One of the most sought-after designations in wealth management is on the verge of becoming a little harder to claim on a resume.
But before the Certified Financial Planner Board of Standards raises its competency standards for its mark holders, it wants to hear what the industry has to say.
The CFP Board, a professional group for wealth managers, is mulling nine proposed changes to the competency criteria it uses to decide who can hold the CFP designation. The board now counts
The proposal would raise the CFP Board's criteria mainly by increasing the number of continuing education hours advisors have to log to maintain their certifications. It could also require CFP aspirants to have specific financial planning-related experience before they're eligible to be brought into the fold.
At the same time, certain of the proposed changes could ease the way for some CFP aspirants. Time spent in pro-bono planning work, for instance, could count toward the hours of work planners have to put in before they can gain admission.
But before making any changes, the board wants to hear what the financial planning industry at large has to say. It's giving planners until Feb. 28 to submit
"We recognize that changes to the competency standards can significantly shape the future of the profession," CFP Board CEO Kevin Keller said in a statement. "That's why input from practitioners, candidates, firms, membership organizations and the public is so important."
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Many of the proposals seek to use continuing education to ensure advisors stay up to date on the latest industry regulations and trends. Current CFP rules require certification holders to obtain credit for 30 hours of continuing education every two years. The CFP Board is considering recommending that number increase to 40. The board is also considering required continuing education on specific topics related to new laws, tax policies or regulations that may have come into effect.
The proposal would meanwhile set tighter requirements for the types of industry work advisors can log on their way to obtaining a CFP credential. Current rules require many CFP aspirants to count 6,000 hours of industry experience before they can claim their certification.
The new proposal would specify that that experience must be related to at least three of what the CFP board
CFP Board Chair Matt Boersen said the proposals are meant in part to bring the CFP more in line "with the most revered professional standard-setting bodies and established professions, including law, accounting, architecture and medicine."
"The recommendations being evaluated support CFP certification's role in benefitting the public, while also ensuring that CFP certification remains relevant and valuable as the financial planning profession continues to evolve and thrive," Boerson said.
Brad Herdt, a financial planner at Salt Lake City, Utah-based Deseret Mutual Benefit Administrators who has had his CFP certification since 2022, said 40 hours of continuing education isn't too much to ask every two years. That's especially true given how quickly the industry changes and how easy it is to fall behind on the latest regulations and policies.
He also favors allowing the CFP to require advisors to obtain continuing education in certain specific topics.
"If you have two people who get their CFPs at the same time, they'll have roughly comparable knowledge," Herdt said. "But if they've had their CFPs for five years, there is no guarantee they still speak the same language, because our industry has quite a few distinct niches. So I think this can help build confidence that we can still talk about certain topics even if they're not our particular forte."
If anything, Herdt has misgivings about parts of the proposal that would make things slightly easier for some CFP holders or aspirants. One recommendation, for instance, would let advisors go back 15 years when logging industry experiences that count toward a CFP certification. The current rules cut off those backward looks at 10 years.
"How relevant is any knowledge you gained and any soft skills you gained back then, when it's now been 15 years?" Herdt said. "I'm a very different person than I was 15 years ago."
Herdt likewise questioned a proposal that would let advisors roll as many 10 continuing education hours over from one two-year period to the next after they've met their basic 40-hour requirement. Current rules allow no such transfers.
"So something I did in continuing education nearly four years ago could still count today?" Herdt said.
By and large, though, Herdt said, "I feel very good about the majority of the proposed changes."
Among other things, the CFP Board is also recommending that:
- Certified investment management analysts, or CIMAs, be allowed to meet the board's extensive coursework requirements by taking a single capstone course. The board already grants that privilege to certified public accounts (CPAs), chartered financial analysts (CFAs), chartered life underwriters (CFUs) and various other professionals.
- CFP aspirants be allowed to log as many as 600 hours of pro-bono work toward the 6,000 hours of industry experience they need to become a CFP.
- Changing the CFP's entrance examination to state that "competency to practice independently as a financial planner" has to be shown by the completion of four specific certification requirements. Those requirements fall under the headings: education, examination, experience and ethics.
- If the continuing education requirement is increased to 40 hours every two years, allowing CFP holders to log 10 of those hours doing pro-bono work.
The proposed changes are the result of the first comprehensive review the CFP Board has conducted of its competency standards since introducing them in the 1970s. That review was conducted by a specially formed
The commission began its work in January 2023. The recommendations came not only from discussions with CFP mark holders and candidates but also professional credentialing organizations such as the CFA Institute and the Society for Human Resource Management.
