IS YOUR FINANCIAL PLANNER CERTIFIED?
“Certified Financial Planner”. CFP.
It’s only three little letters.
Why would I put myself through years of hard work, rigorous education, a gruelling exam, and a requirement to continue education every year for three little letters?
Especially because when I got those letters, I didn’t even need them to practice as a financial planner in Ontario.
Now there is legislation in Ontario that protects the use of the “Financial Planner” and “Financial Advisor” title. It means that there are now minimum standards of education and experience that Financial Planners and Financial Advisors must have to use their respective title.
But that didn’t come into effect until March 28, 2022 – after I became a CFP.
So, why did I bother?
Because, for me, it demonstrates the commitment to expertise and professional conduct that my clients deserve.
And I have never shied away from a little hard work.
What is a CFP?
CFP is the most widely recognized financial designation in Canada.
To a CFP designation, you must:
· Complete a Core and Advanced curriculum program.
· Complete a course on Professional Ethics
· Complete the CFP Professional Education Program, a 140-hour program designed to teach you to apply the technical skills learned in the core and advanced curriculum programs in a holistic way
· Complete an Exam Prep Course
· Pass a gruelling 6 hour exam – the pass right for this exam is only 63%! The pass rate on the second attempt is only about 33%!
· Complete 3 years of qualifying work experience directly with clients
The whole designation takes about 600-800 hours and costs about $10,000.
(You can search for professionals who are approved to use the Financial Planner title here.)
Once you have your CFP, you must maintain it. That means completing 25 hours of continuing education programs every year, including in a “professional responsibility” category.
CFPs are trained in the more complex areas of finances like tax and estate planning. CFPs can work with not only individuals but also corporations.
It is not for the faint of heart.
But why does this matter to you, as a client?
One of the most important components of the designation is the code of ethics all CFPs are required to abide by.
The very first item in this code is a duty of loyalty to the client.
Word for word, directly from the code itself, this means that CFPs have:
“The duty to act in the client’s interest by placing the client’s interests first. Placing the client’s interests first requires the Certificant place the client’s interests ahead of their own and all other interests.”
This is akin to a fiduciary duty.
In fact, that is stated directly in another section of the code:
“A Certificant who takes custody of all or any part of a client’s assets for investment purposes shall do so with the care required of a fiduciary.”
In Ontario, financial professionals are only bound by law to demonstrate a “duty of care”, not a fiduciary duty. That means the only legal requirement is that financial professionals provide suitable advice to their clients. But is what is suitable also what is best for you?
Not necessarily.
The planner might stand to make more money if you selected a particular investment option over another. So long as the suggested option is still suitable for you (as in, doesn’t actively cause harm), they are well within their legal right to recommend it.
A CFP, on the other hand, is required to put your needs above their own. If there was an investment option that would minimize your risk and maximize your gain, but would make the planner less money, they are obligated to suggest that over any other option. If they do not, they risk losing their designation (among other things).
This code of ethics is a big reason why those three little letters means so much to me.
Having CFP after my name is my quantifiable demonstration to my clients that their needs will always come above my own.
It means my clients will never have to wonder what my motivations are.
To me, that’s priceless.
If that sounds like the relationship you want, work with a Certified Financial Planner like me. Book a call.