When you look at the financial advice-giving landscape, there can be a lot of confusing titles given to individuals. The industry has done a terrible job of explaining to the public what each of those titles mean and what they do. For example, titles like vice-president of investments or senior vice president sound appealing but are given to individuals based off meeting a commission-based goals. While others, like Retirement Planning Specialist, are given by passing a test (given by that firm), which does not take very long to complete, and suddenly, they are “professional” in the eyes of the public.
So, how do you know that you are getting the best advice?
For starters, find a credential this is specific to your needs. If it is for financial/retirement planning, the one most recognized by the industry is the CERTIFIED FINANCIAL PLANNERTM (CFP®). One that is overseen by a non-biased, independent board which requires that individual to complete continuing education (CE) and ongoing ethical standards.
However, as I briefly mentioned in my previous article, Focus on what you can Control, it is scary to think how few individuals in our industry have the CFP® certification. They are few and far between.
Of the approximately 310,000 individuals in the U.S.1 who give financial advice, only 88,635 have the CFP® designation, according to the CFP website (cfp.net). A little over one in every four. Which is unfortunate to say the least, as the approach taken by a CFP®, in my opinion, should be an industry standard when giving financial planning advice.
A CFP® professional takes a holistic personalized approach, to bring all the pieces of your financial life together. These individuals also have made a commitment to the CFP Board to act as a fiduciary (always putting the clients’ interest first).
So why don’t more individuals have the designation?
The simple answer - because it is tough to get. It requires the completion of a rigorous process in which the individual must:
Complete a two-part education requirement
Including completing both coursework through an independent board registered program and
Have a bachelor’s degree or higher from an accredited college or university
Pass an exam that consists of two 3-hour sessions over one day
Complete the experience requirement (which prepares the individual to provide personal financial planning to the public without supervision) which requires
6,000 hours of professional experience related to the financial planning process or
4,000 hours of apprenticeship experience that meets additional requirements
Complete the ethics requirement which indicates you have agreed to adhere to high ethical standards for the practice of financial planning
Along with that, every two years the individual must:
- Complete 30 credit hours of continuing education (CE) of which 2 hours must be board approved ethics CE
Let’s just say it is a more difficult process than meeting a commissions goal or passing a short exam to get a title that sounds good to the public.
I am not saying that if a person does not have the CFP® certification they are not giving good financial advice. My point is that there are few that:
- Go through such a difficult process to let the public know that they have the background and knowledge to take care of your financial future.
- MUST go through the financial planning process with every one of their clients (unfortunately not everyone in the industry does).
- Few are held to a higher standard when it comes to always doing what is best for the client.
- Robbins, Tony, Unshakeable: Your Financial Freedom, 2017
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