 hours) that meets additional requirements.

Step 5: Pass CFP Board’s Candidate Fitness Standards

To do this, you must agree to adhere to their ethical standards. You also must disclose any criminal or employment termination history and pass a background check. For more information about the ethics requirement, visit the CFP Board website.

Is CFP^® certification right for you? Get a preview of our required education materials in this free download.

Does Earning a CFP^® Certification Require a Degree?

Yes, you need a degree to earn the CFP^® Certification. Part of the CFP^® Certification requirements including obtaining a bachelor’s degree (or higher) from an accredited university. Additionally, practical financial planning experience is also required, equaling 6000 hours.

CFP^® Exam Cost

There is a standard registration fee for the CFP^® exam and even an early bird rate, which is available for a few months before the standard registration deadline. There’s a late registration fee for several weeks after the standard registration deadline. You can register for the CFP^® exam with CFP Board online or by phone before or after you complete the education program coursework and become eligible for the exam. If you register before you finish the coursework, you must send CFP Board proof of your completed coursework. CFP Board will notify you when your eligibility is confirmed.

How to Prepare for the CFP^® Exam

The exam is given in a computer-based format and consists of 170 multiple-choice questions that test your financial planning knowledge in client situations. You are given the exam in two 3-hour sessions with a 40-minute scheduled break between the two sessions. Each session includes two subsections and you may take an optional, unscheduled break between the exam subsections.

Preparing for the CFP^® exam requires a significant time commitment. While that sounds overwhelming, the time goes pretty quickly between pre-study, required education courses, question bank time, a review class, practice exams, and your own review preparations.

A great way to approach preparing for the CFP^® exam is to think of it like training for a marathon. It’s not a situation where you can sprint (or cram). There’s just too much to learn, and you’ll need to be able to apply it to case studies. So, make sure you have the space in your life to dedicate the necessary hours to study.

Then, create a strategic study plan. A great way to structure your plan is to mirror the exam weighting, which CFP Board updates based on regular job task analysis. At the same time, you shouldn’t start off by studying the most heavily weighted topics in depth. Instead, learn the basics of each category first. Then, work deeper into the categories based on weight and your familiarity with them, so you can absorb more detail.

How Long Should You Study For the CFP® Exam?

The recommended study time for the CFP^® exam is typically between 150-250 hours, which translates to roughly 4-6 months of dedicated studying.

How to Pass the CFP^® Exam

Here are few tips that can help you pass the CFP^® exam.

Focus on Learning When You Study

The CFP^® exam is all about applying knowledge to real situations you could encounter on the job. The exam content requires the use of critical thinking and problem-solving ability. Therefore, rather than spending all your time on memorizing, you need to work on mastering the material and applying it.

Practice Exam Questions

The more you practice, the more familiar you will become with how to apply your knowledge. Work with questions that have the same difficulty level as the actual exam to determine if you have truly mastered a particular domain and where you might be making mistakes. You can find practice questions at the end of prep provider chapters, in prep provider bank quizzes, and in practice exams from CFP Board and prep providers.

Don’t Cram the Day and Night Before

Feverishly going over lists or taking full practice exams can be mentally draining, so avoid them on the day before the exam. Instead, reread some of the wordier areas of the curriculum like ethics. Think about what it could be like to be advising clients in the future and practice answers to the questions they might ask. Then, stop about dinner time, just as if you were already in the office, relax, and have a good meal.

Picture Yourself Passing

Before a big exam like this, it’s natural to panic and worry about failing. Instead try to visualize yourself answering questions competently and getting a great score. Positive affirmation can go a long way to calm your nerves and put you in the right mindset.

CFP^® Certification Renewal Process

Once you have your CFP^® certification, as a CFP^® professional each year you will be required to pay an annual certification fee. In addition, every two years, you will be required renewal requirements including submitting a certification application (which includes an ethics declaration) and completing continuing education (CE).  

If you do your continuing education credits through Collete for Financial Planning—a Kaplan Company, we’ll submit your completions for you! To view our continuing education offerings for CFP^® certification, please visit our CFP^® certification CE page. You can also learn more about all our CFP^® certification offerings on our CFP^® Education page.

Ready to Get Started With Your CFP^® Certification Education?

Enroll with College for Financial Planning^®—a Kaplan Company by visiting our website browsing our CFP^® certification offerings or calling a designation specialist at 800.237.9990, Option 2.

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*This is one of the findings of a quantitative survey conducted by the College for Financial Planning^®—a Kaplan Company between June 27 and August 7, 2023. For this survey, a sample of 951 2022 and 2023 graduates of the College for Financial Planning was interviewed online in English. The sample includes 182 graduates whose most recent professional designation earned was the CFP^® mark and who answered this question.

Financial advisors do exactly what the name suggests. They work with clients to assess their current financial status and future plans, economic conditions and forecasts, and regulations, to provide financial advice. Read on to learn the steps you must complete to become a financial advisor. 

Financial Advisor vs. Investment Adviser >>

Steps to Become a Financial Advisor

Below are five basic steps for becoming a financial advisor.

STEP 1: Earn a Bachelor’s Degree

If you’re currently enrolled in college and working toward your bachelor’s degree, you’re already on the path toward becoming a financial advisor. Most practicing financial advisors majored in some type of business or finance program.

If you’re considering a career in financial advice, it might also be a good idea to find and interview someone who is currently working in the field. Tell them you’d like to become a financial advisor, and ask them specific questions about what an average day looks like, what factors influence their compensation, and what they like and dislike about their career.

Download the free eBook, Getting There from Here: Career Path Stories from Finance Professionals, to get firsthand accounts of what it's like to have a rewarding career in finance.

This will give you an accurate picture of what to expect in the career for which you’re preparing.

33% of respondents in our 2024 Survey of Trends Report joined their financial services profession due to a desire to help others manage their finances and take control of their retirement.*

STEP 2: Complete an Internship

While still in school, it’s a good idea to pursue an internship with a financial advice firm or sole practitioner. Internships will help you get a first-person look at the career and understand what it means to be a financial advisor on a day-to-day basis.

Internships also represent an opportunity to network with existing financial advisors and potentially find a mentor. Some of the relationships you form as an intern will follow you throughout your career.

Finally, an internship looks good on your resume. Most employers prefer to hire people with experience. Of course, as a recent college graduate, you won’t have much, if any, experience.

An internship provides a priceless opportunity to gain experience and demonstrate your active interest in becoming a financial advisor

How to Get a Finance Internship >>

STEP 3: Find a Job

Once you’ve earned your degree and gotten some experience as an intern, it’s time to start job hunting. There is no shortage of resources available to help you write an effective resume. Here’s a few tips for writing a resume that will get noticed:

• Go beyond your education and work experience. Talk about what makes you a great employee, and the skills you have that make you a great fit for the position.
• Don’t waste words. Short and impactful statements on your resume make it easier for the employer to identify and remember the points you’re trying to make.
• Put the important stuff up front. It’s ok to work from a template, but you’re trying to present yourself as a unique individual to potential employers. Feel free to take liberties with the template to make sure it effectively sells you as a potential employee.

How to Make Your Resume Stand Out to Recruiters >>

STEP 4: Get Certified

The field of financial advising is competitive. Many advisors pursue certifications or licenses to help them develop a specialty or differentiate themselves from their competition. Once you’ve logged some experience in the field, you will get a better idea of the type of work you enjoy as a financial advisor.

This experience will help you decide which certification(s) are a good fit for the career you want to build. Some common certifications and licenses that financial advisors pursue are:

• CERTIFIED FINANCIAL PLANNER™
• Chartered Financial Analyst®
• Securities licenses
• Insurance licenses

STEP 5: Pursue Additional Education

A thirst for knowledge will serve you well in any career. Financial advice professionals will often go back to school to pursue a graduate degree, or even a doctorate. Your job relies on your ability to provide valuable financial advice to clients. The pursuit of further education is a tangible way to demonstrate your commitment to providing excellent service as you continue in your career.

Demand for financial advisors is high and will continue to grow as our society becomes more financially literate and recognizes the importance of making sound financial decisions.

Now that you understand how to become a financial advisor, you are prepared to chart your own career path and get started providing valuable advice?

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*These are among the findings of a quantitative survey conducted by the College for Financial Planning®—a Kaplan Company between June 27, 2023, and August 7, 2023. A total of 951 respondents completed the survey, although not all of them answered every question.

A special designation in financial planning can set you apart from the competition and boost your career. But should you earn the AAMS^® or the CFP^® mark? Both lead to rewarding, professional opportunities for those who want a career in personal finance and planning, but the topics they cover, their requirements, and their benefits are slightly different. In this article, we compare the AAMS^® vs. CFP^® mark to help you choose the credential that’s right for you.

AAMS^® Designation Overview

The Accredited Asset Management Specialist^SM (AAMS^®) program provides advisors with fundamental financial knowledge of asset management and investments. Offered exclusively online by the College for Financial Planning^®—a Kaplan company (CFFP), the AAMS^® credential and program are designed to help personal financial advisors who are just starting out in their careers. However, more experienced financial advisors can benefit from the credential, too, because it lets clients know they have a specialty in asset management.

Get more details in this AAMS^® designation article.

Requirements for Earning the AAMS^® Designation

To earn the AAMS^® designation, follow these steps:

1. Complete a 10-module education program provided by CFFP. There are no prerequisites for this program. Students have 120 days from the date they are provided online access to complete a designation program (including testing and passing the Final Exam). The modules cover the asset management process; risk, return, and investment performance; asset allocation and selection; investment strategies; taxation of investments; investing for retirement; deferred compensation and benefit plans; insurance products for investment clients; estate planning for investment clients; and fiduciary, regulatory, and ethical issues for advisors.
2. Take and pass the AAMS^® exam. You must take the test for the first time within six months of enrolling for the program, and you have a year to pass it. There are 80 questions on the exam, and the passing score is 70 percent. Plan on studying for about 80–100 hours.
3. Agree to abide by a code of ethics.

AAMS^® Benefits

The AAMS^® designation is recognized as the industry benchmark for asset management credentials and is endorsed by leading financial firms. Compared to earning an MBA or other credentials, the AAMS^® designation is a relatively low-cost way to advance your career and lets clients know you have deep knowledge in asset management and investments. Financial advisors with the AAMS^® credential report an average earnings increase of 20 percent, as well as client-base growth and greater job satisfaction.

CFP^® Certification Overview

The CERTIFIED FINANCIAL PLANNER^™ (CFP^®) mark enables finance professionals to help individual clients create comprehensive plans for meeting their long-term financial goals, such as retirement, college tuition, business start-up, a home, and so on. Its governing body, CFP Board, administers the credential. In 2017, CNN Money reported that jobs for CFP^® professionals are expected to grow 30 percent over the next 10 years, making it an excellent career option for young financial professionals.

Requirements for Earning the CFP^® Mark

The requirements for earning CFP® certification are:

• Complete a CFP Board-registered education program. CFP Board must be notified when you’ve completed it.
• Pass the CFP^® exam. Offered three times a year in March, July, and November, the CFP® exam focuses on testing your financial planning knowledge in client situations. The topics covered include professional conduct and regulation, general financial planning principles, education planning, risk management and insurance planning, investment planning, tax planning, retirement savings and income planning, and estate planning. You should plan to spend 250 hours studying for the six-hour, 170-question, computer-based exam. This exam FAQ has more details.
• Hold a bachelor’s degree from an accredited university or college. You can hold the degree before you complete the education program and pass the exam or earn it afterward. (You have up to five years after passing to get your degree.)
• Have financial planning experience. This can be 6,000 hours of full-time, relevant personal financial planning or 4,000 hours of apprenticeship.
• Pass the CFP Board candidate fitness standards. To do this, you must agree to adhere to CFP Board’s ethical standards, disclose any criminal or employment termination history, and pass a background check.

For all the details about how to become a CFP^® professional, check out this article.

CFP^® Certification Benefits

Like the AAMS^® designation, the benefits of earning the CFP^® mark include a rewarding career that involves a relatively low investment compared to the tuition for an MBA or other credentials. The most common careers include financial planner, wealth advisor, estate planning specialist, trading and research associate, financial consultant, financial representative, or financial analyst. If you want to become a branch manager at a financial firm, CFP^® certification can help you achieve that level in your organization as well.

AAMS^® vs. CFP^® Mark: How to Choose

The AAMS^® designation is respected as an achievement milestone. If you would like to quickly earn a credential to demonstrate your asset investment expertise to clients and employers, the AAMS^® program takes less than three months to complete. If you are in training to become a personal financial planner, earning your AAMS^® can put you on the path to an entry-level position.

The CFP^® mark is highly respected in the industry, and it can open many doors for you in your career. Firms know that CFP^® professionals are preferred by clients. In fact, a recent CFP Board study revealed that 69 percent of surveyed consumers said they would insist that their financial planners have the CFP^® certification. As a result, many companies will offer financial assistance to employees interested in earning the CFP^® mark.

As you ponder the benefits of each, ask yourself what your long-term goals are. If you would like to get a headstart in your financial planning career, earning the AAMS^® designation is a good option. If your dream is to work in a large firm where you can apply personal financial planning knowledge and skills more broadly—and you have the time to invest in an intense program—the CFP^® mark is an excellent choice.

Who Says You Have to Decide?

There is a third option: earning both the AAMS^® and the CFP^® mark. Many financial planners and advisors start with the AAMS^® designation. Then, after gaining experience in the field, they enroll in the CFP^® program and earn that credential. In fact, AAMS® designees receive credit for the completion of FP511 in the CFFP CFP® certification education program. This allows you to save both time and money.

Performing well in the AAMS^® designation program and on the exam also increases your odds of passing the CFP^® exam. A study by CFFP that was submitted to the 2019 Annual Meeting Academy of Financial Services shows that students who did well (either an A or B grade) in the AAMS^® program had a good chance of doing well in the CFP^® program. Testing out of two courses offered by CFFP and performing better in the CFP® program are two powerful arguments for earning your AAMS^® before your CFP^® mark.

Ready to Get Started?

Get your financial planning career on the right track. Learn more about our CFP^® certification packages here, or explore the AAMS^® program.

A career in wealth management for the sports and entertainment industries offers the exciting opportunity to work with athletes and entertainers from around the world and guide them on their financial journeys. This specialized type of wealth manager can expect a lucrative and rewarding career as well as the chance to make a real impact in their clients’ lives. In this article, we provide a comprehensive overview of why and how to become a certified sports and entertainment wealth manager.

What does a sports and entertainment wealth manager do?

A sports and entertainment wealth manager is a type of wealth manager who works with high-net-worth clients in the sports and entertainment industries. They help their clients overcome the distinct financial challenges they face in their careers. From a sudden wealth event to uneven or multiple income streams, these professionals have added complexities in their financial lives and require a qualified advisor who can handle their specialized needs. The chart below showcases some examples of the clients you might work with as a sports and entertainment wealth manager. 

Unique Dynamics and Challenges of Sports and Entertainment Wealth Management Clients

Every profession in the sports and entertainment industries is unique and has its own earning profile and career span. Professionals who work in these industries need an accredited sports and entertainment wealth manager who understands the unusual dynamics and challenges they may face, including: 

• A sudden wealth event

• Uneven cash flow

• Multi-sourced income streams

• Variable career spans

• Lifestyle maintenance

• A broad network of influencers

• Physical, emotional, and behavioral risks with potentially long-term impacts

Benefits to Becoming a Sports and Entertainment Wealth Manager

Wealth management is a rewarding financial career with steady industry growth, job flexibility, and high earning potential. As a wealth manager, you can choose to specialize in the types of clients you work with, becoming an expert in a specific industry and ultimately garnering a higher perception of authority in the marketplace. For example, you could become a sports and entertainment wealth manager and work exclusively with athletes and entertainers. Becoming a sports and entertainment wealth manager has numerous benefits, including:

• Income potential. As a sports and entertainment wealth manager, you have the opportunity to earn more by taking on as many high-net-worth clients as you can handle.
  

• A flexible work schedule. Sports and entertainment wealth managers have the flexibility to create a work schedule that suits their needs, unlike other career paths that follow a traditional 9-to-5 schedule.
  

• The chance to work with interesting clients. Sports and entertainment wealth managers often work with famous, high-profile clientele as well as rising stars.
  

• An opportunity to make a meaningful impact. As a sports and entertainment wealth manager, you have the chance to make a real difference in people’s lives – from helping them grow their businesses to planning for retirement and leaving a legacy.

Sports and Entertainment Wealth Manager Salaries

You can expect to make a competitive salary as a wealth manager working with high-net-worth sports and entertainment clients. According to data from Glassdoor, the average salary of a wealth manager in the United States is $84,668 per year, with additional pay from commission and other bonuses bringing the total up to $100,039. Salaries will range depending on your experience, client base, and credentials, but Glassdoor cites the wealth manager salary range as anywhere from $25,456 to $490,786 per year. 

