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Financial Advisor vs Financial Planner - My Story

Posted by Ken Coombs

Nov 20th, 2017

Financial Advisor vs Financial Planner - My Story

“Hey Ken, I have a friend who is an advisor, but he’s not a CFP, what’s the difference?”

That was the question posed to me at a gathering a few weeks ago from a friend of a friend. What is the difference between someone called a Financial Advisor and someone who is a Certified Financial Planner? I’d like to think that it has something to do with the amount of time, energy and dedication a CFP professional puts into becoming certified.

That’s not to say that someone without a CFP designation isn’t any good. I have friends in the industry who are quite happy not going through what I did and are still respected by their clients and run a pretty decent business.

So, what does it take to be able to call yourself a Certified Financial Planner? Allow me to walk you through my story.

Educational Requirements

First off, I needed to study. A lot. There are four core courses that must completed in order to take the first (yes, there are multiple) exam. You may either take them through an accredited educational institute or through a self-study, on-line based format. This is what I did. It allowed me to continue to work and continue to be a husband and father in my spare time. I read after the kids were in bed and during my lunch break. Each course requires four chapter tests and a 100 question multiple choice exam on all the information in each course.

Each of these courses cost money. Through the provider I chose, each of the four courses cost $550. Let’s keep a running tally. So far that’s $2,200 and roughly 1,800 pages of information crammed into my head.

Examinations

After I passed all those, I had the “privilege” of writing FPE1 (Financial Planning Examination Level 1). This is a 100 multiple choice question exam done twice a year and costing $550 ($2,750). Once I passed that, I was now a registered candidate, which they charge you $200 a year for ($2,950)

In 2011 the Financial Planning Standards Council, FPSC, the acronym behind the acronym in Canada, added a capstone course for all candidates. They also require that candidates have at least 1 year of real world experience before they can even register for it. This course is a giant case study. I had to read a big 900 page text book (2,700 pages), recapping what I had just learned in the previous 4 courses, and then I had to complete a full, comprehensive financial plan for a fictional situation. This course costs $900 ($3,850) and I had 4 months to complete it. My plan was scrutinized by existing CFPs and they pointed out all the things I didn’t do right…or at all! A passing grade of 70% is required to move on to…

FPE2. (Yup, another exam) This one is done twice a year as well, costing $550 ($4,400). This exam is half multiple choice and half constructed answer. I used up a lot of eraser during that part. Did I mention that the exams are 6 HOURS LONG? No? Well they are. Once I finished the test, I had to wait 3 months to get the results, as the constructed questions need to be evaluated by those real life CFPs previously mentioned.

Pay your dues… literally

Now that I am educated and have proven I know things, I had to wait. 2 years to be exact. You can only apply to call yourself a CFP after you have accumulated 3 years of experience in the financial sector, dealing directly with clients. Once I had satisfied that, I got a pretty piece of paper that had my name on it and cost me close to $5,000.


Of course, it doesn’t stop there. Each year, a CFP is required to complete 25 credits of continuing education (CE), where a credit is about equivalent to an hour. So, for every year of my life, I need to take 30 hours of it and spend it learning new products, strategies and concepts… or I can’t be a CFP anymore. CFPs are required to follow a very strict code of ethics, which make us accountable to the client. If we try to pull a fast one on you, we’re in a lot of trouble. Oh, and you have to pay to keep those letters too, $450 a year.

So, what’s the difference between an advisor and a CFP? I’d say about 2 ½ years of intense education and $5,500 out of pocket. Now that’s a commitment to serve the client to the best of my abilities.

Kenenth Coombs CFP CHS RRC

Ken has 12 years experience in the financial services industry, is a Registered Retirement Consultant and a Certified Financial Planner. Ken has written financial planning columns and has been a guest on financial radio and podcast programs.

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Financial Advisor vs Financial Planner - My Story

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