What is a certified financial planner (CFP)?

A certified financial planner (CFP), one of the most recognizable types of financial adviser, helps clients manage their finances and reach financial goals. Unlike some other financial advisers, CFPs must meet certain education and experience requirements and must follow a code of ethics.

Read on to learn more about CFPs.

Key takeaways

• All CFPs are financial advisers, but not all financial advisers are CFPs.
• A CFP generally must hold at least a bachelor’s degree, have a minimum amount of work experience and pass an exam to hold this professional designation.
• CFPs can help clients with things like retirement planning, expense management and investment guidance.
• CFPs might earn compensation through fees or commissions or a combination of the two.

A CFP gives financial advice to clients. This advice might include assistance with retirement planning, investing, wealth management, estate planning or tax planning. A CFP might work on their own or at a financial services firm.

As of June 2023, there were more than 96,000 CFPs in the U.S. More than half—53%—of Americans work with or have worked with a CFP, according to a 2023 survey by Certified Financial Planner Board of Standards.

A CFP typically helps a client with things like:

• Creating a personal budget
• Managing expenses
• Establishing savings goals
• Planning for retirement
• Making investment decisions
• Developing an estate plan

A CFP is a type of financial adviser who helps clients achieve their financial goals. But not all financial advisers are CFPs. Generally, though, CFPs and other financial advisers help clients manage money.

A CFP earns a special designation from the CFP Board based on a combination of education and experience. Other financial advisers may or may not hold professional certifications.

Aside from CFPs, types of financial advisers include the following:

• Certified public accountant (CPA), who prepares tax returns, generates financial statements and creates financial plans, among other tasks.
• Chartered financial analyst (CFA), who helps guide investment decisions.
• Insurance agent, who sells health, life and property insurance policies to clients.
• Registered investment adviser (RIA), who offers investment advice to clients.
• Robo-adviser, which is a technology platform that automates investment moves on behalf of clients.
• Stockbroker, who buys and sells stocks and other investments for clients.
• Wealth manager, who oversees financial planning for well-to-do clients.

A CFP is a fiduciary. Acting in the best interests of a client, a fiduciary—either a person or an organization—manages a client’s money and other assets. By law, fiduciaries can’t provide financial advice that would benefit themselves instead of their clients.

Furthermore, a fiduciary is supposed to reveal any conflicts of interest that might affect their clients.

Some financial advisers, but not all, are fiduciaries. For instance, someone might work as a financial adviser or wealth adviser but not be a fiduciary.

Examples of financial advisers who are fiduciaries include CFAs, CFPs and RIAs. Among those who generally are fiduciaries but might not be financial advisers are accountants, attorneys, bankers, insurance agents and investment brokers.

To become a CFP, one typically must meet education requirements, pass an exam, accumulate relevant work experience and follow a code of ethics. The CFP Board sets standards for CFPs and awards the CFP designation.

In some cases, a CFP candidate may qualify for a waiver or substitution of some of the CFP Board’s requirements.

A CFP must hold a bachelor’s degree or graduate degree from an accredited college or university. The degree can be in any field, but it must be completed either before passing the CFP exam or within a five-year window after passing it.

In addition, a CFP candidate must complete college- or university-level coursework through a program registered by the CFP Board. This includes a 45-hour capstone course on financial planning. A slimmed-down capstone alternative may be available to some professionals based on their knowledge of financial planning.

Some professionals may be able to bypass the CFP coursework altogether if they hold an advanced degree or a professional certification. Among those who might qualify for this waiver are:

• CFAs
• CPAs
• Chartered financial consultants (CFCs)
• Chartered life underwriters (CLUs)
• Licensed attorneys
• Holders of a doctoral degree in business administration, economics, finance or financial planning

To become a CFP, a candidate must pass an exam administered by the CFP Board. The exam is offered across eight-day testing periods every March, July and November. 

The standard fee for the CFP exam is $925, but an early-bird rate of $825 is available until six weeks before the registration deadline. A rate of $1,025 kicks in during the final week of registration.

The CFP Board provides a number of ways for a candidate to meet the experience requirement.

Overall, you must complete 6,000 hours of professional experience related to financial planning or 4,000 hours of apprentice experience.

Among the ways a candidate can gain those hours are:

• Supplying financial planning services to clients
• Teaching financial planning-related courses
• Participating in internship programs
• Enrolling in a residency program

The CFP Board requires every CFP to follow a code of ethics. A CFP who fails to adhere to the code faces disciplinary action from the board.

CFPs’ ethics rules include:

• Passing a background check
• Upholding fiduciary responsibilities to their clients
• Avoiding or disclosing conflicts of interest
• Exercising professional integrity in delivering services
• Complying with all laws, rules and regulations that govern professional services
• Being upfront about how they’re compensated

You may benefit from hiring a CFP to address several needs, such as:

• Setting financial goals
• Developing a plan to reach your financial goals
• Determining the current state of your finances
• Preparing financially for a marriage or divorce
• Planning financially for the birth or adoption of a child
• Ensuring you’ll have enough money for retirement
• Figuring out what to do with an inheritance
• Handling financial matters after a death in the family

The cost to hire a CFP varies greatly, depending on where you’re located and which services you’re using. A CFP might be compensated on a fee-only basis, commission-only basis or combination of the two.

Here are some of the ways that a CFP makes money:

• Charging a percentage of the assets being managed. For instance, if a CFP is managing $500,000 of your assets and charges a 1% fee, you’d pay $5,000 a year.
• Charging a commission on transactions, such as the purchase or sale of stock.
• Charging a monthly or quarterly retainer or subscription fee.
• Charging a fixed fee for each service.
• Charging a flat fee, which could be $100 or more per hour.

The Kitces Report in 2020 found that CFPs charged a median flat fee of $2,500 or a median hourly fee of $250 to create a comprehensive financial plan.

CFPs are financial advisers who help clients with investment, retirement and budgeting decisions, among other things. They might work on their own or at a financial services firm. CFPs are obligated to act in the best interests of their clients, and they must meet an array of professional standards and educational requirements.