The Basics Of CFP Designation Maintenance

As with most other professions that require certifications, such as doctors, lawyers and CPAs, the Certified Financial Planner (CFP) board requires its certificants to meet certain ongoing criteria. In this article, we'll take a look at what you need to do to maintain your certificate in the CFP field. If you have recently completed the coursework, passed the CFP board exam, or are considering attaining a CFP designation and are curious as to what comes next, read on!

Continuing Education Requirements
Some of the requirements for maintaining your CFP include:

  1. Continuing education
  2. Ethics
  3. Professionalism
  4. Practice standards

The CFP board requires each certificant to complete 30 hours of continuing education credits every two calendar years. Of these credits, 28 can cover virtually any financial topic, including investments, insurance, estate planning, taxes, retirement plans, education planning and a range of other topics that have been accepted by the CFP board.

These credits can often count toward continuing education credits for other licenses and designations as well, such as insurance or securities licenses. Therefore, if 12 hours of continuing education is required to maintain a life insurance license, some or all of these hours may count toward the 30 hours required by the CFP board. Dual crediting is also possible between the CFP and other professional financial designations, such as the Enrolled Agent (EA), Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Registered Health Underwriter (RHU), Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and many others. 

Being able to credit the same hours of continuing education toward multiple designations and licenses greatly simplifies the continuing education process for many advisors who are already interested in obtaining another designation. For example, for each level of the CFA exam that is passed successfully, 60 hours of continuing education credits are earned.

Finally, out of the 30 hours required, two of them must cover ethics as outlined by the CFP board. There are a number of courses now available online that satisfy both this and the remaining continuing education requirements.

Ethics: An Ever-Increasing Standard
Newly minted CFP certificants will quickly discover that the ethical standards required and maintained by the CFP board are among the most rigorous and comprehensive in the industry. Securities and insurance licensed professionals must include two hours of ethics training in their continuing education and, of course, must follow all pertinent rules and regulations as mandated by the industry.

Keep in mind that the ethical standards imposed by the Securities and Exchange Commision (SEC), Financial Industry Regulatory Authority (FINRA) and the insurance industry only lay the foundation for the platform of ethics that is outlined by the CFP board in its official Code of Ethics and Professional Responsibility. This code is broken down into seven separate segments:

  1. Integrity - CFP practitioners have the trust and confidence of their clients. Decisions that are made for those clients require a level of honesty that takes precedence over any personal gain. Integrity does allow for honest mistakes and differences in professional philosophy, but it excludes any form of deceit.
  2. Objectivity - CFP practitioners must be impartial and objective in all decisions and transactions.
  3. Competence - CFP practitioners must maintain and develop the necessary knowledge and skills to competently perform their daily duties. This means that they must be able to do their jobs correctly and effectively on a consistent basis.
  4. Fairness - CFP practitioners must be fair in all dealings with both clients and associates. This includes disclosure of all conflicts of interest, and treating others with respect.
  5. Confidentiality - All material disclosures given by clients are strictly confidential and cannot be disclosed to any third party outside the necessary course of business. Obviously, trust between clients and advisors is based on this.
  6. Professionalism - A CFP practitioner's conduct must be courteous and dignified at all times. Professional behavior is expected as a matter of course, both with clients and associates.
  7. Diligence - CFP practitioners must provide their services with promptness. Proper supervision of all procedures and services provided is also expected.

The CFP code of ethics has been updated to mandate a fiduciary level of responsibility over all clients and transactions. This constitutes a major step forward for the CFP board in its effort to maintain the integrity of its credential. 

Ongoing Fitness Standards
The CFP board's standards of excellence do not end with ethical requirements. CFP practitioners face some of the highest standards of discipline in the industry. Virtually any certificant who incurs disciplinary action from FINRA or the insurance industry can expect to receive corresponding disciplinary action from the CFP board. The board will not hesitate to suspend or disbar any practitioner found guilty of any investment or financial planning related offense. There is, of course, a due process that is followed in these cases, and practitioners who have lost their designations are allowed, in some cases, to petition for reinstatement.

Any of the following actions will automatically result in a CFP certificant's disbarment:

  • Felony conviction for any financial-related crime
  • Felony conviction for any violent crime, rape or murder
  • Two or more personal or business bankruptcies

The following actions will also incur disbarment, but the CFP certificant will be allowed to petition for reinstatement:

  • Having more than one judgement lien
  • Any personal or business bankruptcy within the last five years 
  • Revocation or suspension of any securities or insurance license for a non-administrative reason
  • Revocation or suspension of a non-financial license for a non-administrative reason
  • Felony conviction of a non-violent crime
  • Felony conviction for a violent crime committed more than five years ago

The Bottom Line
While the CFP designation is considered one of the premier credentials in the industry, certificants should be prepared to adhere to the ongoing requirements set forth by the CFP board. Practitioners need to be vigilant in ensuring their personal and business lives stay within the boundaries set forth by the board and exemplify impeccable standards of professionalism at all times.

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