At some point in your financial career, you might encounter a client whose current situation is complicated, and during your meeting you might be stumped in determining the best solution. Clients with seemingly simple situations can often have complex issues related to life insurance, taxes or estate planning they may be unaware of.

In order to avoid these types of awkward situations, it is important to ensure that you have equipped yourself to recognize many situations and guide your clients through them correctly. By increasing your knowledge, your credibility and your income will benefit. In this article we'll examine three different designations that will allow you to gain the knowledge you need to handle almost any client's situation: the Certified Financial Planner® (CFP®), Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®).

CFP® - The Media's Choice
The CFP® mark is offered - and governed - by the Certified Financial Planner® Board of Standards in Washington, DC. The CFP® designation is perhaps the most widely recognized credential in the field today, due largely to the amount of exposure it has received from the media. This credential is generally the designation of choice for those who wish to offer fee-based financial planning, and traditionally has been more heavily pursued by those in the tax, legal or investment professions. Insurance agents that obtain this designation can use it to provide comprehensive financial plans for clients and show them how their various insurance needs fit into such plans.

The CFP® curriculum contains five core courses that cover the following planning topics:

  • Investment planning
  • Insurance planning
  • Estate planning
  • Tax planning
  • Retirement planning
  • Education planning
  • Ethics and the financial planning process

There are approximately 106 conceptual topics related to financial planning that are covered in this material. Once all coursework has been successfully completed, students must pass a rigorous, comprehensive 10-hour board exam. Once the candidates have passed the exam, they must pass a background check and pay an entrance fee before receiving their certifications.

Chartered Life Underwriter® - The Oldest Designation
The CLU® is widely considered to be the most respected insurance designation in the industry. This designation was created in 1927 by the AmericanCollege in Bryn Mawr, Pa. The CLU®; has traditionally been pursued by agents who wish to specialize in life insurance for business or estate-planning purposes.

The current course curriculum for the CLU® includes five required courses plus three elective courses. The required courses include the following:

  • Fundamentals of Insurance Planning
  • Life Insurance Law
  • Individual Life Insurance
  • Fundamentals of Estate Planning
  • Planning for Business Owners and Professionals

The three elective courses can be chosen from such subjects as the following:

  • Financial Planning: Process and Environment
  • Individual Health Insurance
  • Income Taxation
  • Group Benefits
  • Planning for Retirement Needs
  • Investments
  • Estate Planning Applications

Chartered Financial Consultant - Advanced Financial Planning
The Chartered Financial Consultant® (ChFC®) credential was introduced in 1982 as an alternative to the CFP® mark. This designation has the same core curriculum as the CFP® designation, plus two or three additional elective courses that focus on various areas of personal financial planning. The biggest difference is that it does not require candidates to pass a comprehensive board exam, as with the CFP®.

Due to the number of courses that overlap both the ChFC® and CFP®, the ChFC® and CLU marks are often taken by individuals seeking in-depth knowledge of both financial planning and insurance, but who wish to avoid a lengthy board exam.

Which Is Best?
The answer to this question lies in your preferred area of focus. If you would like to focus more exclusively on life insurance, then the CLU® designation will provide the most complete curriculum for you. If you would rather focus on comprehensive financial planning, then one of the other two credentials will be a better fit.

It should be noted that none of these designations are considered to be inherently superior to the others. The CFP® designation requires less coursework but forces its students to learn the material in a way that allows them to proactively apply it in the board exam. The CLU® and ChFC® credentials require more coursework but have no comprehensive exam. The following chart can help you understand the differences and similarities between the three designations.

-- CLU® CFP® ChFC®
Comprehensive Board Exam No Yes No
Number of courses required 8 5 8
Focus of Study Life Insurance, both personal and business Comprehensive financial planning Comprehensive financial planning

The Bottom Line
Agents and brokers that decide to earn one of these designations will soon discover that some of the same coursework is required regardless of which designation is chosen. Those who desire to obtain only one of these credentials will need to personally evaluate the courses that are required for each and their relevance to their specific areas of practice.

Related Articles
  1. Personal Finance

    A Guide To Financial Designations

    Find out which certifications can bring you the greatest career returns.
  2. Professionals

    Fiduciary Designations For Financial Advisors

    Attaining the AIF or AIFA could help both you and your clients enjoy a comfortable retirement.
  3. Professionals

    Real Estate Careers And Their Designations

    The real estate industry offers a wide variety of career opportunities and dozens of designations to increase your skills.
  4. Professionals

    Financial Designations That Employers Require

    We break down the designations that are important to have if you want to work in the financial sector.
  5. Professionals

    Designations No Retirement Planner Should Be Without

    Advance your career and gain clientele by adding a few choice certifications.
  6. Retirement

    Two Heads Are Better Than One With Your Finances

    We discuss the advantages of seeking professional help when it comes to managing our retirement account.
  7. Financial Advisors

    Tips on Passing the CFA Level I on Your First Attempt

    Obtain valuable tips and helpful study instructions that can help you pass the Level 1 Chartered Financial Analyst exam on your first attempt.
  8. Professionals

    The Best Financial Modeling Courses for Investment Bankers

    Obtain information, both general and comparative, about the best available financial modeling courses for individuals pursuing a career in investment banking.
  9. Personal Finance

    How the Social Security Reboot May Affect You

    While there’s still potential for some “tweaking” around your Social Security retirement benefits, I’d like to share some insight on what we know now.
  10. Professionals

    Credit Risk Analyst: Job Description and Average Salary

    Learn what credit risk analysts do every day and how much money they make on average, and identify the skills and education needed for this career.
  1. Do financial advisors have to find their own clients?

    Nearly all financial advisors, particularly when new to the field, have to find their own clients. An employer may provide ... Read Full Answer >>
  2. Do financial advisors get drug tested?

    Financial advisors are not drug tested by any federal or state regulatory body. This means you may receive your Series 6, ... Read Full Answer >>
  3. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
  4. Do financial advisors have to be licensed?

    Financial advisors must possess various securities licenses in order to sell investment products. The specific products an ... Read Full Answer >>
  5. Do financial advisors need to meet quotas?

    Most financial advisors are required to meet quotas, particularly if they work for firms that pay base salaries or draws ... Read Full Answer >>
  6. Does a financial advisor need an MBA?

    Obtaining a license as a financial adviser does not require an Master's of Business Administration (MBA) degree. The Certified ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  4. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  5. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  6. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
Trading Center