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CFP Designation is given too much credibility

2,922 Views | 34 Replies | Last: 4 yr ago by cheeky
cjsag94
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AG
I've noticed, especially after the DOL stuff, that there seemed to be a lot more chatter about how you have to use a CFP. The marketing is great (by CFP Organization and CFP Designees) as the illusion has been created that you are guaranteed to be supported by an ethical and all knowing individual if they have this designation. The CFP board has come under fire as it's been discovered how little they monitor their members after they pass the test.

The reality is, this designation is obtained by taking courses and reading a bunch of books. It's maintained by taking continuing education. I work with many advisors and some are CFP, some aren't. The designation does not differentiate their capabilities or ethics.

I began pursuit of CFP a number of years ago, realized in the midst of "learning" just how irrelevant most of the info was to what we do on a daily basis. Moreso, I realized it was a system that was a snapshot in time and didn't do much to keep me up to date as things change (we all know the required continuing Ed is a joke). I dropped the course and focused on partnering with the necessary experts in each field to support the various needs of my clients, as well as staying current with relevant topics. Other than not appearing in CFP site searches, I've never spoken with anyone who walked away because I wasn't certified.

Not saying CFP is bad by any means... But it would weigh very little in my decision to engage with an advisor.

Flame away.
Baby Billy
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AG
I tend to agree, and most CFP's I've talked to have said that it doesn't really make a difference for your business one way or the other. I've done the coursework, but have not sat for the test. I'm sure I will sit relatively soon, but I don't think it's necessary to be a great advisor.

Now, if you work for a smaller, boutique firm with limited support, it may be more necessary.
nactownag
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What it does is give the advisor the benefit of the doubt. It is absolutely not fool proof. I know a lot of CFPs that go around slinging whole life insurance to anyone and everyone.

But I do believe it's a good starting point if a person is looking for an advisor.

The advisor should have the heart of a teacher and be able to articulate all the ways they can help the client. If the advisor is just there to sell you a product I don't care if they hold a CFP or not they aren't doing the client any favors
cjsag94
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I agree with all of these comments. I have just really started to see that people seem to be referring to CFPs as though they are all of those things by definition.

I would argue, based on many of the CFPs I know, that it is frequently little more than deceptive marketing. It's like they get the designation to promote their business.. rather than actually being a good advisor.
Duncan Idaho
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You are describing almost every white collar professional certification that isnt a state professional license.
Woody2006
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The CFP was a very simplistic curriculum compared to the CFA. I have both, but I value the CFA charter significantly more than the CFP designation.
cjsag94
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Ok, first, I'm shocked.. I braced myself for a barrage of defensive attacks with the term fiduciary in every other response.

I agree about the parallel to professional designations. The difference is this one is actively marketed to ignorant consumers that they are better. Other professional designations are viewed appropriately in industry circles by people who know the difference.

CFP runs commercials where they cut the rock stars hair and have him to pretend to be an advisor. Get a CFP so you can somehow be sure you aren't getting a guy that plays in a rock band.

The result is John q public believing if I how a CFP I can automatically trust them completely.
SquareOne07
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SquareOne07
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Plenty of good CFPs
Plenty of bad CFPs
Plenty of CFPs who just gather assets
Plenty of CFPs who are worth their weight in gold
Plenty of CFPs who have no idea how to apply basic financial planning tools
Plenty of CFPs who try and sell their letters

I don't think having a CFP makes you any more or less credible than anybody else, and if you don't have the information yourself to provide for the client, so long as you can be the resource that gets them the answer, that's just as good, if not better.
Duncan Idaho
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Woody2006 said:

The CFP was a very simplistic curriculum compared to the CFA. I have both, but I value the CFA charter significantly more than the CFP designation.


The cfa is literally why I said "almost"
neutics
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OP - some valid points but I don't buy your excuse that the CFP coursework is not relevant. Perhaps if you already had 10+ years of experience, but all too often I see the old-school advisors who still don't get this thing called comprehensive planning. Like it or not the CFP adds a degree of credibility and is an indicator that an advisor is a professional, not someone who was selling cars a couple months ago.

If we want what we do to be considered a profession, then there has to be a set of standards and a 'code' and for better or worse the CFP board has tried to fulfill that role.

Also remember that CFA charterholders have NO mandatory CE and really no ethics monitoring. I agree the CFP board's efforts on the ethics side could be better, but the CFA institute has no enforcement mechanism.