What skills do you need to be a sports and entertainment wealth manager?

Wealth management is a client-focused industry, and as a sports and entertainment wealth manager, you’ll be working with high-net-worth clients and dealing with sensitive financial information. Some soft skills that will help you succeed as a sports and entertainment wealth manager include:

• Communication skills. You’ll be working closely with clients, so strong communication skills are critical to this career path. The ability to hold productive conversations and actively listen will help you build relationships and establish a strong client base.

• Integrity. Wealth managers often deal with sensitive, private information about their clients’ assets, so integrity is critical to their roles. Sports and entertainment wealth managers, specifically, may work with high-profile clientele, so having a reputation for discretion will be key in attracting and maintaining clients.
  

• Analytical skills. One of the top requirements of all types of wealth managers is the ability to analyze and interpret data into logical information for your clients.
  

• Customer service. Prioritizing your clients’ needs and responding to them in a timely manner will help you build relationships and maintain customer satisfaction.

• Problem-solving. Being able to solve your clients’ unique financial problems and overcome challenges will be critical to your success as a sports and entertainment wealth manager.
  

• Proactivity. Sports and entertainment wealth managers devise proactive and assertive financial strategies for their clients, acting in anticipation of future needs.
  

• Market awareness. Spotting investment opportunities and staying on top of market trends will allow you to successfully advise your clients.

Education to Become a Sports and Entertainment Wealth Manager

Sports and entertainment wealth managers have an in-depth and broad knowledge of the stock market, tax laws, banking, and more. Most wealth managers hold a bachelor’s degree in finance, accounting, business, or a related field; some may even hold a master’s degree or doctorate in wealth management. In addition to a college education, competitive wealth managers also hold certifications that demonstrate their commitment to learning and showcase their expertise. Wealth management certifications like the AWMA® designation and the SE-AWMA℠ designation set you apart from other wealth managers and prepare you to handle your clients’ financial needs.

What is the SE-AWMA^SM designation?

The Sports & Entertainment Accredited Wealth Management Advisor℠ (SE-AWMA℠) designation is the certification you receive after successfully completing the SE-AWMA℠ designation offered by the College for Financial Planning® (CFFP)—a Kaplan company. The SE-AWMA℠ designation is the first and only professional designation from an accredited college or university designed to prepare advisors to address the sophisticated financial planning needs to help high-net-worth sports and entertainment clients protect, grow, and transfer their wealth. Earning the SE-AWMA℠ mark reinforces your credibility with sports and entertainment wealth management clients and proves you have the specialized knowledge needed to help them navigate their unique financial challenges.

What if I have already received the AWMA® designation? 

If you have already received the Accredited Wealth Management Advisor® (AWMA®) designation from the College for Financial Planning, you are well on your way to earning your SE-AWMA℠ designation. You only need to complete the Sports & Entertainment (SE) Supplemental Education for the AWMA® program to earn the SE-AWMA℠ designation. This additional course module will build on the wealth management knowledge you learned in the AWMA® designation program and train you to handle the specialized financial needs of athletes and entertainers.

What is the SE-AWMA^SM program?

The College’s SE-AWMA℠ program prepares advisors to address the sophisticated financial planning needs to help high-net-worth sports and entertainment clients protect, grow, and transfer their wealth. The program augments your existing skills, so you’ll be able to analyze and evaluate different planning strategies that account for sports and entertainment clients’ unique circumstances, including:

• Qualitative planning

• Trusts

• Investments

• Employee and retirement benefits

• Cash flow, budgeting, and tax planning

• Business planning 

• Estate planning

Coursework in the SE-AWMA℠ program utilizes real-world situations and case studies to illustrate planning techniques instantly applicable to your practice. The program is delivered via the College’s exclusive online learning platform. Enrollment includes your choice of Live Online classes or OnDemand classes, a learning platform to access course materials and study resources, and expert instructors providing personalized guidance in class and via email as you study from your online learning platform. 

How to Earn the SE-AWMA^SM Designation 

See below for the step-by-step process on how to earn the SE-AWMA℠ designation:

1. Complete the College for Financial Planning’s online SE-AWMA℠ program in 120 days or less (this includes taking and passing the final exam). The modules cover getting to know your high-net-worth client; investment risk, return, and performance; advanced investment products and strategies; considerations for business owners; income tax planning for high-net-worth clients; executive benefits planning for high-net-worth-clients; estate planning for high-net-worth clients; fiduciary and regulatory issues for financial services professionals; and special issues for athletes and entertainers.
   

2. Take a module quiz after each class.
   

3. Pass the final exam, which is taken online through your learning platform.
   

4. Upon graduating from the program, apply for the SE-AWMA^SM designation.

What are the benefits of earning the SE-AWMA^SM designation?

There are multiple benefits of earning the SE-AWMA℠ designation, including:

• Reinforcing credibility with clients in the sports and entertainment industries by earning the only professional designation from an accredited college or university focused on the wealth management of this special client segment.
  

• Gaining specialized knowledge to address the unique circumstances and financial planning needs of clients in these niche segments, such as the unique tax, retirement, and estate implications.
  

• Distinguishing yourself from other advisors to help expand your client base by becoming an accredited sports and entertainment wealth manager.
  

• Earning stackable credits toward our CFP® certification education program or Master of Science Degree.

How long does it take to get the SE-AWMA^SM designation?

How long it takes to get the SE-AWMA℠ designation depends on how quickly you finish the College for Financial Planning’s program. Students have a maximum of 120 days to complete the SE-AWMA℠ program, including passing the final exam. The program is delivered online through your choice of classes. You can either take the Live Online option, which has a fixed schedule, or the OnDemand option, which you can start anytime and complete at your own pace. On average, students should commit to 8-10 hours per week of studying and expect to spend a minimum of 135 hours in course-related activities. 

Are SE-AWMA^SM program credits transferable?

Looking to advance your finance career even further by building upon your SE-AWMA℠ designation? Graduates of the SE-AWMA℠ program receive credit that you can use towards your next credential, saving you time and money. If you’re interested in pursuing your CFP® certification or master of science degree, here’s how credits from the SE-AWMA℠ designation will transfer:

• Course FP513 Investment Planning in the College’s CFP® certification education program or
  

• One elective course in the College for Financial Planning’s Master of Science Degree in Personal Financial Planning         

The AWMA® designation, also called AWMA® certification, is the industry benchmark for wealth management credentials recognized by top financial firms. AWMA® stands for Accredited Wealth Management Advisor^SM. As a financial professional, you’ve undoubtedly heard of this top-tier certification, but you may be wondering if it’s right for you. In this article, we discuss what the AWMA® designation is and how it can benefit your career.

What is the AWMA® designation?

The AWMA® designation is the certification you receive after successfully completing the AWMA® Professional Designation Program. It is an indication that you can effectively identify, analyze, and recommend strategies for the unique needs of high-net-worth clients. The AWMA® mark assures your clients that you have the education and knowledge to help them achieve their wealth management goals. After earning the AWMA® designation, financial professionals showcase the certification by listing it on their business cards, resumes, LinkedIn profiles, and more. The AWMA® certification is also listed by FINRA, a private, self-regulatory organization that regulates certain aspects of the securities industry.

What is the AWMA® Professional Designation Program?

The AWMA® Professional Designation Program is an education program for financial professionals offered by the College for Financial Planning® (CFFP)—a Kaplan company. The program teaches financial professionals how to advise their high-net-worth clients on growing, preserving, and transferring their wealth. Its specialized curriculum contains sections on behavioral finance, working with small business owners, and succession and exit planning. The AWMA® program launched in 2005 and is offered exclusively via CFFP’s digital learning platform. 

Is the AWMA® designation right for you?

The AWMA® offers you a chance to distinguish yourself in wealth management. This designation is right for you if you are:

• An experienced advisor who wants financial planning credentials to advance your career

• A producer who is transitioning from product sales into offering a broader range of services

• An advisor with general financial knowledge who wants to specialize in the unique needs of high-net-worth clients

• An advisor who wants to pursue the CFP® Certification or a Master of Science degree at a later date
  

Learn more about the AWMA® program and how to enroll here.

Requirements to earn your AWMA® designation

To earn the AWMA® designation, follow these steps:

1. Complete an eight-module education program provided by CFFP. There are no prerequisites for this program, and you have 120 days to complete it (including testing and passing the Final Exam). The modules cover getting to know your high-net-worth client; considerations for business owners; income tax strategies for high-net-worth clients; executive benefits planning for high-net-worth clients; estate planning for high-net-worth clients; and fiduciary, regulatory, and ethical issues for financial services providers.
   

2. Take and pass the AWMA® exam. There are 80 questions on the exam, and the passing score is 70 percent. According to Analyst Forum, you should plan on studying for about 150 hours.
   

3. Agree to abide by a code of ethics.

How long does it take to get the AWMA®  designation?

How long it takes to get the AWMA® designation depends on how quickly you complete the CFFP program and pass the AWMA® exam. You have 120 days to finish CFFP’s eight modules and pass the program’s final exam. We recommend at least 135 hours of study for the course. On average, it takes financial professionals two to three months to earn the AWMA® designation.

What are the benefits of earning an AWMA® designation?

Achieving the AWMA® designation is a huge milestone in your financial career. Some of the benefits of earning the AWMA® mark include:

• Earning more while working with fewer clients. AWMA® designees have reported that since earning the credential, they are able to attract and maintain higher-net-worth clients, which means they can increase their income while focusing on fewer clients at a time.

• Getting tangible career benefits. 72% of professionals surveyed with specialized financial designations such as the AWMA^® designation reported an increase in their client base after earning their most recent professional designation. Financial planning professionals working in a financial planning role both the year before and year after receiving their most recent specialized professional designation such as the AWMA^® designation reported an average 16% earnings increase in the year after earning that professional designation

• Differentiating yourself from your peers. Achieving the AWMA® designation signifies you have the qualifications to work with high-net-worth and ultra-high-net-worth clients. Some of these clients will specifically look for advisors who have received the AWMA® designation, allowing you to grow your client base and set yourself apart from competitors.
  

• Earning stackable credits. Earning the AWMA® designation saves you time and money by allowing you to stack credits. AWMA® designees are qualified to earn credit for completing course FP513 Investment Planning in our CFP® certification education program or receive credit for an elective in our MS Degree in Personal Financial Planning.

• Fulfilling continuing education requirements. For CFP® professionals who are required to complete continuing education requirements as part of their certification renewal, the AWMA® designation program completion fulfills 28 hours of continuing education. If you currently hold a professional designation from CFFP, completion of the AWMA® program fulfills 16 hours of continuing education as part of the renewal of your current designation.
  

• Learning skills that will benefit you and your clients. Completing the AWMA® designation program gives you the most up-to-date financial skills and knowledge you can use to advance your career and serve the unique needs of your high-net-worth clients via behavioral finance and emotional intelligence. 

What does a wealth manager do?

A wealth manager offers comprehensive financial advice to high-net-worth clients. They go beyond providing investment advice by taking a holistic approach to meet the complex needs of their clients. Typical services offered by wealth managers include:

• Investment advice and management

• Estate planning

• Retirement planning

• Trust services

• Risk management and insurance planning 

• Tax planning and accounting services

Download the free eBook, Getting There from Here: Career Path Stories from Finance Professionals, to read firsthand accounts of what it's like to have a rewarding career in finance.

What is the difference between a wealth manager and a financial planner?

While there is no strict definition for wealth managers or financial planners, there is generally considered some overlap between the two professions and some important distinctions. Wealth management is a comprehensive financial service for high-net-worth clients, typically with $5 million or more in assets. Wealth management services and strategies vary based on the needs of the client, but the overall goal of wealth managers is to help their clients accumulate, protect, and distribute their wealth. Financial planning is generally considered the first step in wealth management. Where the two roles diverge is that wealth managers work almost exclusively with higher-net-worth clients and provide a wider range of financial services. In contrast, financial planners primarily assist with lifestyle planning for clients in all income brackets. 

[Learn more: Is a Wealth Management Career Right for Me?]

What is the difference between a wealth manager and an asset manager?

The main difference between a wealth manager and an asset manager is that wealth managers offer long-term, holistic financial guidance while asset managers focus more on investment management and maximizing returns. Because wealth managers provide a wider range of financial services, they earn more than asset managers. Both wealth managers and asset managers may bill clients based on the amount of money they manage, but wealth managers may also be compensated via an hourly fee or a flat fee. Wealth managers are also more likely to be fiduciaries than asset managers, but it is not a requirement of the profession. 

Why Financial Professionals Should Learn Behavioral Finance

Why should financial professionals learn behavioral finance? For one, understanding the psychology, economics, and other social sciences that drive people to make certain financial choices can help finance professionals develop long-term relationships with their clients and build portfolios better suited to them. For another, the awareness of the effect that market and trading psychology, cognitive errors, and emotional reasoning have on investors is growing.

In fact, 70 percent of the 503 financial professionals who participated in a 2020 survey and who had not received behavioral finance training say they are now considering it. Seventy-eight percent of all survey respondents say they would be interested in behavioral finance training if they received accreditation for it. Seventy-nine percent feel that accreditation in behavioral finance would positively influence current and potential clients. Lastly, 90 percent think that behavioral finance training can help them build their client base and deepen relationships with existing clients.

If you’re a financial advisor, a behavioral finance approach to investing can help differentiate your services and ultimately better serve your clients. Let’s explore what is available to you in terms of becoming proficient.

What are Behavioral Finance Programs?

Behavioral finance is the study of the effects of psychology on investors and financial markets. It focuses on explaining why investors often appear to lack self-control, act against their own best interest, and make decisions based on personal biases instead of facts. Behavioral finance programs come in many forms. Some are courses and course modules offered by online training firms and universities. Others are professional programs offered by traditional universities. Some universities offer accredited behavioral finance degrees, including bachelor of science, masters of science, and Ph.D. programs. 

These programs also have all kinds of names—from “behavioral finance” to “behavioral economics and social health science.” They combine psychology and neuroscience with traditional financial practices. They aim to equip advisors with tools and training to further help their clients make sound financial decisions, maintain emotional competency, and achieve their financial goals. 

Accredited Behavioral Finance Professional℠ (ABFP℠) is the designation offered by the College for Financial Planning^®, a Kaplan company. This program helps to provide an understanding of theories and hands-on practice of the knowledge to help advisors translate what they learn into their day to day client interactions.

Who Should Earn a Behavioral Finance Designation?

Gaining knowledge that is part of earning a behavioral finance designation can benefit most finance professionals, especially those who are in wealth management, securities, and financial planning fields. The College for Financial Planning^® notes that finance professionals in mid-career to advanced career stages are most likely to benefit, such as experienced advisors who desire financial planning credentials to enhance their careers and advisors who wish to pursue a master of science degree at a later date. For that reason, the College’s designation is designed to accommodate working students. However, if you are in the process of earning a degree or credential in another finance field, the designation can help you as well.

No matter where you are in your career, the program gives you tools that help you understand clients better and motivate them to make wise financial moves. It also enables professionals to advance current career stages while earning credit toward their next credential.

Why Earn a Behavioral Finance Designation?

In today’s ever-changing and complex financial markets, any professional responsible for managing client assets should recognize the factors that lead to less-desirable outcomes for investors. Behavioral finance helps professionals understand the applied science of effective decision-making and how human brains are not wired to deal with the decisions that modern financial markets require. 

Because behavioral finance is an offshoot of conventional financial theory, anyone who masters skills as part of earning a designation in it can help their clients stay on a more rational course. By recognizing that human decision-makers are often influenced by emotion, biases, and cognitive errors, finance professionals with a behavioral finance designation can not only help clients see and manage their irrational tendencies, but they can also see their own. Other benefits of taking courses like the ones required for the ABFP^SM designation is that they help you understand why financial bubbles develop so you can design strategies that avoid that behavior and identify the psychological reasons that lead clients to make severe investment errors.

This program also helps advisors differentiate themselves by adding an extra dimension to the advice they provide to clients. Many investment-focused advisors, robo-advisors, and even other financial planning firms do not yet take the behavioral dimension into account when providing advice and developing goals. The ability to help clients manage their emotions and connect their goals and behavior with what is most important to them is a significant value-add.  An advisor who understands behavioral finance and uses it along with other skills and knowledge will also be better able to build deep, meaningful relationships with clients.

Behavioral Finance Skills for Financial Professionals

The fact of the matter is that investment markets are more about emotions than they are about rationality. This is where the science of behavioral finance comes into play. There are several studies that indicate that the difference between successful and unsuccessful investors is not in their cognitive abilities but rather in their behavioral abilities. Here are some of the advantages of using this philosophy after earning your designation to make investment decisions.

