A Career as a Certified Financial Planner™ (CFP®)

It’s official: Americans are demanding better financial advice.1 And they’re not just turning to anyone for help — they’re seeking out certified, experienced professionals who believe in putting their clients’ best interests before anything else.

The data backs it up: over the past five years, the number of consumers partnering with financial advisors grew from 28 percent to 40 percent. And what’s more, seven out of 10 consumers report that they’ve opted to work with a Certified Financial Planner™ (CFP®), one of the most highly regarded —and in-demand — designations in the field.2

Mark Fedenia

So what does being a CFP® really mean, besides earning a spot in the “alphabet soup” following your advisor’s title? And what should budding advisors know about the designation and the industry, in general? We recently sat down with Mark Fedenia, Ph.D., Associate Professor of Finance, Investment and Banking at the University of Wisconsin – Madison, to find out:

1. Tell us: what is the value of having the Certified Financial Planner™ (CFP®) designation?

There are three things that set CFP® certificants apart from the rest of the financial services industry. Anybody can give out advice — but in some cases, you might not have a clear sense of the person’s background or their motivations behind recommending certain products or vehicles. By enlisting the help of a CFP®, clients know that they’re getting someone who can not only cover every dimension of the financial planning process, but someone who has been educated and tested on all aspects of the process.

The second benefit is professional responsibility: CFP® certificants are required to adhere to a certain set of professional standards. These standards are publicly available for clients to review, which allows transparency around the boundaries in which the advisor will operate, and in the service clients can expect.

This is an industry that’s constantly evolving. Laws are changing every year, many of which specifically impact some of the recommendations or advice that advisors provide their clients — for instance, the laws around Social Security claiming strategies, which took effect last year.

A CFP® certificant is obligated to participate in continuing, ongoing education.
They’re not just working from a stock set of knowledge; they’re constantly upgrading their skills and expertise and learning new information. You’re getting a certain level of advice you might not get elsewhere.

2. Research has shown that the certification is growing in popularity across the advisory community. In fact, the number of CFP® certificants has more-than-doubled over the past 17 years. What do you think is driving this demand?3

I think the drivers are bigger than the certification itself. First, there’s been a steady decline in defined benefit (DB) programs over the past few decades.
Previously, people relied on traditional pension plans for retirement savings — now, in our defined contribution world, you need to have or hire expertise, so some of these people got a late start in developing comprehensive financial plans.

Then, we experienced significant bouts of market volatility — rollercoaster-style swings that came at a time when people were in pretty vulnerable positions.
Many people were faced with rebuilding their capital after these market declines.

Now, investors are looking for someone to help guide them through these periods of volatility, to provide confidence and advice through the ups and downs so they can meet their retirement goals. Under the older pension system, these issues were handled at a professional level. Now, people are forced to look for that trusted, specialized expertise, and that’s exactly what a CFP® certificant can provide.

3. As you mentioned previously, the financial services industry is constantly evolving. Are there any trends or changes on the horizon that budding advisors should keep in mind?

With the release of the Department of Labor (DOL)’s fiduciary rule, most advisors will be required to uphold the fiduciary responsibility to their clients. These advisors can no longer ignore critical dimensions that might adversely affect a client; advisors must address all the critical components of a financial plan. As an advisor, you need to be well-versed in all areas, as an individual or part of a team of experts. The expectations for service and advice are higher now, across every part of the industry.

Technology will also play a bigger role in the financial planning process, especially when it comes to analysis and decision-making. Many young advisors already have a leg up on this trend, since they’ve grown up in the Internet era. They’re familiar with the new tools and decision-support systems that are available to advisors — plus, they’ve just had general exposure to technology in their everyday lives.

When it comes to these changes, we’re just seeing the tip of the iceberg: more firms will be modifying their processes and approaches to capitalize on these changes, and a young advisor can bring a lot of value to the table by boosting their skills and knowledge in these areas.

4. Over the years, you’ve seen many prospective advisors and CFP® candidates come through your classroom. In your opinion, what qualities or core competencies do successful students (and soon-to-be advisors) possess?

Many of my students are already drawn toward a profession in finance and have similar technical skill sets. But what it really comes down to is the person. I’ve noticed that students who are more geared toward wealth management or financial planning possess a “medical-doctor mentality.”

Here’s what I mean by that: a general practitioner can provide recommendations about a patient’s general health and identify and cure problems before they become acute. The students who have that connection with people and want direct interaction with a client go on to be wealth managers and earn the CFP® certification. They see themselves as the “financial doctor” of an individual or a family, so to speak.
They want to be productive members of society through providing valuable financial services, helping enrich somebody else’s life by helping them achieve their financial goals.

5. What factors should young advisors look for in firms when vetting potential job opportunities? How can they ensure they’re choosing the firm that’s right for their long-term career goals?

Above all, it’s important to take the job where you’ll be part of a team that can give you guidance — a firm that matches young advisors up with experienced mentors. Beyond a technical standpoint, being an advisor means developing relationships with clients and maintaining them. It’s something you may have learned a little bit about in school, but it’s experience you really can’t gain in the classroom.

It’s essential to have a quality team of seasoned professionals to help guide you — to take the technical skills you’ve learned, foster your communication skills and help you manage the sometimes-delicate issues that you’ll be encountering in your meetings with clients on a regular basis. Sometimes, you’re having conversations with people that they don’t want to have in their own homes.

If you’re interviewing with a firm that isn’t structured in a way that encourages constructive team dynamics, with a process for developing people’s strengths, it’s not a good starting point, and it’s probably not the firm for you. You need that valuable, real-world experience, and a team that is willing to show you the ropes and invest in you, as an advisor.

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OneBite Editorial Staff

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A Career as a Certified Financial Planner™ (CFP®)

time to read: 5 min