The continuing education is completely what you make of it i.e. are you checking the block and going to your local FPA for the lunch or seeking out challenging conferences and content? Again, attaining the CFP mark is an indicator that you take your profession seriously and are willing to continually learn to better serve your clients. Sorry the CFP curriculum and standards didn't work out for you - they have served me well.
cjsag94
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neutics said:

OP - some valid points but I don't buy your excuse that the CFP coursework is not relevant. Perhaps if you already had 10+ years of experience, but all too often I see the old-school advisors who still don't get this thing called comprehensive planning. Like it or not the CFP adds a degree of credibility and is an indicator that an advisor is a professional, not someone who was selling cars a couple months ago.


No it doesn't.. that's the problem. You can sell cars while studying to be a CFP.. pass the test then get to work. The next day with the designation.

Your point actually illustrates that.. The CFP gives value to a less experienced advisor... Yet people hold it out to be some holy Grail.

That's kind of my whole point.. the CFP is perceived as you have described (some assurance of what/who you are getting)... Kids are coming straight out of college with the designation. I see a ton of advisors getting it because they know it gives them a competitive leg up.. But they are terrible advisors.

FINRA broker check shows the background of any advisor.. don't need CFP to get that.
neutics
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cjsag94 said:

neutics said:

OP - some valid points but I don't buy your excuse that the CFP coursework is not relevant. Perhaps if you already had 10+ years of experience, but all too often I see the old-school advisors who still don't get this thing called comprehensive planning. Like it or not the CFP adds a degree of credibility and is an indicator that an advisor is a professional, not someone who was selling cars a couple months ago.


No it doesn't.. that's the problem. You can sell cars while studying to be a CFP.. pass the test then get to work. The next day with the designation.

Your point actually illustrates that.. The CFP gives value to a less experienced advisor... Yet people hold it out to be some holy Grail.

You're forgetting that passing the CFP exam is different than actually calling yourself a CFP. First, you need a college degree, but more importantly they require 2-3 years of 'comprehensive' experience even after passing the test before you can hold yourself out as a CFP professional.

I don't get the animosity you seem to have towards the CFP. Yes, it is in large part a marketing tool and we can debate whether the CFP board should be spending so much of my dues towards that effort, but for me it was important for the reasons already mentioned (credibility and to be considered a professional).

You can make the same argument about someone being a CFA or CPA and still being a terrible advisor. I've tried to mentor a younger CFA (not at my firm) who thinks he is ready to be a senior advisor and is no doubt smart but is severely lacking on the relationship management side of our business. In general, firms want to hire a CFP because they are more of a known quantity and again an indicator that someone is serious about our line of work. Firms with more credentialed advisors appear more professional, period.
cjsag94
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I agree with everything you've said.

To answer question about my animosity...

It's not dogging the value of CFP, but rather the deceptive use of the designation being fed to consumers that by using a CFP you are all set... And doing so in a fashion that implies anyone who isn't a CFP is an inexperienced crook. As we all know, there's good and bad on both sides, the designation doesn't make a difference.

In the past 2 years, the proliferation of the fiduciary label is all part of this. Guess what.. all that label means is advisors and their firms provide more disclosures to defend themselves in court. Calling someone a fiduciary, or a CFP doesn't make bad advisors/people do good things.

But the CFP message is that it does.. And more and more people are buying into that, and, like I said, many CFPs got the designation for marketing purposes, not so they could become more knowledgeable advisors.

You describe yourself as someone who does not fall into that category. I would submit that you would be just as good of an advisor with or without the letters because you seem to genuinely care to stay informed and guide clients.
nactownag
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cjsag94 said:

I agree with everything you've said.

To answer question about my animosity...

It's not dogging the value of CFP, but rather the deceptive use of the designation being fed to consumers that by using a CFP you are all set... And doing so in a fashion that implies anyone who isn't a CFP is an inexperienced crook. As we all know, there's good and bad on both sides, the designation doesn't make a difference.

In the past 2 years, the proliferation of the fiduciary label is all part of this. Guess what.. all that label means is advisors and their firms provide more disclosures to defend themselves in court. Calling someone a fiduciary, or a CFP doesn't make bad advisors/people do good things.

But the CFP message is that it does.. And more and more people are buying into that, and, like I said, many CFPs got the designation for marketing purposes, not so they could become more knowledgeable advisors.

You describe yourself as someone who does not fall into that category. I would submit that you would be just as good of an advisor with or without the letters because you seem to genuinely care to stay informed and guide clients.

Of course they are going to promote it that way. It's their job to promote the brand.