Understanding Your Clients’ Biases

Pointing out biased behavior, especially in the moment, may not be well received. To be effective, you need a plan in place in advance. Few of us are comfortable owning up to our own bias, but if you approach the subject correctly, your clients may benefit, and so will you. A more self-aware client should produce fewer counterproductive demands, which could mean less stress and greater productivity for you.  

Understanding Your Clients’ Behavior

The more you understand what motivates your prospects and clients, the better your chances of success when it comes to attracting and retaining them. When you begin to see things from your clients’ and prospects’ point of view, you can start to influence their decisions and help them make good ones. Then you will be able to build strong client relationships, anticipate your client needs, and manage their expectations.

Understanding Emotional Reasoning

Once you understand what may be getting in the way of solid decision-making, while you cannot remove emotions, you can help mitigate them. This could include utilizing goals-based investing, which helps you understand from the very first conversation what your clients are trying to accomplish. The more you understand your clients’ emotions and anticipate those behaviors, the better their financial decision-making can be. 

Behavioral Finance Applications for Retirement

Financial advisors with a behavioral finance designation can encourage clients to make binding decisions earlier in life and prior to the onset of cognitive impairment. They can also help protect older clients from unwisely draining their assets too quickly, either by recommending financial products that guarantee payouts for life, or by limiting the amount that may be withdrawn at a given point.

How to Become an Accredited Behavioral Finance Professional

As the first advisor-focused behavioral finance designation from an accredited college or university, the Accredited Behavioral Finance Professional℠ (ABFP℠) program, is a unique program that enhances advisors’ emotional competencies, client interactions, and financial planning advice through a thorough understanding of psychological explanations for economic behavior and hands-on practice of knowledge.

Designed for financial professionals in mid to advanced stages of their career, the ABFP℠ program brings together comprehensive research and trends from leaders and experts in the area of behavioral finance. Engaging, in-class activities enable you to start using your new skills with existing clients from day one.

Course topics in this program include:

• Foundations in behavioral finance

• Cognitive and knowledge errors

• Overconfidence and emotional reasoning

• Investor behavior

• Debiasing and client management 

• Behavioral finance applications

• Behavioral finance applications for retirement

After you complete your coursework, you will have to pass a final exam. The exam has 50 questions on it, and you will have two hours to complete it. The passing score is 70 percent or better. 

This program can also help you fulfill continuing education (CE) requirements. For example,If you are a CFP^® professional, it is one of the designation programs that fulfills 28 hours of CE as part of your CFP^® certification renewal. If you currently hold a professional designation from the College for Financial Planning^®, completion of a new professional designation fulfills CE hours as part of the renewal of your current designation.

Could a Behavioral Finance Designation Benefit Your Career?

The survey mentioned at the beginning of this article found that those who incorporate behavioral finance into client relationships see benefits in many areas. Of those surveyed who had received behavioral finance training, 79% said it resulted in better client relationships, 75% said it resulted in better client reception of their planning advice, and 22% said it resulted in more clients. 

If you are interested in earning the designation to benefit you or your career, read more information about behavioral finance designations.

Behavioral finance is the study of the effects of psychology on investors and financial markets. It focuses on explaining why investors often appear to lack self-control, act against their own best interest, and make decisions based on personal biases instead of facts. The reddit, Gamestop, Robinhood, and Melvin Capital story of early 2021 is an example from today’s news of how irrational, biased, and emotional investors move the markets. In this article, we define behavioral finance, and break down its components for better understanding.

Behavioral Finance Definition: What does Behavioral Finance mean?

Behavioral finance is the study of psychological influences on investors and financial markets. At its core, behavioral finance is about identifying and explaining inefficiency and mispricing in financial markets. It uses experiments and research to demonstrate that humans and financial markets are not always rational, and the decisions they make are often flawed. If you are wondering how emotions and biases drive share prices, behavioral finance offers answers and explanations.

Behavioral finance originated from the work of psychologists Daniel Kahneman and Amos Tversky and economist Robert J. Shiller in the 1970s-1980s. They applied the pervasive, deep-seeded, subconscious biases and heuristics to the way that people make financial decisions. At about the same time, finance researchers began to propose that the efficient market hypothesis (EMH), a popular theory that the stock market moves in rational, predictable ways, doesn’t always hold up under scrutiny. In reality, the markets are full of inefficiencies due to investors' flawed thinking about prices and risk. 

In the past decade, behavioral finance has been embraced in the academic and financial communities as a subfield of behavioral economics influenced by economic psychology.  By showing how, when, and why behavior deviates from rational expectations, behavioral finance provides a blueprint to help everyone make better, more rational decisions when it comes to their finances.

Understanding Economic Behavior and Economic Psychology

Understanding economic behavior and economic psychology is a field of study called behavioral economics. It uses psychology and economics to explore why people sometimes make emotional rather than logical decisions and why their behavior does not follow the predictions of accepted economic models. It looks for answers to questions such as why even experienced investors buy too late and sell too soon, or why someone doesn’t use their savings account to help with paying off massive credit card debt. It even studies anomalies such as the small but measurable advantage companies have in the market if their stock ticker abbreviations come first in the alphabet, or the effect of the weather on market values.

Behavioral economics has also identified that systematic errors and biases recur predictably in certain circumstances, offering a framework for understanding when and how people make mistakes. There are two types of human behavior that factor heavily in behavioral economics: heuristics and biases.

Understanding Economic and Financial Heuristics

According to behavioral economist Herbert Simon, most people use heuristics when confronted with a complex decision. Heuristics are mental shortcuts we use to decide something quickly or not at all. Investors and financial professionals often use heuristics when analyzing investment decisions. Heuristics are often based on assumptions or rules of thumb that often but not always, hold true.

An example of a common heuristic is to assume that past investment performance indicates future returns. Although that seems to make sense on the surface, it doesn’t take into account changes in the economy, or how fully valued a stock has become. An investor might assume that because an emerging markets equity mutual fund has posted positive returns for the past five years, a sensible decision would be to maintain or increase the position in the fund. However, it is possible that the mutual fund has undergone a turnover in management, or oil prices have risen which affects shipping costs to these markets, for example. A mental shortcut in investment analysis can have an adverse effect on a portfolio.

Another example is seeing a “sale price” and assuming that it’s a good deal because it’s below the normal price. Sometimes it is a good deal, but other times it isn’t. This heuristic is based on the tendency to believe a reference point is real because of how it is reported. In this case, it’s the price a tag says is the normal price. Making a purchase decision based on an inaccurate reference number can result in negative financial consequences. 

Fortunately, when people become aware of errors caused by heuristics, they can adjust their decision-making processes. Not only that, but they can also learn which heuristics are reliable. In finance, some heuristics, such as the 10% savings rule, the 70% replacement ratio in retirement rule, and the ‘“cost-per-use” strategy to make purchasing decisions are effective.

Understanding Behavioral Finance Biases

When economic and financial heuristics lead to inaccurate judgments and beliefs, the result is cognitive biases. The most common cognitive biases include:

• Self-attribution bias: Believing that good investment outcomes are the result of skill, and undesirable results are caused by bad luck.

• Confirmation bias: Paying close attention to information that confirms a finance or investment belief and ignoring any information that contradicts it.

• Representative bias: Believing that two things or events are more closely correlated than they really are.

• Framing bias: Reacting to a particular finance opportunity based on how it is presented.

• Anchoring bias: Letting the first price or number encountered unduly influence your opinion.

• Loss aversion: Trying to avoid a loss more than on recognizing investment gains, so that desirable investment or finance opportunities are missed.

These biases and the heuristics that helped create them affect investor behavior, market and trading psychology, cognitive errors, and emotional reasoning.

Investor Behavior

Overconfidence, excessive optimism, self-attribution bias, framing bias, and loss aversion often lead investors astray. All of these factors lead to irrational rather than well-considered investments.

Trading Psychology

Trading psychology refers to the mental state and emotions of a trader that determines the success or failure of a trade. Assumption heuristics, such as making a decision based on one positive result, anchoring bias, loss aversion, and confirmation bias can yield less than desirable investment or financial outcomes.

Market Psychology

Human economic and financial heuristics and biases affect economic markets, the odd mix of collective and independent decisions of millions of people, acting for themselves and on behalf of funds or companies. As a result, many markets are not successful for many years. Understanding what causes the anomalies in valuations of individual securities and the stock market can result in better market performance.

Cognitive Errors

Suboptimal financial decision-making is the result of cognitive errors, many of which are made because of heuristics and anchoring, self-attribution, and framing biases. Exploring neuroscience discoveries and the implications for financial decision-making under uncertainty can result in sounder strategies for client debiasing and financial management.

Emotional Reasoning

Many investors believe that their heuristics and biases are examples of sound, scientific reasoning and therefore should be used for investment decisions. They are surprised to learn that they are emotional, not logical.

Read more about the role that understanding emotional intelligence plays in behavioral finance.

Behavioral Finance is a Growing Field

Behavioral finance is now being implemented in financial advisor business models and client engagement practices. For financial analysts, asset managers and the investment process itself, behavioral finance is also growing in importance as the basis of an investment methodology. It is now possible to earn a behavioral finance designation. It’s something to consider if you want to understand the markets or excel as a financial advisor.

Interested in learning more about behavioral finance and financial planning? 

Explore the Accredited Behavioral Finance Professional program through the College of Financial Planning.

The College for Financial Planning—a Kaplan Company offers the Financial Paraplanner Qualified Professional^SM (FPQP^®) designation. That is certainly a verbose description, but what does it actually mean? What do paraplanners actually do? In this article, I answer that question and explain the two paraplanner career paths.

What is a Paraplanner?

In the simplest terms, the FPQP^® credential is an introductory professional designation. A candidate for this program is a person who is serious about starting a financial services career but may not yet have the experience necessary to run their own practice. Paraplanners are team players. The role of the paraplanner is to help make their chosen financial services team successful.

What Does a Paraplanner Do?

The prefix para actually comes from the Greek word that means beside. Paraplanners work beside financial planners. In their role, they are immediately immersed in the labyrinth of financial services. Para is also related to the latin word parare, which means to defend or shield. Paraplanners are usually on the front lines of client interactions. In many ways, paraplanners are the first line of defense in the client relationship. For the right person, the FPQP^® designation can be the gateway to a prosperous and satisfying financial planning career.

Generally speaking, there are two career paths that a paraplanner might choose. Type A is a transitional paraplanner. Type B is a career paraplanner.

Paraplanner Career Path #1: Transition to CFP^® Professional

Transitional paraplanners have every intention of becoming CFP^® professionals themselves, but they do not yet have the years of experience necessary to earn the marks. They simply need to acquire some industry experience first. In other words, they need a way to earn their stripes.

or example, many years ago, a friend, I will call her Sue, called to invite me for lunch. “Sure,” I said. I knew her well. I assumed this was just another social call. Sue was between jobs. She was very talented, but the labor market was tight at that time. She had a master’s degree in marketing but no financial planning experience. She knew I was a financial advisor.

Over sushi, she announced, “Mike, I want to be a financial advisor like you!” A rush of emotions came to me. I was flattered and worried for her all at the same time. It often takes most people one to three years to get established in the field, and there are many, many sacrifices along the way. I also knew she could not go another year without a steady paycheck. “Okay,” I said, “let’s talk this over for a minute and look at your options.”

I went on to explain that her proposed course of action was fraught with risk. If she failed, and a high percentage of new advisors do, she might lose her house. “Why don’t you find an established planner first? Go work for them for a year. He or she can show you the ropes. If, after one year, you still want to be a financial advisor, go for it! You will have my full support. In the meantime, you can immediately start gaining valuable experience, learning about the industry, and, most importantly, earning a paycheck.”

My advice struck a chord with her. I think somewhere in the back of her mind she thought she could just go out, pass the Series 7, and instantly get rich quick. To be fair, that could happen, but for the vast majority of people, it is not that easy. I would describe Sue as a transitional paraplanner. She had the full intention of becoming a financial advisor herself someday, but she needed a way to break into the industry in a meaningful way. To her, the paraplanner role would have been a stepping stone.

Paraplanner Career Path #2: Financial Planning Support

Career paraplanners have no intention of owning their own practice. They are content to spend their career as “best supporting actors.”

I have another friend who I will call Michelle. Michelle had a well-established track record as an administrative professional. Before long, it would be time for her children to go off to college. She knew in her heart that she needed to prepare. She was looking for a way to set herself apart, increase her skills, and get a higher paying job. I recommended the FPQP^® program to her.

Independent planners often need administrative support. In fact, the larger their practice becomes, the more complex their administrative needs become. A planner will reach a point in their practice where they need someone who knows what they are doing. The planner is so busy meeting with clients that they need to be able to hand a client file off to their associate and say, “Take care of this for me.” These are tasks the planner would normally do themselves if they had time, but they do not. In much the same way that successful attorneys need a paralegal to run their practice, successful CFP^® professionals need paraplanners who understand the business at a higher level.

Go Further on Your Career Path with the FPQP^® Mark

No matter which career path they take, professionals who earn the FPQP^® designation are worth more to their employers because of their specialized skill sets. Paraplanners with the FPQP^® mark are trained in the fundamentals of the financial planning process. They are taught the language of financial planning: business ownership, cash management, debt, time-value-of-money, and the basics of insurance. Paraplanners are also expected to comprehend investment basics, retirement planning, and the rudiments of taxation and estate planning.

The FPQP^® program communicates these complex concepts to candidates on an introductory level that is easy to understand. Make no mistake, the FPQP^® is an arduous program. This is not a weekend seminar. The program includes 100 - 125 hours of required education and, like many professional designations, has a continuing education requirement.

If you are fresh out of college and looking for your first position in the financial services industry, the FPQP^® program may be right for you. Likewise, if you are a career administrative pro looking for a way to distinguish yourself and acquire additional skills, you may also be a good fit for the FPQP^® program.

Ready to Get Started?

If you’d like to learn more about the FPQP^® designation, this article has all the details. You can also sign up for FPQP^® education courses.

About the Author

Michael Angell, CFP^®, EA, is an associate professor at the College for Financial Planning—a Kaplan Company, where he serves primarily as the in-house income tax planning subject matter expert. Michael began his financial services career in banking over 20 years ago and eventually migrated into investment management and insurance planning. He has served clients in various capacities with independent, boutique-style firms and learned directly from seasoned CFP^® practitioners in the field. Michael has also been an income tax professional for several years.

If CFP^® exam day is approaching for you, congrats! Make sure all your hard work studying pays off by understanding what to expect on the day of the exam. You will need to register for the exam using your CFP Board account. You will then be instructed about how to schedule the exam with Prometric. Scheduling is done on a first-come, first-serve basis, so be sure to register early.

What is the CFP^® exam check-in process like?

On the day of the exam, you will be asked to present a valid government ID. Proper government identification includes:

• Valid driver’s license
• Valid government issued ID card
• Valid passport
• Valid military ID

The first and last name on your government ID must match the first and last name on your CFP Board account. Ensure you double check this on your CFP Board account prior to registering for the exam.

Your fingerprints will be captured along with a photo for security purposes at the exam. You should also expect to go through a brief body scan. A locker and key will be assigned to you at check-in. All of your personal belongings will have to be put into your locker before you go into the exam room. This includes items like purses, cell phones, jewelry, watches, food, water, electronic devices (except approved calculators), personal headphones, exam notes, or study materials. You will not be able to access these items at all during the exam. It is best if you leave any valuables you will be concerned about at home.

Preparing for the CFP^® exam? Download this free eBook to learn how to create a CFP® exam study plan that works for you.

What items can I bring into the CFP^® exam?

There are a number of items you can bring into the testing room, including CFP Board-approved calculators and scratch paper. Prometric will supply up to four pieces of scratch paper for your use. If you need more, you will need to turn in all four sheets to get four new sheets. The scratch paper you use in the first session of the exam will need to be turned in after you are done with the session.

CFP Board-approved calculators include:

• HP 10B
• HP 10BII
• HP 10BII+
• HP 12C and HP 12C Platinum
• HP 17BII+
• Sharp Business/Financial Calculator EL-733
• Sharp Business/Financial Calculator EL-733a
• Sharp Business/Financial Calculator EL-738
• TI BAII Plus
• TI BAII Plus Professional & TI BAII Plus (Business Analyst)

If you are worried about your batteries dying during the test, you are able to bring in loose batteries. You must remove them from the packaging, however. If your calculator has any visible formulas on the reverse side, you must cover them with black electrical tape or blank paper. The testing center may check this.

You are welcome to bring a sweater or sweatshirt to the test if you are worried about getting cold. Expect the testing center to check them before you go into the exam room.

