It is quite common for an insurance agent or adviser to be unsure of the path to take even when the mind is made up to pursue and advanced financial designation. We take a look at two of the industry's most recognised and prestigious designations - Certified Financial Planner (CFP) and Chartered Financial Consultant (ChFC) - to help you better understand and decide which is suitable for you.
According to The American College of Financial Services:
Educational experience
The CFP, which is conferred by The Certified Financial Planner Board of Standards, Inc., requires a minimum of bachelor’s degree and the completion of a college-level program of study in personal financial planning (such as The American College of Financial Services’ CFP program) and capstone course in financial plan development. While the examination is offered by the CFP Board, the educational experience must be obtained elsewhere from an approved CFP educational provider.
The ChFC is conferred The American College of Financial Services and requires the completion of 9 courses offered by The American College. The nine courses are detailed in the Studying for the CFP and ChFC on The American College website.
Professional experience
If you want to earn the CFP designation, you must have three prior years of financial planning experience.
The ChFC requires three years of professional experience, but doesn’t mandate the experience be planning related (a list of acceptable experience can be found here.). An undergraduate or graduate degree from an accredited institution can substitute for one year of professional experience for the ChFC.
Examinations
Students working toward the CFP credential must pass a comprehensive and intensive board exam covering 78 principal topics. CFP preparation programs, such as The American College’s, address these topics within their course curricula. Historically, the exam carries a pass rate between 60 and 65%.
The ChFC doesn’t require students to sit for a board exam. Instead, advisors take an examination after each course to ensure comprehension of the material covered before moving to the next class.
Post-program and Continuing Education (CE)
After passing the rigorous exam, CFP students must also pass a background check and pay an entrance fee before obtaining their official certification. Once an financial services professional has been authorised to add the CFP designation to his or her title, the CFP board requires an ongoing annual certification fee as well as completion of 30 CE hours every two years.
Post-designation considerations for the ChFC also require 30 hours of CE every two years and a recertification fee that’s assessed every other year.
Both designations emphasise the importance of CE with these post-designation stipulations.
So which is suitable for you?
According to The American College, it’s truly a matter of personal preference; the bottom line is that you have options.
They both have many similarities but also key differences that you must consider before proceeding. Both are rich with benefits that will make you a more successful financial adviser, so you really can’t make a wrong decision. Choose the designation you believe will position you for optimal future success.
In fact, for many financial services professionals, The American Colleage said “the best alternative is to pursue both”. They are complementary designations and not mutually exclusive. Given that there are seven shared courses required by both, the return from a bit of additional study is considerable, it said.
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