A Detailed Guide On CFP Certification

The CFP certification, whose full form is Certified Financial Planner Certification, is the highest worldwide in financial planning with over 2,23,700 certificates issued. This certification is for those dedicated to professional and moral financial planning practice with a CERTIFIED FINANCIAL PLANNER® accreditation.

Global Recognition and Popularity:

Its certification is recognised and respected in over 27 countries, which also include India. With a CFP Certification in India, the professional stands apart from others and performs well in the financial services sector.

Role of CFP in Financial Planning and Wealth Management

CFPs are available to assist people with money management. This can include a wide range of requirements, including insurance, education, retirement, and investment planning. Being a fiduciary of your assets, or someone who makes choices with your best interests in mind, is the most crucial quality of a CFP.

• It’s the top qualification in Financial Planning & Wealth Management
• Expanded opportunities in Wealth Management, Mutual Funds, Banks and Financial Planning Firms.
• Over time, enhances career advancement prospects, especially as banks proliferate services and require someone well-versed in mutual funds insurance or even taxation along with the set core of banking products.
• Enhances credibility on wealth advisory services, proving your expertise and knowledge in financial planning.

Also Read – 10 reasons why you should become a certified financial planner

• Students after 12th/graduation who want to go into personal finance
• Mutual Fund Distributors
• Insurance agents
• Banking Professionals
• Individuals wanting to get into wealth management
• Investment Advisors
• Financial Planners

Also Read – How a CFP certification can help mutual fund distributors

There are two primary pathways to obtaining CFP certification.

Normal Pathway

• High School Graduates : Anyone who has completed 12th grade or its equivalent in any stream.
• Undergraduates and Graduates: Students and degree holders in fields such as B.com, BFM, BAF, BMS, BBA and similar disciplines.
• Qualified Professionals: Insurance and mutual fund advisors, stockbrokers, wealth managers and relationship managers with relevant qualifications are eligible to take the CFP certification exam through the regular mode.

Fast Track Pathway

• Experienced Finance Professionals: A postgraduate in finance with at least 3 years of relevant professional experience can opt to take a single exam – Integrated Financial Planning, to acquire the CFP certification.

Officially, both pathways are valid routes to obtaining CFP certification, leveraging varying educational backgrounds and work experience levels.

Want To Know Which Pathway Is Best For You?

Regular Pathway:

• Must have cleared Class 12.
• Must have passed all exams covering six modules of the certification program.

Fast Track Pathway:

• For candidates with qualifications such as CA Intermediate level, MPhil, ICWA, CFA, CAIIB, LLB, CS, PhD, PG, Licentiate/ Associate/ Fellowship of Life Insurance, Actuary, FFSI & FLMI (LOMA), or UPSC Civil Service Examinations.
• Needs to pass the 5th exam (Advanced Financial Planning) to earn the certification.

Documentation: Certificates, degrees, and marksheets will constitute the supporting documentation for the aforementioned.

Eligibility Criteria For Others

For Experienced Candidates:

In the case of employees, they must have at least three years of prior work experience at the time of document submission.

• Any bank, brokerage, mutual fund asset management, securities firm, insurance business, portfolio manager, and non-banking finance company (NBFC).
• Investment advisor who is registered (as “persons associated with investment advice”).
• Treasury division of a business that has registered as an academic institution with the RoC or as an Authorised Education Provider.

Experience in one of the following general work functions is required:

• Funds management
• Advice on investments
• Accounting, fund accounting, and corporate finance auditing
• Investor services and customer relationships
• Giving lectures on economics, commerce, and finance at academic institutions or providing instruction or training on the Financial Planning Education Framework-based CFP certification program.

Documentation: The experience will only be taken into consideration with proper certification from the company HR department, the RIA, the academic institution’s authorised person, or the approved education provider. To account for all applicable experience, appointment and relief letters will be used to support three years of experience gained from many companies.

Note: Academic experience will be limited to three years and cannot be mixed with work experience.

For Self-employed Candidates:

When self-employed professionals are working in the financial intermediation, distribution, or advisory industry, they must have at least three years of previous work experience in the following roles:

• Proprietary, Individual firm
• Partnership firm, LLP

Two of the three years of prior job experience mentioned above may be used for any one of the following general financial planning components. The candidate must have experience in “two or more” of the following areas for the final year (or at least one year of the total experience).