What do I have permission to do during the exam?

You are able to mark questions for review at a later time, and you do not need to answer questions in a specific order. You may also highlight desired text and strikethrough answer choices you have deemed incorrect. In addition, you will be able to review the Tax Tables and Sample Formulas at any time during the exam. Simply click on the icon at the bottom of your screen to pull them up.

How much time do I have to complete the CFP^® exam?

The CFP^® exam is presented in two 3-hour sessions separated by a 40-minute scheduled break. Each session contains 85 multiple-choice questions, divided into two subsections, for a total of 170 questions. You can take an optional break between each subsection (in addition to the 40-minute scheduled break between sessions).Prior to submitting your answers for each subsection, you can go back to questions you’ve marked for review or have not answered yet. 

What if I need special accommodations for the CFP^® exam?

You are able to get testing accommodations for the CFP^® exam. CFP Board will provide reasonable and appropriate accommodations to individuals with documented disabilities who demonstrate a need for them. Accommodations are considered on a case-by-case basis. To request accommodations, you must register for the exam and submit the required documentation by the Education Verification Deadline for your desired exam appointment. For more information, visit CFP Board.

How will I receive my CFP^® exam results?

As soon as you complete the second session of the CFP^® exam, you will receive a preliminary pass/fail result. Four weeks after the exam window closes, Prometric will review all candidate scores to ensure there were no irregularities or issues related to the exam. Official results are provided to candidates by email 

Those who fail the exam will also receive a diagnostic report indicating their exam performance across the Principal Topics, with indications of strengths and weaknesses to help candidates prepare for a retake. (For more information, here's an article detailing the reasons people fail the CFP® exam.)

Have other questions? Check out CFP Board’s Exam Day Experience webinar for more information.

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Ensure you are prepared for exam day with College for Financial Planning®—a Kaplan Company's CFP^® exam prep review. Choose from our live online or traditional classroom settings and get the expert instruction and education you need to pass the exam with confidence!

If you are considering a career in financial planning, a special designation can help you set yourself apart from the competition and boost your career. But, which career path makes more sense for you: CFP^® certification or an MS in Personal Financial Planning?

Both lead to unique professional opportunities for those with a bachelor’s degree who want a career in personal finance and planning. But how they cover the topics of personal financial planning, their requirements, and their benefits are slightly different. To make a decision, you need to think about what you want to do long-term. In this article, we break both options down for you.

CFP^® Certification Overview

The CERTIFIED FINANCIAL PLANNER™ (CFP^®) mark enables financial professionals to help individual clients create comprehensive plans for meeting their long-term financial goals, such as retirement, college tuition, business start-up, a home, and so on. Its governing body, CFP Board, administers the credential. The U.S. Bureau of Labor Statistics predicts 15 percent job growth in the financial advising field through 2031, making it an excellent career option for young financial professionals. To earn the CFP^® certification, you need to complete a CFP^® certification program to be eligible to sit for the exam.

Get a sneak peak at the beginning of the College for Financial Planning-a Kaplan Company's education program to get a feel for whether CFP® certification is right for you by downloading our free eBook. 

CFP^® Exam

Offered three times a year in March, July, and November, the CFP^® exam is:

• A computer-based examination that takes six hours to complete and consists of 170 multiple-choice questions. The six hours are divided into two 3-hour sessions. Each session has two distinct subsections. There is a 40-minute scheduled break in between the sessions and you can take an optional break between the subsections.
• Focused on testing your financial planning knowledge in client situations. The topics covered include professional conduct and regulation, general financial planning principles, risk management and insurance planning, investment planning, tax planning, retirement savings and income planning, estate planning and psychology of financial planning.
• A significant time commitment. You’ll need to pace yourself and avoid cramming because the exam asks you to apply knowledge to case studies. So make sure you have the space in your life to dedicate the necessary hours to study. Then, create a strategic study plan that includes a review program.

Requirements for Earning CFP^® Certification

The other requirements for earning CFP^® certification are:

• A CFP Board-registered education program: CFP Board must be notified when you’ve completed it. You can’t take the exam without it.
• A bachelor’s degree from an accredited university or college: You can hold the degree before you complete the education program and pass the exam or earn it afterwards. (You have up to five years after passing to get your degree.)
• Financial planning experience: This can be professional experience (6,000 hours) in relevant personal financial planning activities, or apprenticeship experience (4,000 hours) that meets additional requirements.
• Candidate fitness: CFP Board requires you to pass its Candidate Fitness Standards. To do this, you must agree to adhere to their ethical standards, disclose any criminal or employment termination history, and pass a background check.

CFP^® Certification Benefits

The benefits of earning the CFP^® mark include a rewarding career that involves a relatively low investment compared to the tuition for a master’s degree program. The most common careers include financial planner, wealth advisor, estate planning specialist, trading and research associate, financial consultant, financial representative, or financial analyst. If you want to become a branch manager at a financial firm, CFP^® certification can help you achieve that level in your organization as well.

MS in Personal Financial Planning Overview

Offered by colleges and universities (such as the College for Financial Planning), master’s degree programs go deeper into personal financial planning subject matter. These programs cater to those interested in expanding their knowledge beyond typical financial licensing and credentials. Also, for those interested in becoming financial planning educators, the MS is the next step on that career path.

Compared to CFP^® certificants, master’s degree students are exposed to the greater impact that finance has on an organization. Participants often gain a deeper grasp of the processes used by firms to maximize shareholder wealth, analyze financial statements, and hold management or C-level positions in financial institutions.

MS in Personal Financial Planning Requirements

For an MS in Personal Financial Planning, the college or university is the governing board, although many are registered with CFP Board. Like any degree program, and unlike CFP^® certification, it does not all hinge on one exam. You will take individual classes and be expected to pass the exams for each. The common curriculum will include some required and some elective courses in international finance, corporate finance, financial institutions, money and markets, risk management, and investment theory. You can also earn the CRPC^®, APMA^®, and AWMA^® professional designations, among others.

You will also be expected to meet all the degree requirements of the college or university. Generally, this includes:

• Having a bachelor’s degree.
• Having professional work experience (varies by school).
• Completing additional program prerequisites (varies by school).

Some colleges and universities also require that you complete the GRE or GMAT with a satisfactory score.

Benefits of an MS in Personal Financial Planning

Although a graduate program is more expensive than CFP^® certification, it still costs less than many other graduate programs. Other benefits of earning the MS can include:

• An increase in earnings after completing the program.
• More exposure to real-world scenarios and case studies.
• Real-world critical thinking skills that you can immediately apply in your day-to-day occupation.
• Depending on the institution, the choice of taking your classes online or in a classroom, as well as the option to attend full time or part time. 

Which is Right for You?

Choosing between CFP^® certification or a master’s degree program isn’t always easy, especially for financial planning. The roles you are eligible for are similar, as are the types of companies that are likely to hire you: financial services firms, mutual fund companies, brokerage firms, insurance companies, banks, and so on. There are some differences, however.

The CFP^® mark is definitely respected as an achievement milestone. If you aspire to a financial planning career right after you earn your degree (or even before), you can use your CFP^® certification to gain experience at a large financial firm or insurance company. These firms know that CFP^® professionals are preferred by clients. In fact, a recent CFP Board study revealed that 4 out of 5 consumers prefer an advisor who takes all areas of their financial life into account. This is a main reason why many companies will offer financial assistance to anyone interested in earning the CFP^® mark. In addition, CFP^® certification often tips the scales in your favor if you are up against an equally qualified candidate who is not credentialed.

An MS in Personal Financial Planning tends to take you farther in your career. Graduate degrees impress—they demonstrate a desire to specialize in a topic and become an expert in a field. Therefore, companies perceive those with an MS in Personal Financial Planning as having deeper knowledge of financial analysis and theory. They are likely to climb the ladder in a company faster or even start out with a better position because they have completed an in-depth curriculum and, in many cases, may have held a financial planning role as an intern while earning their MS. There are a few companies that forego offering tuition assistance for CFP^® certification in favor of an MS because they perceive that it’s a better long-term investment.

As you ponder the benefits of each, ask yourself what your long-term goals are. If you’re anxious to start your financial planning career, or you don’t have the time or resources for graduate school, earning CFP^® certification is a good option. If you are seeking a position where you can apply investment theory and analytics to planning, or you would like to educate others in the field, the MS might be right for you.

Who Says You Have to Choose?

There is a third option: earning both the CFP^® mark and an MS in Personal Financial Planning. A CFP^® professional with an MS in Personal Financial Planning will have the competitive edge in any career opportunity. Customers will trust someone with CFP^® certification, and financial firms will be more likely to view them as management or executive material. Therefore, colleges and universities who offer an MS in Personal Financial Planning often offer CFP^® certification education as part of the degree. In addition, if you are already a CFP^® certificant, there are a few select colleges and universities, such as the College for Financial Planning and Kansas State, that will credit that education toward your MS degree.

Ready to Get Started?

Get your financial planning career on the right track. Learn more about our CFP^® certification offerings, or visit the College for Financial Planning website to explore MS degree opportunities.

CFP Board is the accepted short name for Certified Financial Planner Board of Standards, Inc., a non-profit organization that administers the CERTIFIED FINANCIAL PLANNER™ (CFP^®) designation. Along with granting the CFP^® mark, the mission of CFP Board is to advance and ensure that the certification is the recognized standard of excellence for personal financial planning. In this article, you’ll learn about the history of CFP Board, its structure and activities, and its role in developing the CFP^® exam.

CFP Board History

In 1969, 13 men met in Chicago to formalize personal financial planning as a profession. Before that time, personal financial planning required searching numerous areas of the financial services industry for ways to help individuals plan for their financial futures. At that meeting, they created the International Association for Financial Planners (IAFP) and the College for Financial Planning, which introduced an education program for what would later become CFP^® certification.

Sixteen years later, in 1985, the College for Financial Planning agreed to the establishment of an independent, non-profit certifying and standards-setting organization. It transferred ownership of the CFP^® mark and responsibility for continuing the CFP^® certification program to the new organization, now known as CFP Board. In November 1991, 81 people received the CFP^® mark after passing the very first CFP^® exam, which tested their ability to integrate and apply the knowledge gained from the financial planning curriculum.

Get a sneak peak at the beginning of the Kaplan education program to get a feel for whether CFP® certification is right for you by downloading our free eBook. 

CFP Board Today

Today, CFP Board is headquartered in Washington, D.C., and its CEO is Kevin Keller, CAE. Among its responsibilities is maintaining current, and developing new, financial planning standards as the industry changes. It accepts volunteers for its various councils and research projects, and it counts all CFP^® professionals in good standing (those who have earned the certification and keep it active through continuing education) as its members. As of August 31, 2019, there are 85,434 CFP^® certificants, and they are located all over the U.S.

CFP Board has a board of directors, which oversees CFP Board and sets policy. The current chair is Susan John, CFP^®, of Financial Focus, Inc., Wolfeboro, NH. CFP Board has a number of research initiatives on topics such as racial and ethnic diversity, women in financial planning, and consumer surveys. It has councils for business models, public policy, and education, and a standards commission. It also operates CFP Board Center for Financial Planning, which is dedicated to making sure every American has access to financial planning advice that is competent and ethical through greater diversity and sustainability.

CFP Board Education and Ethics

CFP Board sets the standards for the financial planning education required to earn the CFP^® certification. In other words, before you can become a CFP^® professional, you must complete a comprehensive course of study at a college or university that offers a financial planning curriculum approved by CFP Board. After CFP Board is notified that you’ve successfully finished that education, you can take the exam. Once you pass the CFP^® exam, gain the requisite years of experience, and earn the certification, it’s good for two years. After that, you must renew it every two years by taking continuing education courses approved by CFP Board.

CFP Board is also the keeper of “The Rules of Conduct.” These rules require that CFP^® professionals put client interests ahead of their own at all times and that their financial planning services are “fiduciary,” which means they are acting in the best interest of their clients. CFP Board can, if it chooses, sanction CFP^® professionals who violate these standards.

CFP Board and the CFP^® Exam

CFP Board develops the CFP^® Certification Exam, which tests how well candidates can apply financial planning knowledge to real-life situations. Volunteer CFP^® professionals guide all aspects of the exam, which include setting the criteria for scoring and passing. Some of these volunteers are subject matter experts (SMEs) who determine what the content will cover, write the questions, and review them. Others are volunteers on the CFP Board Council of Examinations (COE), which reviews and approves the questions. Testing experts assure the exam is current, reliable, valid, and legal.

Before you take the exam, you must meet the education requirement by completing the CFP^® curriculum at a CFP Board-approved educational institution. The topics covered on the CFP^® exam include general financial planning principles, investment planning, retirement savings and income planning, risk management and insurance planning, tax planning, estate planning, professional conduct and regulation, and education planning. It consists of 170 multiple-choice questions, and candidates take it over the course of six hours with a 40-minute scheduled break after the first 3 hours. Each session is divided into two subsections. Optional breaks are available between each subsection. The exam is offered in eight-day windows, three times a year. (This CFP^® Exam FAQ has more details.)

Ready to be Recognized by CFP Board as a CFP^® Professional?

If you’re interested in taking the exam, we have CFP^® exam study packages. Or, if you’re just starting out and need to complete the required education, explore our CFP Board-registered education program.

How to pass the CFP^® exam is a big concern for candidates who are planning to earn the CFP^® mark. The exam is definitely a challenge and is different from many other financial exams. In March 2023, the overall pass rate was 65 percent, and the pass rate for first-timers was 69 percent. In this article, you’ll learn about the exam and the steps you can take to pass. At the end, you’ll find additional tips you can apply throughout your preparation and on exam day.

About the CFP^® Exam

The CFP^® exam is a multiple-choice, computer-based exam. It is offered three times a year in March, July, and November at almost 50 locations nationwide, and it costs between $825–$1,025 USD (depending on when you register). The exam is given in a computer-based format and consists of 170 multiple-choice questions that test your financial planning knowledge in client situations. Each session is divided into two subsections. There is a 40-minute scheduled break between each session, and you may take an optional break between each subsection.

Follow these 5 steps to pass the CFP^® exam.

1. Start studying early.

Getting CFP^® exam-ready requires a major time commitment. CFP Board recommends you spend at least 250 hours studying for the exam. While that sounds overwhelming, the time goes pretty quickly between pre-study, the Candidate Handbook, required education courses, question bank time, review, practice exams, and your own preparations.

It’s important to think of preparing for the CFP^® exam like training for a marathon. It’s not a situation where you can sprint (or cram). There’s just too much to learn, and you’ll need to be able to apply it to case studies. To be properly prepared for the exam, you need to have the space in your life to dedicate the necessary hours to study.

Preparing for the CFP® exam? Download this free eBook to learn how to create a CFP® exam study plan that works for you.

2. Create a strategic and efficient study plan.

Given the hours and the amount of material to master, you should create a strategic study plan. Spending too much or too little time on any one activity can be detrimental to your preparation. Therefore, devising a study plan based on how CFP Board weights the exam topics is a good plan of action. The topics and their weights are:

• Professional conduct and regulation—8%
• General principles of financial planning—15%
• Risk management and insurance planning—11%
• Investment planning—17%
• Tax planning—14%
• Retirement savings and income planning—18%
• Estate planning—10%
• Psychology of Financial Planning—7%

You should learn the basics of each category first and then work deeper into the categories based on weight and your familiarity. This will enable you to absorb more detail and application.

3. Focus on learning how to apply what you know.

The CFP^® exam is all about applying knowledge to real situations you could encounter on the job. There are two important case studies. There are typically 8-12 questions per case study. You must analyze a hypothetical client situation and determine the best next steps. Memorization alone won’t cut it in this section. Mastery of the material is important. But to do well, you must apply your knowledge to the given client information.

4. Practice, practice, practice.

Because the CFP^® exam tests how you apply what you’ve learned in readings and classes, it is vital that you practice what you learn. You should answer the questions at the end of the chapters you read and take question bank quizzes and practice exams. The more you practice, the more familiar you will become with how to apply your knowledge. Exam prep providers and CFP Board offer practice exams you can take before your exam day.

5. Stay calm as exam day approaches.

Try to be at your mental peak for the exam. Use the day before the exam to reread some of the more wordy areas of the curriculum, like Ethics. Studying too hard or taking full practice exams the day before can mentally drain you. Few people sleep well the night before the exam, so make sure you get into a good sleep pattern leading up to it. A week of 7–8 hours of sleep each night, along with some exercise and relaxation, will help you get through exam day in good form.

