Selecting the services of a “financial advisor” is debatable among the essential choices you will provide for yourself. When searching for an advisor that best fits your needs, should credentials (diplomas) be more crucial than accomplishments (deeds)? This is a question that I wrestled with from the day I started my practice 27 years ago. I was in a quandary. Should I pursue credentials to complement my college degree or invest my time and resources in other areas? This is a common predicament that many advisors face. Although I desperately craved the CERTIFIED FINANCIAL PLANNER™ designation (among our industries highest credentials), I thought the amount of time, effort, and money to accomplish this undertaking was unproductive, especially for someone 25 years old with limited financial resources. Beyond impressing friends, family, and clients with my dedication to professional development, I did not believe the additional credentials would create much value for my practice and, more notably, for my clients?
While I have always been impressed by the CFP® credential, I never suggested that anyone is better than anyone else merely because of the letters after their name. Nevertheless, I understood the sacrifice and commitment it takes to earn the CFP® designation. As an example, the rigorous CFP® certification process can consume up to two years to complete. Additionally, the expense to prepare oneself for the examination can top $5,000. One must have a bachelor’s degree, pass a two-day exam, (according to the CFP Board has a current pass rate of 64.3%), acquire three years’ of experience as an advisor, be subject to background check, and adhere to a fiduciary standard. I admired those who could accomplish this task while simultaneously working a full-time job. Despite the fact that that I envied my colleagues who had the CFP® letters after their name, I continued to assure myself that taking advice from someone who had been in the trenches just like clients and successfully proved his value to investors, was more vital for clients than advisors who were more interested in furthering their education with more diplomas. Furthermore, I regularly reminded myself that there were a significant number of competent, ethical, and qualified advisors who did not have the CERTIFIED FINANCIAL PLANNER™ designation. So for the past 27 years, I persuaded myself that “excellence in” business is more crucial than “education in” a subject.
Over the recent decade or so, I became increasingly troubled by the financial service industry and the relative ease of entry to becoming a financial advisor. Conversely, traditional occupations like medicine, law, and accounting have a minimum requirement to enter their respective professions. Medical doctors must pass the Medical College Admission Test (MCAT), graduate from medical school, and complete a residency. Attorneys must pass the Law School Administration Test (L.S.A.T) and attend a two-day written bar exam. Accountants must pass the strenuous Certified Public Accountant (CPA) exam in addition to passing the American Institute of CPAs professional ethics exam with a score of 90 percent. While the financial industry does have qualifications to become a Financial Advisor, I felt I needed additional requirements to help demonstrate my knowledge and skills.
I finally pledged to fulfill my long-lasting aspiration of earning the credentials of a CERTIFIED FINANCIAL PLANNER™ professional. As a result, I recently spent 40 weeks with my nose in a truckload of books and online tutorials. I studied more than 600 hours to prepare for the agony of the 10-hour exam, which covers financial planning, tax planning, employee benefits and retirement planning, estate planning, investment management and insurance topics. I am proud to state that after 27 years of my internal battles, it’s over. I passed. I am now a CERTIFIED FINANCIAL PLANNER™ professional. I tell you this not to boast, but to help you understand how our industry is structured and to share my view on the best course moving forward. I feel strongly that the adherence to the ethical standards stated in the Wells Fargo Advisors and CFP® Code of Ethics and the continuing education and certification process demanded from the CFP Board should be of the highest importance to our industry and clients. Just because one has the CFP® designation or some other description after their name, does not indicate they are a competent financial advisor. Much like physicians, lawyers, and CPA’s, there are good advisors and bad ones. Nevertheless, those three little letters signify some very high standards in the financial services industry. At the end of the day, we could all be best served to pay attention to the suggestion from the familiar Latin expression, caveat emptor, “let the buyer be beware.”
If you have an interest in knowing if your advisor is authorized by the CFP Board to use the CFP® certification marks, call toll-free 1-800-487-1497 or visit CFP Board’s Web site at www.CFP.net/search.