Choosing the Chartered Financial Consultant (ChFC) ® Designation over the Certified Financial Planner (CFP) ® Certification
Certified Financial Planner (CFP) ® is the media love child for financial advisor designations. It should be, as $11.7 million of the CFP ® Board’s annual budget goes towards marketing. Their name recognition outranks Chartered Financial Consultant (ChFC) ® by 5 to 1 with the general public. But does that mean it’s a better designation for training financial advisors to actually serve their clients, or is it just marketing hype?
I consider both the Chartered Financial Consultant, ChFC ® and the Certified Financial Planner, CFP® certifications to be held in highest regard and most valuable for offering financial planning advice. Whereas nearly anyone in the financial field can refer to themselves as financial advisors or financial planners, not all are equally qualified. The required course study of the ChFC® and CFP® establishes those that earned the designation as experts in the field. Insurance agents, investment advisor representatives and brokers without these credentials haven’t completed the arduous course work and testing to prove their expertise. In my opinion, these are standards that are critical when preparing a family’s financial future.
And when it comes to retirement planning, my thoughts were that no matter how difficult it was to study and meet the criteria for the designation, it was critical. My clients have worked their entire lives and sacrificed to save for their retirement. They are literally placing their money and all their trust in my hands for their future. I owed it to them to prove that I’m worthy, by earning the certification.
The ChFC ®and CFP® designations are very similar. Both course studies include basic financial planning, insurance planning, income taxation, retirement planning, investments, estate planning fundamentals, with a mandatory exam to be passed after each course. Each also has continuing education requirements of 30 hours every two years and a mandatory ethics class.
Both ChFC ®and CFP® are held to a fiduciary standard by their issuing bodies. That simply means they are held to a higher standard in the financial industry and are bound to put their client’s best interest above their own. Other financial advisors and insurance agents might operate based upon “suitability” which permits them to choose from an array of products or solutions that may actually be to the best advantage of the representative, not the client, as long as the product is suitable.
While the CFP® is issued by Certified Financial Planner Board of Standards, founded in 1985, the ChFC® is earned from the The American College of Financial Services, which began in 1927.
The courses are very similar, however the ChFC® designation has more course requirements. Both the ChFC® and CFP® will study the same core curriculum, but the ChFC® requires two additional college-level courses that focus on specific personal finance topics, including building a comprehensive financial plan.
Although the CFP® does require passing a Board Exam and a 4-year degree, The ChFC® is a more elite group of only 55,000 designation holders, as opposed to 78,000 CFPs.
What attracted me to the ChFC® program was that I felt the curriculum was very thorough and would be very applicable to the clients I serve. Chartered Financial Consultants® live by a philosophy that investments are simply components in an overall financial strategy, not financial solutions in themselves. The course work was essential training in how to create integrated financial strategies using not only investments, but also methods for tax management, wealth accumulation, wealth preservation and tax-managed wealth transfer. This knowledge has been key to implementing detailed financial strategies throughout the years and helping my clients pursue their long-term goals.
When I compared the two programs, I knew that the CFP® program was more recognizable and that it would certainly be a better choice from a sales and marketing perspective. I knew fully well that many people might dismiss me without understanding the advanced curriculum associated with the ChFC® program. However, I believed at a starting point, it was more important to have the knowledge and skills over titles. Proving my acumen has been much stronger for my practice than letters behind my name.
I’m glad I chose to pursue the ChFC® designation first, as I use those skills every day. I also happen to believe that the CFP® program is a strong program. As I’ve already learned most of the course content, adding that certification will essentially be as simple as passing the board exam. So, you might ask why I don’t already have the CFP® designation, too.
My only hesitancy is that I must memorize advanced financial formulas for the board exam. Yes, I had to learn them for the ChFC® as well, but since I don’t hand write my financial plans, they’ve been forgotten in time. How did I forget? Because the best financial planners utilize advanced software with high tech financial programs built in, which go way beyond hand written formulas. It’s much more efficient and effective to have the skills to navigate cutting edge fin-tech!
Yes, I feel that part of the exam is antiquated. And I also don’t believe the CFP® designation will add to my proficiency. Yet, I am relenting and plan to earn the certification in 2020. It may not add anything tangible to my ability to financially plan for my clients, but I realize, for some, a few extra letters behind my name may inspire more confidence in my investment advice.
I’ll always stand firm in my belief that designations and certifications are only as important as the skill set that they add to an advisor. And what’s most important isn’t the advisor’s status, but the needs of the clients and the solutions that the advisor provides on a one-on-one basis.