• Budgeting, cash flow management, personal financial management, etc.
• Planning investments, managing assets, managing a portfolio, etc.
• Planning for insurance and risk management
• Tax Optimization for Businesses, Individuals, and Corporations
• Retirement Planning: Options for Both Employers and Individuals
• Planning an Estate; Transfer of Wealth: Individual and Family Office Configuration

Documentation: The incorporation documents, which indicate the date of the firm’s establishment, commercial activity, etc., as well as registration data such as the ARN, IRDA licence, and Retirement Adviser certificate from the relevant regulator or agency, are the pertinent experience documents that the self-employed must provide. You may also produce the commission statements that you have received from product businesses (MF/Insurance) and/or IT returns to attest to your continued operations during the relevant time (of the aforementioned experience).

There are Three Modules:

• Investment Planning
• Retirement and Tax Planning
• Risk and Estate Planning

Fourth & final module is the Integrate Module: Combination of 3 Specialist Modules Plus Financial Assessment Plan (case study)

• FPSB awards an International Certification for each level

Please note: 

• Financial Planning Standard Board Ltd., US, now directly handles the CFP certification qualifications in India.
• Candidates must complete the online Ethics Course offered by FPSB Ltd. before applying for any certificates, such as the track exam certificate or the final CFP certification.

Module 1 to 3 of the FPSB Specialist Certification assess a candidate’s proficiency in each of the several areas of financial planning. The candidate may attempt them in any sequence. A candidate is only qualified to attempt the final test, test 5, if they have passed each of the four component examinations. The structure used consists of objective multiple-choice questions that are broken out for component exams and closely connected to Case Studies that replicate a household’s actual financial condition as it works toward reaching financial objectives. (source)

FPSB conducts a Specialist certification exam every month in the 3rd week and a final module every alternate month.

Eligibility to take the exam requires completion of the education coursework requirement. Candidates can register before finishing their coursework or even before obtaining a bachelor’s degree. This flexibility allows individuals to begin the exam process earlier in their educational journey.

For exam preparation, a range of resources is available to support candidates. These include comprehensive guides on navigating the exam process and developing effective study strategies tailored to the content and structure of the CFP® exam. These resources aim to enhance preparation efforts and optimise success on exam day.

CFP Exam Fees For Both The Pathways

Regular Pathway

Fast Track Pathway

Registration and Scheduling Process:

1. Create a FPSB Board online account (if you don’t already have one). It’s fast, free, and secure.
2. Log into your FPSB Board account and go to the “Exam” section of your Account Dashboard. Click “Select Your Test Dates” and complete the registration form.
3. Submit payment for the exam registration fee using a credit card.
4. FPSB conducts exams in the 3rd week of every month, candidates cannot select dates as per their choice.

Register early to secure the best date and location for your exam.

Levels of Certification

The CFP Curriculum has four distinct levels. Each level is awarded an International Certification by FPSB upon completion.

Practical Experience Requirement

Supervisory Experience Requirement:

• 1 Year of supervisory experience under a practicing CFP professional, to be completed after finishing all modules.

Financial Services Industry Experience Requirement:

• 3 Years of work experience in the financial services industry, in any of the following areas:
  • Funds Management or Investment Advisory
  • Accounting or Auditing
  • Corporate Finance
  • Customer Relations/Investor Services
  • Academic Roles

Your work with clients, teaching financial planning courses or other activities can satisfy these requirements.

Also Read – All About Fee-Based vs Commission-Based Financial Planners

Job Roles

Responsibilities Of A CFP

• Assess clients’ financial situations to identify strengths and weaknesses.
• Recommend financial products like insurance, investments, and banking.
• Develop customised investment and savings plans, including retirement and tax strategies.
• Implement financial plans and work with other professionals as needed.
• Stay updated on financial rules, products, and market trends.

Setting Up Your Own Firm After CFP – Pros & Cons

Once you’ve achieved your Certified Financial Planner (CFP) certification, establishing your own financial planning firm requires a few critical steps to ensure you meet legal, regulatory, and professional standards.

Critical Requirements:

• Adhere to the standards and ethical guidelines set by the Financial Planning Standards Board (FPSB).

To become an Investment Adviser, you need to follow these.

1. Submit Form A and required documents to SEBI.
2. SEBI usually replies within one month, depending on the completeness of the application.
3. Review SEBI (Investment Advisers) Regulations, 2013 for eligibility and details.
4. Covering Letter: Include:
   • Details of any existing advisory services.
   • Information on past investment advice.
   • Statement about applying as a new adviser.
5. Submit:
   • Complete Form A (signed, stamped).
   • Pay Rs. 5,000 as application fee (bank draft to SEBI, Mumbai).
6. Online Application: Follow SEBI’s online guidelines.

Grant of Registration:

1. Approval: SEBI reviews requirements and, if satisfied, approves and informs the applicant.
2. Pay Fees:
   • ₹1,00,000 (corporate) or ₹10,000 (individual) as registration fee (bank draft to SEBI, Mumbai).
   • SEBI issues a registration certificate upon receipt of fees.