Additional Tips on How to Pass the CFP^® Exam

Here are a few tips and tricks that can also help you pass the exam:

• Focus on learning, not memorizing. The CFP^® exam is all about how you handle real situations you could encounter on the job.
• Work with practice questions that have the same difficulty level as the actual exam. This can help you determine if you have truly mastered a particular domain and where you might be making mistakes.
• Don’t feverishly go over lists or answer tons of practice questions on the day before the exam. Instead, think about answering financial planning questions clients might ask. Then, stop about dinner time, just as if you were already in the office, relax, and have a good meal.
• Picture yourself doing well on the exam. Before a big exam like this, it’s natural to panic and worry about failing. Instead, visualize yourself answering questions competently and getting a great score. Positive affirmation can calm your nerves and put you in the right mindset.

Taking the CFP^® Exam?

Increase your chances of passing. Choose a CFP^® exam prep package that suits your study needs today.

The Chartered Retirement Plans Specialist^SM (CRPS^®) designation enables financial advisors and other professionals to demonstrate their expertise in administering retirement plans for businesses and wholesale clients. It is offered exclusively by the College for Financial Planning^®—a Kaplan Company (CFFP). This article explains the designation, how it differs from the CRPC^® mark, and the curriculum to help you decide if it's a good fit for your career.

About the CRPS^® Designation

As retirement plan options evolve and tax complexity increases, many companies seek professional plan administrators to design, install, and maintain their company retirement plans. Firms, non-profits, and government organizations of all sizes recognize the unique skills needed to implement and oversee these internal retirement plans. The CRPS^® designation demonstrates that you have those skills.

The CRPS^® program addresses topics such as the types and characteristics of retirement plans, IRAs, SEP, SIMPLE, 401(k), and defined benefit plans. It also includes coursework that covers non-profit and government plans, qualified and IRA distributions, plan design, installation, and administration, and fiduciary issues.

How Does the CRPS^® Differ from the CRPC^®?

Candidates in the CRPS^® program focus on retirement planning for employees and management in for-profit companies and public sector organizations. By contrast, the CRPC^® designation is the industry benchmark for individual retirement planning. The CRPC^® program guides candidates through specialized tax and estate objectives and strategies for a retiree and presents the financial and emotional aspects of financial planning that are unique to the retirement process for individuals.

The CRPS^® Curriculum

The CRPS^® curriculum consists of these seven modules:

• Introduction to the Employee Retirement Income Security Act of 1974 (ERISA) and the Fiduciary Standard Employer-Funded Defined Contribution Plans
• Participant-Directed Retirement Plans
• Retirement Plan Solutions for Small Business Owners
• Retirement Plan Selection, Design, and Implementation
• Administering ERISA-Compliant Plans Working with Participants

Students must complete the CRPS^® program in 120 days, and there is a final exam. The final exam contains 80 questions, and the passing score is 70 percent.

The Benefits of the CRPS^® Designation

The CRPS^® mark can set you apart from other advisors because it demonstrates you have the knowledge and expertise to recommend implementation techniques that can be executed into well-structured, company-appropriate retirement plans. Businesses, non-profits, and government organizations will recognize that you can effectively administer wholesale retirement plans for their employees and management.

Earning the designation is also a sound financial decision. Advisors can expect an average of a 20 percent pay increase after earning the designation. Plus, it can help with your future education plans. CRPS^® designees receive credit for an elective in the CFFP MS Degree in Personal Financial program. This allows you to save both time and money while pursuing multiple credentials.

Considering the CRPS^® Designation?

The CRPS® designation is well-suited for:

• Experienced advisors who desire financial planning credentials to advance their careers
• Finance professionals who would like to specialize in wholesale-based retirement plans rather than planning for individuals
• Advisors who would like to get a designation to boost their retirement planning skills that also gives them a headstart on earning the CFP^® certification or a Master of Science degree

To learn more about how to earn a retirement planning designation endorsed by the top financial firms, visit the CRPS^® web page.

In 2023, almost 10,000 individuals sat for the CFP^® exam in the March, July, and November exam windows combined. If you are planning to sit for the CFP^® certification exam in the near future, you’re probably wondering how big of a challenge you’re about to face. We’ve put together this resource as an all-inclusive answer source for your questions about the difficulty of the CFP^® exam...and how to improve your odds of success.

CFP^® Exam Pass Rate

The pass rate for the CFP^® exams in 2023 ranged from 64% - 67%. That pass rate has remained relatively consistent since CFP Board introduced a new exam blueprint prior to the March 2016 CFP^® exam. The new blueprint was based on the 8 Principal Knowledge Topics that were defined in CFP Board’s 2021 Job Task Analysis Study.

CFP^® Exam Topics

The topics tested on the CFP^® exam are essentially CFP Board’s 8 Principal Knowledge Topic Categories. Every question you face will directly tie back to one of these eight topics. According to CFP Board, the topic categories, and their weight on the exam, can be broken down as follows:

As you can see, there’s no single topic that dominates the CFP^® exam curriculum. The test is truly designed to assess your understanding across all of the Principle Knowledge Topic Categories. But with three of the topics, at 15 - 18% each, collectively making up over 50% of the exam, it is essential you have a firm grasp on those three topics to be successful. In addition, the exam contains two case studies and cover several pages. Typically there are 8-12 questions per case study.

Want more help with your CFP® exam study plan? Download our free CFP® Exam Study Plan: How to Make the Most of Your Time eBook

CFP^® Exam Study Tips—How to Increase Your Odds of Success

The CFP^® exam is not easy. It requires a significant investment of time to be successful. But most of the time, failure on the exam is the result of poor preparation. Investing in exam preparation is a way to avoid that. In addition, these tips will help you develop the knowledge and confidence necessary to pass the CFP ^® exam.

• Put in the study time: CFP Board says candidates should spend at least 250 hours preparing studying. Don’t take this suggestion lightly. You have a lot of material to cover. Starting early will help ensure you leave yourself enough time to master it.
• Don’t rely on cramming: Candidates who do not manage to dedicate enough time to prepare for the exam might be tempted to resort to cramming. Time and time again, it’s been proven that the best last minute exam prep activities are light review and a good night’s sleep. Cramming is not in the recipe for CFP^® exam success.
• Develop and follow a study plan: To ensure you dedicate yourself to proper preparation for the exam, we recommend developing and following a study plan. This will help you spread the curriculum over the time you have available to study and game plan to ensure you are giving the right amount of focus to the right topics.
• Learn how to apply your knowledge to real life scenarios: If you are relying on memorization of vocabulary to get through the CFP^® exam with a passing score, you’re going to be in for an unpleasant surprise. It’s not enough to be able to recall definitions. The CFP^® exam tests your ability to perform the tasks expected of someone who holds the credential. So you need to know how to apply what you know to scenarios you will actually encounter when serving clients.
• Practice, practice, practice: There is no better way to build your confidence ahead of the CFP^® exam than by doing practice questions. This type of practice helps you truly assess your comprehension of critical concepts, identify and address weaknesses, and get comfortable answering the kinds of questions you’ll face on exam day.

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Ensure you are prepared for exam day with the College for Financial Planning^®—a Kaplan Company's CFP^® exam prep review. Get the expert instruction and education you need to pass the exam with confidence. 

The Financial Paraplanner Qualified Professional^SM (FPQP^®) designation introduces financial planning to professionals with no prior experience and also helps deepen foundational knowledge for support staff with some industry experience. It is offered exclusively by the College for Financial Planning^®—a Kaplan Company (CFFP). This article explains the designation, how it differs from the CFP^® mark, and the curriculum to help you decide if it's a good fit for your career.

About the FPQP^® Designation

The foundation of financial planning is developing strong relationships with new and current clients, so you can help them achieve their financial goals. The FPQP^® designation is for those who have no or some financial planning experience and want to start building that foundation. The program covers the main facets in personal financial planning with a focus on practical application, such as estate, tax, retirement, insurance, and investments. Holding the FPQP^® designation demonstrates to clients that you can gather, review, and analyze their financial information and offer a comprehensive picture of their financial well-being.

How Does the FPQP^® Designation Differ from the CFP Mark?

CFP^® certification is a professional designation for financial planners. Also known as the CERTIFIED FINANCIAL PLANNER^™ mark, its governing body, CFP Board, administers the credential. CFP^® professionals are experienced personal financial advisors who take the lead in helping clients create comprehensive plans for meeting their long-term personal financial goals, such as retirement, college tuition, business startup, a home, and so on. It is considered to be one of the most prestigious designations in personal finance or personal financial planning.

Professionals who have earned the FPQP^® designation are part of a financial planning team and often do most tasks associated with financial planning services. Although FPQP^® designees can advise clients, they do not usually take the lead in client relationships.

The FPQP^® Curriculum

The FPQP^® curriculum consists of these 10 modules:

• The Financial Planning Process
• Business Ownership, Cash Management, and the Use of Debt
• The Time Value of Money
• Insurance Basics and Property Insurance
• Life and Health Insurance
• Investment Basics and Strategies
• Retirement Planning
• Tax Implications of Financial Decisions
• Estate Planning Basics
• Case Study and Master Index

The number of study hours is 100 - 125 hours to complete the FPQP^® program, and there is a final exam. This exam has 75 questions, and the passing score is 70 percent or better. Students have 120 days from the date they are provided online access to complete a designation program (including testing and passing the Final Exam). 

The Benefits of the FPQP^® Designation

The FPQP^® mark can set you apart from other paraplanners because it demonstrates you have the knowledge and expertise to provide advice to clients as part of an effective financial planning team. You are better able to assist financial planners and their clients while advancing your own financial career.

Earning the designation is also a sound financial decision. FPQP^™ graduates can generally expect a pay increase after earning the FPQP^® designation. Plus, it can help with your future education plans. By earning the FPQP^™ designation, you can receive credit for the completion of course FP511 General Financial Planning Principles, Professional Conduct, and Client Psychology in the CFFP CFP^® certification education program. This allows you to save both time and money while pursuing multiple credentials.

Considering the FPQP^® Designation?

The FPQP^® designation is well-suited for:

• New finance professionals who want financial planning credentials to advance their career
• Support personnel who work with financial planners and advisors
• Individuals interested in a broad base of financial knowledge to assist with their personal finances

To learn more about how to earn a financial planning designation endorsed by top financial firms, visit the FPQP^® web page.

Careers in the financial planning field involve helping clients with investment decisions, taxes, insurance policy selection, and retirement plans. The most recent data from the Bureau of Labor Statistics in the U.S. estimates that the employment of personal financial advisors could grow 15 percent from 2021 to 2031, much faster than the average for all occupations. However, financial planning is an umbrella term for a number of different occupations. This article looks at some of the most common ones.

Paraplanner

Paraplanners are the junior members of a financial planning team, and they usually work in financial management firms. They provide financial planning support by investigating investments, making preliminary financial planning recommendations, and coordinating marketing events. They also research financial databases and products for specific solutions that match client needs and prepare charts, graphs, and tables to be used in meetings.

Financial Planning Analyst

The primary role of a financial planning analyst is to analyze the current financial situation of businesses, organizations, and individuals. To achieve this, financial planning analysts use a wide range of quantitative formulas and techniques. They sift through a large amount of data and use their mathematical skills to help clients decide how best to invest their money. Using data gleaned from economic trends, relevant laws, and other factors, they create a viable financial model for a client.

Financial Planner

Financial planners help individuals and couples make investment decisions. Much of the job involves meeting with clients, analyzing financial information, researching new opportunities, and explaining the kinds of financial services and investments they provide to clients. Typically, they help clients understand and set financial and investment goals, in addition to assessing their financial health by examining assets, liabilities, income, taxes, investment, and estate plans. They also monitor accounts and research new investment opportunities to recommend or select for their clients.

Download the free eBook, Getting There from Here: Career Path Stories from Finance Professionals, to get firsthand accounts of what it's like to have a rewarding career in finance.

Personal Financial Planner

A personal financial planner specializes in helping individuals organize their finances and meet long-term financial goals, advising and assisting with budgeting, cash flow planning, and saving for college and retirement. They create comprehensive plans for their clients after assessing their current financial situations and researching what they can do to improve them. Personal financial planners can also have certain areas of expertise, such as retirement planning or education funding planning.

Financial Advisor

Financial advisors help clients manage their money. They create short-term and long-term financial goals for their clients and then devise financial plans for achieving them. Financial advisors often specialize in investment management, estate planning, retirement planning, insurance, debt repayment, tax planning, or any other aspect of the finance industry. They can be stockbrokers, insurance agents, money managers, estate planners, bankers, and more.

Financial Consultant

A financial consultant focuses on the accountability aspects of financial planning. Designing action plans and a financial strategy, financial consultants help clients run their financial systems. They collaborate with other professionals, such as attorneys, accountants, and investment managers to ensure their clients' financial needs are met. They also stay up-to-date on financial news and economic events that might affect the plans they’ve designed for their clients.

Wealth Manager

Wealth managers provide services to high-net-worth individuals and ultra-high-net-worth individuals, and they are usually more hands-on than other financial planners. The solutions they offer are usually more customized because of the special needs of their high-net-worth clients. Examples of their services include investment management, personal financial planning, tax services and planning, retirement planning, legal planning, philanthropic planning, and estate planning, among others.

Interested in a Career in Financial Planning?

If any of these financial planning roles appeal to you, the College for Financial Planning^®—a Kaplan Company can help. From designations for paraplanners, wealth management advisors, and more to the CFP^® mark and MS in Personal Financial Planning, we provide the education and exam preparation needed for success in this rewarding field.

If you are thinking about a career change, consider financial planning. Based on a composite of responses in the 2024 Survey of Trends in the Financial Planning Industry, which was published by the College for Financial Planning®—a Kaplan Company, a sizable majority of respondents are satisfied with their careers. This article explains what financial planning is, why it might be a good career change, and how you can make the change.

About Financial Planning

Professionals in the financial planning field help clients with investment decisions, taxes, and selecting insurance policies and retirement plans. They work with their clients to create comprehensive plans for meeting their long-term personal financial goals, such as retirement, college tuition, business startup, a home, and so on. While no two days will ever be the same, much of the job involves meeting with clients, analyzing financial information, and researching new opportunities. The most recent data from The Bureau of Labor Statistics in the U.S. estimates that the employment of personal financial advisors could grow 15 percent from 2021 to 2031, much faster than the average for all occupations.

Career Changers

Answers to the questions about why respondents became financial planners indicate that 28 percent joined their financial profession because they were looking to help others. One respondent said, ““I wanted to help people succeed in an area of life where many struggle.”

21 percent say they they hold a passion for the financial market and enjoyment for the subject. 

8 percent  reported that they “fell into” their financial profession or joined the field due to the benefits offered by the job.

While 7 percent of respondents joined their financial profession for a career change, 6 percent had a previous similar career or  related education.

Financial planning has staying power as a career. Over one third  of survey responders have been working in the financial planning industry for 10 or more years. 

Before You Commit to Financial Planning as a Career Change

Before you jump into financial planning, we advise you to work your way through these five steps for a smooth and successful transition:

1. Ask yourself why: Create a list of reasons why you want to change careers and why financial planning appeals to you, along with what motivates you. According to the survey, a passion for helping people and an interest in finance or financial planning are two necessary qualities.
2. Research financial planning: Personal financial planners, financial advisors, wealth managers, asset managers, and other similar roles are all part of financial planning. Learn as much as you can about each to get a sense of which role appeals to you.
3. Informally interview people in financial planning: Learn from others in the field. Use contacts, LinkedIn, and online research to find people who may be willing to talk with you about whether this is an industry you would like to enter.
4. Build relationships with financial planning contacts: Look for networking and Meetup groups and attend their events. Join LinkedIn groups and participate in discussions. These activities will help you build a solid list of contacts.
5. Inventory your current skills: Before you decide that your experience does not relate to financial planning, remember the person who was in the music industry and switched. If you have experience working with customers, have made your own financial plan, or have a deep interest in finance topics, you have enough to get started. There is education to help you fill the other gaps.

How to Become a Financial Planner

Because financial planning is such a broad field, the steps for landing a job in a given role can differ. However, these three basic tips can apply to many different roles:

• Earn a bachelor’s degree: Many practicing financial planners majored in some type of business or finance program.
• Find an entry-level finance job: Consider looking on job websites, and make sure you are prepared if you are asked for an interview.
• Earn the necessary licenses and consider certification: Earning the CFP® mark can help you specialize or differentiate yourself from your competition. If the role you want involves selling securities or insurance, you’ll need a license.

Ready to Make the Switch?

If a job in financial planning seems like a good fit for your career change, the College for Financial Planning®—a Kaplan Company can help you learn more and get started.

All CFP^® professionals must agree to abide by a code of ethics and standards of professional conduct that center on protecting clients and complying with employer policies. In 2019, CFP Board enacted a new code and standards, which it will begin enforcing on June 30, 2020. Those who violate the code and standards are subject to discipline. This article shares some examples of violations and disciplinary actions.