But while I agree that not everyone without it are crooks, I would submit that there is a higher likelihood that someone without a CFP is a crook or at least not experienced in complex financial planning. Again not 100%, but the odds are greater. Or restated, the odds are greater that someone with a CFP is not a crook.
cjsag94
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Agree with all except your last sentence. But nothing to do but argue back and forth on that point.
AgBank
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Duncan Idaho said:

You are describing almost every white collar professional certification that isnt a state professional license.
I agree. The state licenses are BS as well.

To be honest, most college degrees are just signaling as well.
BigPuma
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Duncan Idaho said:

You are describing almost every white collar professional certification that isnt a state professional license.
FIFY.

Coming from someone with a state license....
aggie_fan13
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So what you're saying is that I'm wasting my time and money working for an RIA and taking CFP classes
cjsag94
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Not at all... But understand it is just education. Being a good advisor takes much more than being designated a CFP.

But reap the rewards that the average Joe thinks you're the cream of the crop for it even if you aren't any good!
aggie_fan13
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Fake it til you make it
I Drink Your Milkshake
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Some of the brightest accountants I've worked with were not CPAs. Some intentionally so. I'd assume it's the same in the financial planning world.

What bothers me about these certifications is if you are willing to shell out enough cash, anyone can pass. CFP, CPA, CFA. CFA likely being the toughest but there are still plenty of study groups offering money back guarantees if you don't pass.
Ulrich
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I do not have and have not attempted to get either certificate. However, the numbers indicate that the CFA is significantly more rigorous than the CFP.

Cost
CFA: $2,000-3,000
CFP: $600

Testing
CFA: 3 tests spread over 2 years
CFP: 1 test

Pass rate:
CFA: 38%
CFP: 60%

Recommended study time:
CFA: 900 hours
CFP: 250 hours

Work experience required
CFA: 4 years
CFP: 1-3 years
aggie_fan13
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AG
cease & desist
ebdb_bnb
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I'd argue the CFA puts you on a different career path than being an financial advisor or at least it should.
Ulrich
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Everyone I know with a CFA is in investment banking or corpfin, even though when I scanned the curriculum it looks like there is a fair amount of personal investment type stuff in there. But then, I know a lot of investment bankers and corpfin types and almost no personal finance people.
aggie_fan13
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Which means .....?
Stive
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Ulrich said:

Everyone I know with a CFA is in investment banking or corpfin, even though when I scanned the curriculum it looks like there is a fair amount of personal investment type stuff in there. But then, I know a lot of investment bankers and corpfin types and almost no personal finance people.

Some RIA's and advisor teams will employ a CFA in house if they're doing certain levels of portfolio construction, research, analysis, etc.
nactownag
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I actually thought about pursuing the CFA because I agree it is more prestigious. But the thing is that I want be a planner not an analyst. We pay other people to do that for us so it just seemed a little overboard for me.
neutics
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Ulrich said:

I do not have and have not attempted to get either certificate. However, the numbers indicate that the CFA is significantly more rigorous than the CFP.

Cost
CFA: $2,000-3,000
CFP: $600

You are forgetting the cost of the required CFP classes (believe it was 6 plus a capstone when I went through) which can easily be $2,500+ depending on the program. There is a way to skip some of them if you are already a licensed attorney or CFA I believe, though not the capstone.
Woody2006
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nactownag said:

I actually thought about pursuing the CFA because I agree it is more prestigious. But the thing is that I want be a planner not an analyst. We pay other people to do that for us so it just seemed a little overboard for me.
I got the CFP first, and I agree the CFA is a really tough designation to attain relative to its utility in the advisory world -- but I've found it to be a pretty helpful in terms of evaluating the investment solutions we recommend to clients as well as a useful differentiator when a prospect is interviewing multiple advisors.
Duncan Idaho
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AgBank said:

Duncan Idaho said:

You are describing almost every white collar professional certification that isnt a state professional license.
I agree. The state licenses are BS as well.

To be honest, most college degrees are just signaling as well.

I was trying to avoid triggering the Professional engineers and medical personnel
aggie_fan13
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AG
I feel ****ty now about trying to get a CFP designation
cjsag94
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azulAg said:

I feel ****ty now about trying to get a CFP designation


Why? It's good education. Just don't go around afterwards acting like it's more than it is.... Use it as a building block to your knowledge and business, not the end all be all.
Duncan Idaho
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cjsag94 said:

azulAg said:

I feel ****ty now about trying to get a CFP designation


Why? It's good education. Just don't go around afterwards acting like it's more than it is.... Use it as a building block to your knowledge and business, not the end all be all.
that is how I view all of my certs. They dont mean that I know anything but I always learned something getting them
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