Post-Registration Compliance:

1. Reporting: Comply with SEBI’s reporting requirements.
2. Updates: Regularly check SEBI’s website for updates and guidelines.
3. Notify Changes: Inform SEBI of any material changes in details.

Additional Notes:

1. Applicant: The entity applying for registration.
2. Incomplete Applications: Will be rejected; you will be informed.
3. Policy Decisions: May cause delays.
4. Document Handling: Number and stamp/sign each page.
5. Authorization: Provide an authorization letter if using an authorised signatory.
6. SEBI Offices: Head Office in Mumbai; Regional Offices in Kolkata, Delhi, Chennai, Ahmedabad; Local Offices in Bengaluru, Bhubaneshwar, Guwahati, Hyderabad, Indore, Jaipur, Kochi, Lucknow, Patna.
7. File with the appropriate SEBI office. Addresses are on SEBI’s website.

Pros Of Setting Up Your Own Practice As A CFP:

• Full control over your practice and decisions.
• Set your own hours and tailor services.
• Opportunity to expand and build a successful business.
• Develop deeper connections with clients.

Cons Of Setting Up Your Own Practice As A CFP:

• Significant initial expenses for setup and licensing.
• Navigating legal and regulatory requirements can be challenging.
• Handle all business aspects and client management.
• Financial and liability risks, even with insurance.

• Proficient in financial calculations and analysis.
• Communicates financial plans clearly.
• Skilled in selling and managing financial products.
• Builds and maintains positive client relationships.
• Self-motivated and consistently improves.
• Thinks strategically for long-term financial goals.

As mentioned earlier in this blog, there are 223,770+ CFP professionals worldwide. Of this approx. 2731 are based in India. This represents an increase of 8.5% from the previous year. Notably, India is projected to be among the top 5 nations in the world for CFP professional development in 2023. (source)

Source: cfp.net

Potential employers and sectors hiring CFP professionals

Sectors:

• Banks
• Financial Institutions
• Mutual Funds
• Non-Banking Financial Companies (NBFCs)
• Wealth Management Firms

Employers:

India

• Axis Bank
• HDFC
• HSBC
• ICICI Bank
• JP Morgan
• Kotak Life
• LIC, India
• Reserve Bank of India (RBI)
• Standard Chartered Bank
• State Bank of India (SBI)

Global

• Amazon
• Bank of America
• Goldman Sachs
• JPMorgan Chase
• Vanguard
• VISA Inc.

Also Read – What Jobs Can You Get In The UK as a Certified Financial Planner

Salary prospects based on specialisation and experience

India:

Freshers: About ₹3 Lakhs/year

Mid-level: About ₹5-6 Lakhs/year

Senior level: About ₹7-15 Lakhs/year

(source: Livemint, Payscale)

Global Salary

In the US, a CFP professional can expect to make $1,31,259 in total compensation per year, with an average income of $86,228.

(Source: Glassdoor)

*Please note salaries can vary depending on the organisation and the particular financial planning function.

All CFPs are bound by fiduciary rule and they must always place the best interests of their clients first. Such as if they are selling two products, one that makes them more money (perhaps a lot of it) is less likely better than the other for you or what you’re looking for recommending a good product.

CFPs are required to always work in their client’s best interests when providing financial advice or services. These are three main obligations: (1) the duty of loyalty to the client, (2) a standard or duty of care in advising and counselling, and (3) adherence to discretionary professional judgement vested by law.

IMS Proschool offers an intensive program which is designed to make you ready for a career as a Certified Financial Planner (CFP) professional. Whether you plan to study online or offline, IMS Proschool provides end-to-end coverage for CFP certification as an official learning partner of FPSB.

Reasons to Opt for CFP Certification From IMS ProSchool:

• 70% pass percentage: Almost 7 out of 10 students pass Proschool’s CFP test! That’s like winning a big game!
• 200+ hrs offline coaching: You get to learn from real teachers for over 200 hours!
• Learn From Practising CFPs: Imagine learning from someone who already has their own practice! They not only teach you about the course but impart real-world practical knowledge to make you job-ready.
• 2000+ Practice Questions: Want to pass the CFP exams on the 1st attempt? Proschool has over 2000 questions to test you!
• FPSBs Official Learning Partner: This makes us a trusted CFP Training Provider.
• Save on Study Materials: Save Rs. 16,250 on FPSB E-learning books.
  
• Exam Registration help: Don’t worry about filling out tricky papers. Proschool will help you sign up for the test!
• M0 – Foundation Module: Even if you don’t know much about personal finance now, Proschool can teach you from the very beginning about taxes, saving for later, and more!

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