CFP Board Code of Ethics and Standards of Professional Conduct: What Are They?

CFP Board’s Code of Ethics and Standards of Professional Conduct require CFP^® professionals to put the interests of their clients above their own in all circumstances and not just when acting as their financial advisors. In addition, they must act with integrity, respect, and professional competence. Serious disciplinary actions are taken against anyone who violates the code and standards. For industry-related violations, CFP Board maintains an anonymous list of professionals who have been disciplined with revocation of the certification, suspension of up to five years, a public letter of admonition, or private censure.

Some violations are easy to understand and remember. Anyone convicted of theft, embezzlement, a violent crime, murder or rape, tax fraud or other tax-related crimes will face permanent revocation of the CFP^® mark. Other criminal or felony charges can result in a suspension. Anyone who files for bankruptcy is likely to be disciplined with a suspension or revocation of the mark. And, those who violate the standards but are not convicted of a crime will receive either a suspension, a public letter of admonition, or private censure. Here are examples of some of the other actions and activities that violate the code of ethics and professional standards of conduct.

Free eBook: Is CFP^® Certification Right for You?

Employer Policy Violations

CFP^® professionals are required by the code and standards to follow their employers’ rules and policies, yet the majority of CFP Board ethics and standards violations are for not doing that. The discipline for this violation is most likely to be a suspension. For example, a professional received a suspension for obtaining reimbursement from his firm for computer equipment he purchased but then returned or cancelled, encouraging other employees to follow suit, and lying to firm investigators about it. Another professional was suspended for failing to properly supervise an individual’s sale of complex products and unsuitable Class A mutual fund shares.

There has been at least one case where the professional had their CFP^® certification revoked for improper employee conduct. The professional had participated in at least three separate outside business activities without informing his employer, loaned money to three clients, and presented a private securities transaction to clients that resulted in eight of them investing in the transaction. He then completed an employer questionnaire stating that he was not participating in any outside business activities that required disclosure and that he had not participated in any private securities transactions.

Misrepresentation

The second most common violation of CFP’s code of ethics and standards of conduct is misrepresentation; there are 92 examples of it in CFP Board’s list of disciplined professionals. The term covers a broad range of improper and illegal behavior. The most common are claiming to only offer fee-based services when that is not the case and informing CFP board that required continuing education has been completed when, in reality, it has not. Those who falsely claim to be fee-based advisors usually receive letters of admonition, but lying about continuing education results in suspension.

A more unusual example is the suspension of one CFP^® professional who:

• Used unreasonable assumptions that resulted in large overstatements of fund investment values to investors
• Falsely claimed in MD&As (management discussion and analyses) sent to fund investors that a fund’s principal investment relationship with a foreign company was a partnership
• Disclosed to clients and prospective clients that he had obtained a letter of intent to invest from a large development bank when this was not true

Failure to Exercise Fiduciary Duty

For a CFP^® professional, fiduciary duty means putting the interests of your clients above your own at all times. Discipline for those who do not act in a client’s best interest is either suspension or a letter of admonition. For example, a financial advisor received a letter of admonition for charging clients an unreasonable investment fee and failing to disclose the risks involved with Real Estate Investment Trusts.

Another CFP® professional was suspended for directing his clients to sign incomplete and blank forms, including account registration forms, transfer forms, and annuity application forms. None of these included written disclosure of information such as fees, sales charges, or surrender charges. And, finally, another financial advisor was issued a letter of admonition for not exercising his fiduciary duties. Among his long list of transgressions was the fact that he lied to clients and prospective clients, telling them that all advisors who earn commissions make recommendations based on their own personal enrichment, fail to disclose all relevant facts, and do not act in the client’s best interest.

Misconduct

Misconduct is most likely to result in suspension. In one case, a professional was suspended when he took approximately $19,000 from a Scholarship Fund during the period of 2005 to 2012 and used a significant portion of that money for his personal benefit. In 2018, another professional was suspended for convincing her client, who was also her mother, to transfer assets to her, which was not acting in her mother’s best interest. Another example is a professional who was suspended after making material misstatements and omissions to his clients while recommending that the clients invest in what was found to be a Ponzi scheme.

CFP^® Exam Violations

CFP Board also disciplines individuals who have not earned the mark for exam violations and misconduct. For example, CFP Board imposed a two-year delay on any validation of one candidate’s prior passing score after he posted a summary of contents of the CFP® exam on a Reddit message board. Another candidate was barred from taking the exam for two years when he removed a sheet of scratch paper from the scratch booklet, concealed it, and then left the testing center with it. When asked to return the paper, he denied that he had it.

Increase Your Odds of Complying with CFP Board’s Code of Ethics and Standards of Professional Conduct

Understanding the CFP Board code and standards is critical to earning and keeping your CFP® mark. Our education packages can help you get up to speed on all the rules, so you are not surprised on exam day or in your future career.

The CFP^® exam is computer-based and consists of 170 multiple-choice questions that test your financial planning knowledge in client situations. Preparing for the exam requires a significant investment of time and financial resources. As part of deciding your exam education and preparation provider, you will also have to choose between live online education, on-demand classes, or self-study. So, let’s explore the main differences.

CFP^® Exam Preparation: Live Online Classes

Of the three choices, live online exam preparation adds the most structure to your studies and provides a mentor who can encourage you and keep you on track when you need it. You get regular, expert feedback on your weak areas, suggestions for how to improve, and guidance on where to get more practice. You also have someone to ask for help with challenging material.

Live online exam preparation classes provide focus to your study efforts and enable you to use your 250 hours of study time efficiently and effectively. You receive advice on test-taking strategies to make the task of tackling 170 questions in six hours a bit less daunting. If you choose the right package, you also get a mock exam to help you simulate the real thing. Note that of all the options, live online classes require the biggest cash outlay, but considering the expert attention and guidance, many candidates have said it's worth it.

Preparing for the CFP® exam? Download this free eBook to learn how to create a CFP^® exam study plan that works for you.

CFP^® Exam Preparation: On-Demand Classes

On-demand preparation enables you to learn from an expert instructor but on your own time. It is designed to ensure you are staying on track in your prep plan and mastering the curriculum at your own pace. This means it is a great option for those CFP^® candidates who must schedule their exam preparation around a full-time job or learn at a different speed. With on-demand learning, you can start, stop, and rewind through video instruction as often as you need. You have access to practice questions that can help you apply what you’ve learned. And, although you do not get the real-time interaction with instructors, they are helping you review and master the material. You can even email them your questions.

CFP^® Exam Preparation: Self-Study

Self-study is the most affordable exam preparation option. It’s also the most difficult, but there are candidates that have gone this route and been successful. If you choose the self-study option, you will prepare, practice, and perform without the help of an experienced instructor. Therefore, you must:

• Create a study calendar and plan.
• Go through the exam study books.
• Find practice questions.
• Identify and rectify your weak areas.
• Develop a test-taking strategy that will give you the best chance of success.
• Find a mock exam.

Self-study takes a lot of motivation, persistence, patience, confidence, self-awareness, and some expertise in learning. Some people have what it takes to do it this way. They tend to be highly motivated self-starters who have the mettle to put in the hard work day after day and be successful when they sit for the exam.

So, the first thing you have to do is take an honest, unflinching look at yourself and your own history of learning. Ask yourself the tough question, “Do I have what it takes to do this without guidance from instructor-led review classes?” If the answer is yes, then self-study could work for you. If you hesitate before answering, it is likely that instructor-guided review is a better option for you.

Ready to Get Started?

Whether you have decided on live online preparation, on-demand learning, or self-study classroom instruction, we have study tools for you.

Accredited Asset Management Specialist (AAMS^®) is a professional designation designed for those starting out in the financial advice business that is awarded by the College for Financial Planning (CFFP)—a Kaplan company. Earning the designation also enables experienced advisors to learn more about asset management and improve their credentials. This article explains what the designation is, why it’s valuable, how it can help you in your career, and how to get it.

What Is AAMS^®?

AAMS^® is a designation program for financial professionals. The program provides advisors with fundamental financial knowledge of asset management and investments. It was started in 1994 and is offered exclusively online by CFFP. The designation is also listed by FINRA, which is a private, self-regulatory organization that regulates certain aspects of the securities industry.

Why the AAMS^® Program Is Valuable

When asked about the value of the program, one AAMS® professional said: “This program gave me more knowledge to help structure my communication with my clients. The AAMS^® program should be a requirement for anyone involved in asset allocation and money management."

The courses and tests associated with earning the AAMS^® designation teach advisors how to evaluate assets and make recommendations. Those who go through the program learn to identify new investment opportunities and also recognize insurance, tax, retirement, and estate issues.

The program is designed to help financial advisors who are just starting out in their careers. However, more experienced financial advisors can benefit from the credential, too, because it lets clients know they have a specialty in asset management. In addition, financial advisors with the AAMS^® designation who plan to earn the CFP^® designation receive credit for the completion of course FP511 General Financial Planning Principles, Professional Conduct, and Client Psychology in the College's CFP^® certification education program.

How the AAMS^® Designation Can Help Your Career

The AAMS^® designation is recognized as the industry benchmark for asset management credentials and is endorsed by leading financial firms. It enables you to serve individual, small business, or investment clients better. If you have an entry-level financial advice position or are a trainee, it can help you advance your financial career. In addition, financial planning professionals working in a financial planning role both the year before and year after receiving their most recent specialized professional designation such as the AAMS^® designation reported an average 16% earnings increase in the year after earning that professional designation, as well as client base growth and greater job satisfaction.

For clients, the AAMS^® is a sign that you can identify investment opportunities specific to their needs. For example, it can reassure nervous clients who need to plan for college tuition or purchase a retirement home. Because you’ve been through the program and earned the AAMS^® designation, you can guide those clients and others to the right investments for their goals.

How to Earn the AAMS^®

To earn the AAMS® designation, follow these steps:

1. Complete a 10-module education program provided by CFFP. There are no prerequisites for this program. Students have 120 days from the date they are provided online access to complete a designation program (including testing and passing the Final Exam). The modules cover the asset management process; risk, return, and investment performance; asset allocation and selection; investment strategies; taxation of investments; investing for retirement; deferred compensation and benefit plans; insurance products for investment clients; estate planning for investment clients; and fiduciary, regulatory, and ethical issues for advisors.
2. Take and pass the AAMS^® exam. You must test and pass the final exam within the 120 days of your online access. There are 80 questions on the exam, and the passing score is 70 percent. Plan on studying for about 80–100 hours.
3. Agree to abide by a code of ethics.

Think the AAMS^® Designation Is Right for You?

If you’re just starting out in your career, the AAMS^® offers you a chance to build your credentials. If you’re experienced and want to earn your CFP^® mark, the AAMS® program gives you a head start, plus you get a credential in the process. Learn more about the AAMS^® designation program and how to enroll.

The CRPC^® designation is the end result of a comprehensive program that helps financial advisors master the entire retirement planning process, going far beyond retirement income. With financial decisions that will determine their security and lifestyle for the balance of their lives, people born in the early 1960s are demanding a high level of knowledge from their advisors. This program is designed to help retirement planning counselors to meet these demands. This article provides an overview of the program.

Why the CRPC^® Designation?

The youngest of the “baby boomer” generation, people born in 1964, are now solidly into their mid-50s, so retirement is weighing heavily on their minds. In fact, in a recent national survey of financial advisors, the College for Financial Planning®—a Kaplan Company found that more than three-quarters of their clients are “concerned” or “very concerned” about their retirement savings programs, and well over half worry about actually outliving their assets.

So, it’s not at all surprising that financial advisors are facing an increasingly complex onslaught of retirement planning questions as these baby boomers look for advice on when they’ll be able to retire, as well as guidance in finding investments to meet their lifestyle needs in 10 years, 20 years, or beyond.

Recognizing these challenges, the College for Financial Planning®—a Kaplan Company has created the Chartered Retirement Planning Counselor™ (CRPC^®) education and designation program.

What is the Chartered Retirement Planning Counselor^™ (CRPC^®) Designation?

The CRPC^® helps financial advisors by guiding them through specialized tax and estate objectives and strategies for a retiree and presents the unique financial and emotional aspects of financial planning that are unique to the retirement process. In short, the program helps advisors define a “road map to retirement,” enabling them to focus on the pre- and post-retirement needs of their clients.

The CRPC^® designation is the industry benchmark for retirement planning credentials and is encouraged by the top firms in the industry.

According to a recent College for Financial Planning report, CRPC^® professionals surveyed working in a financial planning role both the year before and the year after earning their CRPC^® designation reported an average 10% earnings increase in the year after earning that designation

About the CRPC^® Designation Course

The CRPC^® Professional Education Program is a three-semester credit graduate-level course. The nine modules in the course are:

• Maximizing the Client Experience During the Retirement Planning Process
• Principles and Strategies When Investing for Retirement
• Understanding Social Security, Military and Government Retirement Benefits
• Bridging the Income Gap: Identifying Other Sources of Retirement Income
• Navigating Health Care Options in Retirement
• Making the Emotional and Financial Transition to Retirement
• Designing Optimal Retirement Income Streams
• Achieving Tax and Estate Planning Objectives in Retirement
• Fiduciary, Ethical, and Regulatory Issues for Advisers

The typical student should expect to spend approximately 90–135 hours on course-related activities to study and prepare adequately for the course examination. The CRPC^® course also does double-duty for professionals who are considering a master’s degree: designees receive direct credit for one course in the CFFP MS in Personal Financial Planning program, saving them time and money while enabling them to pursue multiple credentials.

Learn More

Many leading financial advisory firms endorse the CRPC^® designation and will reimburse advisors for course-related expenses. For more information, visit the College’s website.

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* Earnings increases are dependent on numerous factors other than, or in addition to, completion of the specialized financial designation, including specific employment conditions and individual experience. The College for Financial Planning^®—a Kaplan Company does not guarantee any earnings increase resulting directly from such designation. Results are the findings of a quantitative survey conducted by the College for Financial Planning between June 27 and August 7, 2023. For this survey, a sample of 951 2022 and 2023 graduates of the College for Financial Planning was interviewed online in English. This earnings increase was based on 104 graduates whose most recent designation was the CRPC^® designation and who were employed in a financial planning role both the year before and the year after receiving the CRPC^® designation.

With the CERTIFIED FINANCIAL PLANNER™ (CFP®) mark, you have a credential that can set you apart in the financial services industry. Earning the CFP® designation opens the door to unique professional opportunities for those with a bachelor’s degree who want a career in personal finance and planning. So, what kind of CFP® jobs are available to you after you’ve earned the credential and what kind of firms are hiring? Let’s take a look.

Financial Planner

A financial planner helps clients organize their finances and estimates the results of their savings and investments so they can see how well prepared they are to meet long-term financial goals. Financial planners also have certain areas of expertise, such as retirement planning or education funding planning. They assist with budgeting, cash flow planning, and saving for college and retirement. As a financial planner, you’ll likely create a comprehensive plan to help clients after assessing their current financial situations and researching what they can do to improve them.

Financial Advisor

A financial advisor helps clients manage their money, so the role is more general and broader than that of a financial planner. Financial advisors often specialize in investment management, estate planning, retirement planning, insurance, debt repayment, tax planning, or any other aspect of the finance industry. They can be stockbrokers, insurance agents, money managers, estate planners, bankers, and more. Financial planners with the CFP® designation are likely to create short-term and long-term financial goals for their clients and then devise financial plans for achieving them.

Financial Consultant

A financial consultant focuses on the accountability aspects of financial planning by designing action plans and a financial strategy and by helping clients run their financial systems. As part of this accountability, financial consultants collaborate with other financial professionals, such as attorneys, accountants, and investment managers to ensure their clients' financial needs are met. They also stay up-to-date on financial news and economic events that might affect the plans they’ve designed for their clients.

Investment Advisor or Investment Adviser Representative

Investment advisors, also known as Investment Adviser Representatives, recommend investments or conduct securities analysis for their clients. Although this position is generally associated with selling securities, investment advisors are often CFP® certificants, especially if their recommendations are for financial planning purposes, such as retirement, college, and estate.

Wealth Manager

Wealth managers provide services to high-net-worth individuals and ultra-high-net-worth individuals, which can include types of financial planning. Examples include investment management, financial planning, tax services and planning, retirement planning, legal planning, philanthropic planning, and estate planning, among others. Wealth managers are usually more hands-on, and their solutions are usually more comprehensive than other financial planning and advising disciplines because of the special needs of their high-net-worth clients.

CFP® Jobs: What Types of Firms Are Hiring?

Finance and insurance companies, including securities and commodity brokers, banks, insurance carriers, and financial investment firms, are the most common employers of finance professionals with the CFP® credential. Other sources of employment are wealth management firms, pension funds, and Registered Investment Advisers.

Interested in Pursuing the CFP® Designation?

Although earning the CFP® designation does not guarantee you a job, it can make a difference when an employer is deciding between two otherwise equally qualified candidates. Passing the CFP® Exam and earning the designation takes hard work and dedication. It demonstrates to potential employers that you have a mastery of the important concepts in financial planning. Therefore, companies are more likely to choose the candidate with the CFP® mark. It’s a career move worth considering. Our CFP® Exam prep study packages can certainly help you on your journey.

The questions most frequently asked about the CFP^® exam and certification are answered in this article, equipping you with the information you need to plan for this next step in your career.

What is CFP^® certification?

CFP^® certification is a professional designation for financial planners. Also known as the CERTIFIED FINANCIAL PLANNER™ certification or CFP^® mark, its governing body, CFP Board, administers the credential. With financial advising and planning estimated to be one of the top 10 fastest growing occupations, getting your CFP^® mark can help set you apart in the industry.

What is the difference between the CFP^® certification and the CFA^® charter?

The CFP^® mark and CFA^® charter are both the most prestigious designations in their respective fields, and each is administered by a governing body. A CFP^® professional is likely to be a financial planner, wealth manager, or financial advisor. CFA charterholders commonly help individuals and institutions invest and allocate assets. To earn CFP^® certification, you must sit for and pass one exam; the CFA Program exam has three levels. Our article about the CFP^® mark vs the CFA charter has more details.

According to a recent College for Financial Planning report, 82% of CFP^® professionals are more satisfied with their financial planning career after earning their CFP^® mark.*

What is the difference between the CFP^® certification and a master’s in personal financial planning?

Both the CFP^® certification and a master’s degree in personal financial planning lead to unique professional opportunities for those with a bachelor’s degree who want a career in personal finance and planning. But their requirements, topics of study, and their benefits are slightly different. To make a decision, you need to think about what you want to do long-term. This article compares the two options in greater detail.

What jobs can I get with the CFP^® certification?

CFP^® professionals usually become financial planners or advisers, helping clients with investment decisions, taxes, and selecting insurance policies and retirement plans. While no two days will ever be the same, much of the work involves meeting with clients, analyzing financial information, and researching new opportunities.

How do I earn the CFP^® certification?

Earning the CFP^® certification involves the following steps:

1. Complete a CFP Board Registered Education Program and make sure CFP Board is notified.
2. Sit for the CFP^® exam.
3. Hold or earn a bachelor’s degree from an accredited university or college within five years of passing the CFP^® exam.
4. Demonstrate financial planning experience. This can be professional experience (6,000 hours) in relevant personal financial planning activities, or apprenticeship experience (4,000 hours) that meets additional requirements.
5. Pass CFP Board’s Candidate Fitness Standards.

What is the CFP^® exam? Why should I take it?

The CFP^® exam is a multiple-choice, computer-based exam. It consists of two 3-hour sessions that are divided into distinct subsections (two subsections within each session). The sessions are separated by a 40-minute scheduled break. You may also take an optional break between the subsections. It is offered three times a year in March, July, and November at almost 50 locations nationwide.

Recruiters and prospective employers recognize CFP^® certification as the most desired designation in the growing financial planning and advisor field. If your objective is a career as a financial planner or financial adviser, you should consider earning the CFP^® mark, which means taking and passing the exam.

Did you know you can get a sneak peak at the CFP® exam to determine if it's right for you? It's all in our free eBook. Download it today!

What are the requirements to sit for the CFP^® exam?

To sit for the CFP^® exam, you will need to complete a CFP Board Registered Education Program first. After you complete it, CFP Board must be notified. Usually, your coursework provider will do that for you. There are no degree requirements to sit for the CFP^® exam, but you will have to earn a bachelor’s degree within five years of passing the exam. You don’t need a sponsor to take the exam. Also, candidates often use a CFP^® exam study package before they take the exam, but it’s not required.

Should I earn the CFP^® mark if I already have a different certification or charter?

It depends. If you have a securities or insurance license, the CFP^® certification can be helpful if you would like to add planning to your repertoire. On the other hand, if you are a CFA charterholder, a CFP^® mark might not be necessary. Interestingly, however, CFP Board allows CFA charterholders to sit for the exam without having to complete the education requirements. So, if you hold other financial designations, your best option is to consult with your firm about whether you should take the CFP^® exam or not.

Is the CFP^® exam paper or computer-based?

The CFP^® exam is computer-based and administered at a Prometric testing center.

What topics are covered on the CFP^® exam?

The topics covered on the CFP^® exam include general financial planning principles, investment planning, retirement savings and income planning, risk management and insurance planning, tax planning, estate planning, professional conduct and regulation, and psychology of financial planning.

How many questions are on the CFP^® exam?

The CFP^® exam consists of 170 multiple-choice questions that test your ability to apply your financial planning knowledge to client situations. The topic weights break down as follows:

How much time does it take to study for the CFP^® exam?

Most candidates spend between 250 and 300 hours studying for the CFP^® exam, although there are reports that it took some candidates much more than that. The entire CFP^® certification program, including CFP Board Required Education, takes at a minimum about a year.

How hard is the CFP^® exam?

The CFP^® exam is not easy, which is one reason the mark is among the most respected certifications in the financial services industry. It includes case studies, short scenario questions, and standalone questions designed to assess your knowledge of financial planning concepts and how to apply them to specific situations. It requires a significant investment of time to be successful. But most of the time, failing the exam is the result of not preparing properly. If you put together a stellar study plan and are willing to invest in your exam preparation, you can increase your odds of passing.

How much does it cost to sit for the CFP^® exam?

There are three levels of pricing for the CFP^® exam:

• Early: $825
• Standard: $925
• Late: $1,025

Check CFP Board's website for deadlines specific to upcoming exam dates.

What are the pass rates and passing scores for the CFP^® exam?

The most CFP Board says on the passing score for the exam is that it is based on a minimal competency level required to pass the exam, which is determined by CFP^® professionals. For the March 2023 exam, the overall pass rate was 65 percent, and the pass rate for first-time exam takers was approximately 69 percent.

If I fail the CFP^® exam, what is the wait time before I can retake it?

Candidates who do not pass the exam on their first try can take it two more times in a 24-month period. You then have to wait a year before retaking it. If you don’t pass the exam after five attempts, you cannot take it again.

Ready to earn your CFP^® mark?

We hope this article answers your pressing questions about the CFP^® exam and certification. If you’re interested in taking the exam, we have CFP^® exam study packages. Or if you’re just starting out and need to complete the required education, explore our CFP Board-registered education program.

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*This is one of the findings of a quantitative survey conducted by the College for Financial Planning^®—a Kaplan Company between June 27 and August 7, 2023. For this survey, a sample of 951 2022 and 2023 graduates of the College for Financial Planning was interviewed online in English. The sample includes 182 graduates whose most recent professional designation earned was the CFP^® mark and who answered this question

In early July, the Department of Justice petitioned the Supreme Court to challenge the US Court of Appeals for the 5th Circuit Court’s decision to vacate the Department of Labor’s long anticipated “fiduciary responsibility” rule. This decision effectively turned back the clock 2 1/2 years and unwound years of work by the DOL to regulate, restrict, and direct financial advisors to act in clients’ best interest when managing qualified retirement accounts. While many firms are now breathing a sigh of relief, the reversal of this decision will have no material impact on the direction of the industry. Acting in clients’ best interest, whether it’s qualified or unqualified accounts, is well underway.

Underperformance

For years now, DALBAR has tracked and reported consistent investor underperformance based on fixed and equity market indexes. In its more recent “Quantitative Analysis of Investor Behavior” published in April, equity investors underperformed the S&P Index by 191 basis points over the last 20 years. While that gap is significant, it pales in comparison to the 416-basis point gap that fixed investors underperformed the Barclays Aggregate Bond Index over the same time period. For 24 years in a row now, both equity and fixed income investors have consistently lagged behind their respective market index by significant margins. The only explanation is bad investor behavior: buying and selling their investments at the wrong time.

Investors haven’t achieved this consistent level of underperformance all on their own. For decades, financial advisors and financial services firms have sold consumers what is emotionally easiest for them to buy. How can I make that claim? When is it easiest to sell an equity? When the market is rising. When is it easiest to sell a fixed asset? When the market is tanking. It’s not the asset class that creates the problem. It’s the use of the asset class that creates the issue of underperformance. Consumers are waking up to the fact that while their financial advisor may be winning, they’re losing. 

Managing Emotions: The Triple Win

I entered the industry as a new financial advisor in 1985. Back then, financial planning was the new cutting-edge tool in the industry. Planning helped clients be better investors because they now had longer term goals with defined timeframes. There was incentive for them to save more money if they weren’t on track for their goals. The net result was that clients saved and invested more, and as a result, advisors made more commissions, and their firm had more assets to manage. This was the “triple win.” 

Since then we’ve realized that many of the fundamental tools of financial planning, while necessary, are no longer sufficient. Why? Because investors aren’t rational. They act on emotion too often and when they do, it contributes mightily to their underperformance. Tools like Modern Portfolio Theory, asset allocation, and Monte Carlo simulation don’t account for investors getting emotional about their money. 

Behavioral finance helps us understand why that happens; between our emotional reflexivity and psychological decision-making-pitfalls, we have a tendency to make poor choices often. Industry-leading financial advisors in the US, Canada, and around the world are now equipping themselves with the tools and skills to recognize and manage client emotions. These new tools, when used effectively, enable clients to make better investment decisions and create an even more powerful value proposition for the advisor. By acting rationally, clients improve their return on their assets, and they end up with more assets. Advisors and their firms who use the powerful tools for behavioral financial advice exercise their fiduciary responsibility by acting in their clients’ best interest. In the end, they have more money to manage and therefore generate more revenue.  

Disclaimer: Chuck Wachendorfer is Partner and President of think2perform, Kaplan’s partner for our behavioral financial advice program. The opinions expressed in this article are solely those of the author based on personal research and observations. They should not be viewed as legal advice.

If you’ve been working in the advisory business for some time, you might be wondering what the future of the industry could look like. Unfortunately, it probably won’t look like you. But that doesn’t mean you can’t serve the next generation of wealth successfully. After all, the opportunity is huge. The Millennial generation has officially surpassed Baby Boomers in terms of size. Also, and this isn’t the first time you’ve heard it, they are poised to inherit close to 30 trillion dollars over the next 30 years. Like I said, a huge opportunity!

At Stash Wealth, we cater exclusively to Millennials, and they’ve taught us a lot about what they are attracted to when it comes to choosing a financial advisor. Here are a few reasons why Millennials don’t work with you.

1. You Wear A Suit

Millennials don’t trust suits. Crazy, but true. At Stash, we agree that a few bad eggs (wearing suits) ruined it for all of us. Thanks to 2008/2009, Wall Street has officially lost the trust of the Millennial generation. Yes, we are regaining it slowly, but there’s a very unflattering stereotype embedded in everyone’s minds. And movies like The Big Short and Too Big To Fail haven’t helped. Even if you aren’t the stereotype, your suit and tie gives you away. If you don’t wear a suit and tie, you’re one step ahead….seriously. Perception is reality. If you look like a suit, you are a suit....so switch it up.

2. You Speak A Foreign Language

Imagine if your doctor told you your ice cream headache was Sphenopalatine ganglioneuralgia. Drop the jargon. Millennials don’t want to be talked down to. And they definitely don’t want to feel stupid. If you continue to use words like “diversification” and “tax-loss harvesting,” it’s likely that your efforts to educate and empower them will fall on deaf ears. Even if your heart’s in the right place, you need to get smart about how you communicate. Millennials trust clear communicators, not intimidating words and fancy mahogany offices.

3. You Think Your Firm Builds Your Credibility

If a client chooses to work with an individual over a robo-advisor, a common choice for Millennials, it’s likely that they value relationships just as much as technology. Most older advisors I know believe that their firm’s brand is what drives clients to them. Quite frankly, it’s a crutch and a dangerous one. If you work at a firm with hundreds of other advisors, you need to get clear on why Millennial clients should pick you. Advisors who can articulate their value prop beyond the firm’s mission have something real to stand on—something that extends beyond the name of the firm. Why are you unique? Stop falling back on the assumed credibility of your firm and figure out what your advantage is.

A final thought. If you’re in the middle of your career, there’s still time to incorporate a new target market into your strategy. Frankly, you’ll be able to capitalize on the fact that your colleagues probably haven’t seen the light yet. If they are still chasing wealth instead of wealth potential, that’s a good thing for you.
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You know who Millennials trust? Other Millennials. So, if you're a Millennial who is interested in helping other Millennials, consider becoming a financial advisor or earning your CFP® certification. Learn more here.

A CFP^® professional works with clients to create holistic long-term plans in order to help them meet their financial goals. CERTIFIED FINANCIAL PLANNER^™ jobs are expected to grow 30% over the next 10 years, according to CNN Money, making it an excellent career option for young financial professionals. But what does a CFP^® professional do exactly? Read on to find out.

Where do CFP^® professionals work?

Many young CFP^® professionals start out working at large financial firms or insurance companies to gain experience and mentoring from more seasoned professionals. Working for a firm makes you more likely to work on a commission-only basis, meaning you will get paid a cut of the financial products your clients buy.

Other CFP^® professionals choose to go out on their own and start their own practice. While this is a flexible option with endless potential for growth, it does come with more risk and pressure to build a book of business. Many CFP^® professionals with their own practice are fee-only, meaning they charge an hourly rate for providing financial guidance rather than taking a commission.

There are many types of jobs for CFP^® professionals. Regardless of which path you choose, you will likely be helping people develop and reach their long-term financial goals.

Get a sneak peak at the beginning of the Kaplan education program to get a feel for whether CFP® certification is the right fit for you by downloading our free eBook. 

How does a CFP^® professional help clients?

Financial planning is not a set-it-and-forget-it situation. Client financial goals shift over time when life circumstances change. Therefore, CFP^® professionals meet with their clients periodically to ensure no changes need to be made to their plans.

CFP^® professionals work with clients on a wide variety of financial goals. When clients are just starting out, often they will have financial needs related to managing student loan debt, figuring out how to merge finances with a loved one, or saving for a large purchase like a house, car, or boat. As clients start settling down in their lives, CFP^® professionals can help them financially plan for a growing family, education funds, and life insurance and retirement decisions.

Once clients get to midlife, they may need financial help with tax strategies for higher incomes, estate planning, caring for aging parents, and long-term care options. When clients near retirement age, CFP^® professionals can also help with retirement management, as well as preparing a client’s children for planning and managing their inheritance.

What’s the difference between a CFP^® Professional and a Financial Planner?

The difference between a financial planner and a CERTIFIED FINANCIAL PLANNER™ is the certification process required to become a CFP^® professional. A CERTIFIED FINANCIAL PLANNER^™ must meet CFP Board’s qualifications in order to use the marks after his or her name. CFP Board requires an individual to complete a CFP Board-registered education program and pass the CFP^® exam, which is given three times each year. In addition, a CFP^® professional must have professional experience (6,000 hours) in relevant personal financial planning activities, or apprenticeship experience (4,000 hours) that meets additional requirements. This experience must be completed within ten years preceding the exam or five years after.

CFP Board also requires candidates to pass a background check and adhere to their ethics standards. This also means CFP^® professionals must take an ethics course every two years as part of their CE requirements.

Becoming a CFP^® professional is a difficult journey, but it can also be very rewarding once accomplished. Recognized as the highest standard in personal financial planning, earning the CFP^® mark gives finance professionals tremendous opportunities in their career.

Become a CERTIFIED FINANCIAL PLANNER^™

If you think becoming a CFP^® professional is for you, the first step is to enroll in a CFP Board-registered education program. If you are interested in what a CFP^® certification education course is like, check out our eBook preview of the first Kaplan CFP^® certification education course.

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If you’re ready to enroll, get started with Kaplan’s CFP® certification education program now. Choose from our live classroom and self-study options today!

Not sure how to use the CFP^® marks on your business card? You are not alone. The purpose of this guide is to help you better understand the proper usage of the CFP^® marks. This helps CFP Board protect the value of the trademark.

To begin, it is important to know when to use the ^® and when to the use the ^™. When you spell out “CERTIFIED FINANCIAL PLANNER^™, you must use the trademark symbol immediately following it. When you abbreviate to CFP^® you must use the registered mark.

How to use the CERTIFIED FINANCIAL PLANNER™ Marks 

When using CERTIFIED FINANCIAL PLANNER™, there are a number of rules you must follow beyond the ™ mark.

• You must use all capital letters or small cap font.
• You must use the ™ symbol at the end.
• The mark must be associated with individual(s) certified by CFP Board – not companies or groups.
• You may use “CERTIFIED FINANCIAL PLANNER™” following an individual name certified by CFP Board (ex. John Smith, CERTIFIED FINANCIAL PLANNER™)
• If not using with an individual name, you must follow “CERTIFIED FINANCIAL PLANNER™” with one of CFP Board’s approved nouns. These include:
  • Certificant
  • Certification
  • Practitioner
  • Professional
  • Mark
  • Exam

How to Use CFP^® Marks

Similarly, when using “CFP^®,” there are a number of rules you must follow beyond the ^® mark.

• You must use all capital letters.
• You cannot use periods.
• You must use the ^_® symbol after "CFP^®."
• The mark must be associated with individual(s) certified by CFP Board – not companies or groups.
• You may use “CFP^®” following an individual name certified by CFP Board (ex. John Smith, CFP^®).
• If not using with an individual name, you must follow “CFP^®” with one of CFP Board’s approved nouns. These include:
  • Certificant
  • Professional
  • Practitioner
  • Certification
  • Mark
  • Exam

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If you're able to advertise your CFP® Certification, that means it's time to make sure you know about continuing education. You can get more information here.

The CFP^® mark and CFA^® charter are both the most prestigious designations in their respective fields. If you are just starting out in a finance career, you may be wavering between these two designations. Let’s explore the key differences between the two paths to give you a better idea of what makes the most sense for you and your career.

Governing Bodies

Each designation has a governing body, CFP Board and CFA Institute, that upholds the standards of excellence for competent and ethical practices. These governing bodies create the exams and determine the standards required to pass with input from current professionals in the industry.

Exam Differences

To obtain the CFP^® mark, you have to pass one exam. The exam is offered three times per year in March, July, and November. The overall pass rate for the November 2016 CFP^® exam was 63.2%.

The CFA charter, in contrast, requires you to pass three exams. CFA Level I is offered twice per year in December and June, while Levels II and III are only offered annually in June. The CFA Level I exam pass rate in December 2016 was 43%.

Get a sneak peak at the beginning of the Kaplan education program to get a feel for whether CFP® certification is right for you by downloading our free eBook. 

Requirements for the CFP^® Mark and CFA^® Charter

There are a number of requirements beyond passing the exam(s) to obtain both designations. To earn the CFP^® mark, you need a bachelor’s degree. You also need professional experience (6,000 hours) in relevant personal financial planning activities, or apprenticeship experience (4,000 hours) that meets additional requirements. The experience component can be completed within ten years preceding the exam or five years following the exam. You also must complete the required education prior to taking the CFP^® exam and adhere to CFP Board’s ethical standards.

The CFA charter also requires you to obtain a bachelor’s degree and have four years of professional experience. The experience component can be completed before, during, or after completing the CFA Program. Unlike with the CFP^® exam, there is no education requirement for the CFA exams (although passing the exams without studying is nearly impossible). In addition, you must join and maintain membership to CFA Institute to be considered a CFA charterholder.

Exam Topic Areas

There are eight principal knowledge topic categories covered on the CFP® exam. According to CFP Board, all aspects of the CFP® exam are guided by CFP® professionals, including the determination of content coverage; the writing, reviewing, and approving of exam questions; and the scoring and passing criteria. The topics covered include: professional conduct and regulation, general financial planning principles, education planning, risk management and insurance planning, investment planning, tax planning, retirement savings and income planning, and estate planning. The topic area weights vary by exam cycle.

The Candidate Body of Knowledge (CBOK) represents the core knowledge, skills, and abilities tested on the CFA exam. Thousands of investment professionals have input into the CBOK to ensure it represents the most important aspects of the career. Ethics and professional standards is one of the most important topic areas throughout the program. The other nine topic areas include quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments, and portfolio management and wealth planning. The topic area weights vary by level and by exam cycle. Some of the topics are also combined at times for testing purposes.

Time Commitment

It generally takes candidates about one year to complete the CFP^® certification program, assuming they pass the exam on the first try. The required education for CFP^® certification takes about nine months to complete. This allows some time to review the education and prepare for the exam.

The CFA charter can be completed in two and a half years; however, the average candidates gets through the program in four years, according to CFA Institute. It is expected that CFA candidates study for a minimum of 300 hours per exam level.

Common Careers

There are many career options available to both CFP^® professionals and CFA charterholders. CFP^® certification is a common path for professionals interested in becoming financial planners or financial advisors. If you are interested in specializing in wealth or estate planning, there are niche careers in those areas as well. The CFP^® mark can also help you get into a career as a trading and research associate, financial consultant, financial representative, or a financial analyst. If you want to become a branch manager at a financial firm, the CFP^® mark can help you achieve that level in your organization.

The CFA charter opens up opportunities for career advancement in investment and finance fields. CFA charterholders often go on to become portfolio managers, research analysts, consultants, corporate financial analysts, and even chief-level executives. You may opt to earn the FRM^® designation as well and become a financial risk manager. The CFA charter can also help you gain employment as a relationship manager, financial advisor, investment banking analyst, strategist, or trader.

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If you are ready to enroll in an exam prep program, visit Kaplan Financial Education for CFP^® certification education or Kaplan Schweser for CFA exam prep . 

Financial professionals already know the benefits of earning the CERTIFIED FINANCIAL PLANNER™ mark. Increased earnings, higher client satisfaction, additional referrals, and more desirable clients are just some of the ways CFP^® certification can enhance your career.

Unfortunately, there are a lot of myths out there about what needs to be done to get your CFP^® mark and sometimes these misconceptions prevent financial professionals from starting the certification process. This article busts some common myths about CFP^® certification so you have all the facts before deciding whether or not to become a CFP^® professional.

Myth #1: You must complete a bachelor’s degree before you can enroll in CFP^® certification.

You actually have five years after passing the CFP^® exam to get your bachelor’s degree. You only need to have completed the required education coursework through a program registered with CFP Board, which addresses major personal financial planning areas identified by CFP Board’s most recent job analysis.

Myth #2: You must get an advanced degree in financial planning to become a CFP^® professional.

This is also not true! You just need to complete the required education to sit for the CFP^® exam and hold a qualified bachelor’s degree (or higher) within five years of passing the CFP^® certification exam. 

Myth #3: I don’t have any relevant experience, so I can’t take the CFP^® exam.

Professional experience (6,000 hours as part of the Standard Pathway) in relevant personal financial planning activities, or apprenticeship experience (4,000 hours as part of the Apprenticeship Pathway) is required to satisfy the experience requirement of CFP^® certification. This can all take place after you pass the CFP^® exam though. Once you pass the exam, you have five years to fulfill this requirement. You CAN submit completed professional experience to CFP Board for review prior to passing the CFP^® exam, but it is certainly not required.

Is CFP® certification right for you? Get a preview of our required education materials in this free download.

Myth #4: If I change jobs, I will lose my CFP^® mark.

Once you pass the CFP^® certification exam, the designation belongs to you as an individual. You can remain a CFP^® professional if you switch employers as long as you complete your continuing education and certification application every two years and pay your annual certification fee. 

Myth #5: My business will suffer while I am completing the required education for the CFP^® exam.

While it will be a busy time, you can immediately incorporate your education into your daily practice. Seventy-five percent of CFP^® professionals say that their CFP^® mark education directly contributes to their success. ¹  There are also programs where you can study for the CFP^® exam at your own pace.  At the College for Financial Planning^®—a Kaplan Company, you can choose the EssentialPlus or Essential Package, which both allow you to set your own study calendar.

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Are you looking to advance your career by getting your CFP^®certification or are you trying to break into the financial planning industry? If you are looking for more information about the profession, you are in the right place. Learn more about what the day-to-day of a financial planning professional is like, as well as expected job growth over the next decade below.

What Do CERTIFIED FINANCIAL PLANNERS™ Do?

Financial advisors and CFP^® professionals help clients with investment decisions, taxes, and selecting insurance policies and retirement plans. While no two days will ever be the same, much of the job involves meeting with clients, analyzing financial information, and researching new opportunities.

Typical job duties for financial advisors include:

• Meet with clients to discuss and set financial and investment goals
• Explain the kinds of financial services and investments  they provide to clients
• Assess clients’ financial health by examining assets, liabilities, income, taxes, investment, and estate plans
• Help clients plan financially for specific events like college or retirement
• Monitor accounts and recommend or select investments for clients
• Research new investment opportunities

Important Skill Sets for CERTIFIED FINANCIAL PLANNERS™

CFP^® professionals are often thought of as number crunchers, but the reality is that they need to have strong relationship and communication skills to successfully attract and retain clients. Some important skills for CFP^® professionals include:

• Communication Skills: While number crunching is important, a financial advisor needs to be able to communicate and present their knowledge and recommendations to clients in meetings, writing, and over the phone. 
• Sales and Marketing: Financial planners need to be able to market their skills and knowledge to potential clients. It is important for advisors to have the ability to convey how financial advising can benefit their clients’ long-term financial needs. 
• Relationship Management: Being a financial planner involves a great deal of listening and asking the right questions. It is also important for financial advisors to understand the emotions behind decision-making and work to educate and counsel clients effectively.
• Self-Motivation: To succeed in this industry, a financial advisor must take initiative, recognize opportunities, and continually follow up with prospective and current clients. There is a lot of competition in financial services and going above and beyond what is expected is the norm.
• Long-Term Thinking: To successfully maintain clients long-term, it is important to continually anticipate future situations and the needs of your clients.

Is CFP^® certification right for you? Get a preview of our required education materials in this free download.

Job Outlook for Financial Planning Industry

According to the Bureau of Labor Statistics Occupational Outlook Handbook, employment of personal financial advisors is expected to grow 15 percent from 2021 to 2031. This is significantly higher than average for all occupations. 

Decreases in funds for corporate and state pensions are expected to contribute to the growth of the industry as more individuals will require financial planning.

Financial planners who obtain the CERTIFIED FINANCIAL PLANNER™ certification will likely obtain the best job prospects over the next decade. A CFP Board study  revealed that 83% of CFP^® professionals say they have a competitive edge over other financial advisors.

How Much Do CERTIFIED FINANCIAL PLANNERS™ Make?

According to CNN Money, the median pay for a CFP^® professional is $89,500 annually with the top pay at $171,000. The median pay for a professional in the larger umbrella of personal financial advisors is $67,620 annually or $32.46 per hour.

Advisors who work for financial investment firms or planning firms, or who are self-employed, generally charge their clients a percentage of the assets they manage. They may also charge an hourly fee or get fees for stock and online insurance policies purchased. In addition, advisors often get commissions for financial products sold.

How Do You Become a CERTIFIED FINANCIAL PLANNER™?

To become a CERTIFIED FINANCIAL PLANNER™ , you must complete the required education, pass the certification exam, and meet the experience and ethics requirements. For more details, visit our How to Become a CFP^® Professional article.

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Looking for more information on CFP^® certification? Kaplan Financial Education offers CFP^® certification education and exam prep review study solutions for the CFP^® exam. Check out our courses for CFP^® certification or call 800.237.9990 Option 2 for more information.

If you've read our article that defines wealth management and the career appeals to you, you're likely interested in learning more about what it takes to be successful as in wealth management. Finance career opportunities are plentiful; the trick is uncovering which area of financial services is the best fit for you. This article explores the wealth management segment of financial services and which skills are required to be successful.

Wealth management is a similar path to financial planning. In fact, the major difference between wealth management and financial planning is the clientele. A wealth manager is commonly defined as someone who manages high-net worth clients (worth $1 million or more). Often these types of clients are broken down into two categories: high-net worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs). HNWIs and UHNWIs require services like capital gains planning, estate planning, and risk management. Social Security benefits, retirement planning, and succession planning differ for HNWIs and UHNWIs than from the rest of the population because often they do not need all of their retirement savings. Wealth managers help people literally manage their wealth effectively, whereas financial planners tend to focus more on middle class clients who need help with lifestyle planning, budgeting, cash flow planning, and saving for college and retirement.

Important Skills for Wealth Managers

In addition to having a passion for helping HNWIs and UHNWIs manage their wealth, there are a number of important skills for succeeding in a wealth management career.

Tenacity

Being proactive is essential for success in wealth management. The career requires a strong desire to build a rapport with clients and go the extra mile to ensure they are receiving the best possible service. The industry is competitive...there are many other wealth managers out there who want your clients. Drive and stamina to work long hours will be important for success.

Download the free eBook, Getting There from Here: Career Path Stories from Finance Professionals, to get firsthand accounts of what it's like to have a rewarding career in finance.

Communication

While knowing how to crunch numbers is important for any financial professional, being able to communicate what the numbers mean for clients is vital to your success as a wealth manager. Whether in a face-to-face client meeting or corresponding via email, you must be able to explain complicated financial concepts in ways that make sense to your clients. A failure to communicate effectively could result in higher turnover for you, because your clients will not have a good understanding of the value you bring to them.

Anticipation

Being able to think long-term and envision what your clients will need from you in the immediate or distant future will help you be more successful. Clients will not always know what they need or what they should ask. Being able to anticipate situations and needs, and take care of them ahead of time, will not only build trust, but it will help you build a solid rapport with clients as well.

Ethics

The scandals that have plagued the financial industry make ethics an increasingly important skill for success. Not only are advanced designations, such as CFA® and CFP® certification, making ethics a bigger priority than ever before, but the DOL Fiduciary Rule is also tightening government oversight on the industry. All clients, particularly high-net worth clients, want wealth managers who show integrity, confidentiality, and professionalism. Adhering to the utmost ethical standards is the best long-term retention strategy.

Now that you have a better idea of wealth management and the skills necessary for a successful wealth management career, we hope that you are able to better answer the question, “Is wealth management the right career for me?” Time to explore wealth management certifications!

Wealth management is a financial services term that gets thrown around a lot and, yet, is not well understood even by people in the business. Wealth management and financial planning are very similar paths. They both assist clients with investment decisions and goals. However, what uniquely distinguishes the field of wealth management from financial planning is the clients. A wealth manager is someone who consults with high-net worth clients to achieve their goals related to wealth accumulation, protection, and distribution.

Why would high-net worth clients make wealth management different from financial planning? Think of a wealth manager as a surgeon and a financial planner as a family practitioner. There is a unique specialization that is required for wealth management. Estate planning and strategies, as well as income tax planning, differ greatly for the high-net worth populations. Social Security benefits and retirement planning, as well as succession planning, also differ for clients with a high-net worth who probably will not need all of their retirement savings.

So, what is a high-net worth client? There isn’t a total consensus in the industry on that question. Some define it as $1 million or above, while many put it in the $5 to $10 million range.

So, What Does a Wealth Manager Do?

The wealth manager position has a similar process to other related occupations, such as financial planners, financial advisors, or investment advisors. The bulk of the work revolves around talking with clients, helping them identify their goals, and determining a strategy for achieving their goals in the short and long-term.

Wealth managers tend to have fewer clients than financial advisors or financial planners because their clients have more needs and require more attention. Wealth managers evaluate their clients’ needs and gain an understanding of the vehicles of their wealth. The wealth mangers then analyze the information and develop recommendations for their strategies. This involves interacting with other financial professionals the client works with as well.

Download the free eBook, Getting There from Here: Career Path Stories from Finance Professionals, to get firsthand accounts of what it's like to have a rewarding career in finance.

Wealth managers offer services that include investment advice, accounting/tax services, retirement planning, and legal/estate planning. The advantage to clients is that they get all of these services for a single fee, and the wealth manager then coordinates input from the other financial experts on the client’s team, such as attorneys, accountants, and insurance agents. The more wealth a person has, the more financial decisions they need to make. The options available can be overwhelming, and a wealth manager can steer clients toward ideas that make the most sense for them.

Some important knowledge areas for wealth managers include effective strategies for giving to charities, intra-family transactions, multi-generational estate plans, and understanding the impact of partnerships and illiquid assets in the estate.

Possible Career Paths to Wealth Management

Wealth management is a specialization, so it is important to get your feet wet in the industry first. Earning a designation like the Chartered Financial Analyst® will give you the deep knowledge you need to analyze investments, stocks, bonds, hedging strategies, financial statements, and other macro and microeconomic factors that could impact markets. The CFA® exam process takes a minimum of three years, and the competition is fierce. But, it will give you comprehensive understanding of financial markets and how they relate to one another. To learn more about the path to CFA, visit Kaplan Schweser.

The CERTIFIED FINANCIAL PLANNER™ certification is another good option for someone looking to become a wealth manager. The CFP® certification will give you fundamental understanding of general financial planning principles, risk management, investment planning, tax planning, retirement and income planning, estate planning, and financial plan development. Unlike the CFA program, you can earn the CFP® mark in as little as one year. Learn more about CFP® certification at Kaplan Financial Education.