Money

Is The Cost and Effort to Become a CFP Worth It?

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In January, I announced that I was undertaking the challenge of completing the Certified Financial Planner (CFP®) education and exam. I’ve recently successfully completed both.

Since making the announcement, I’ve been surprised by the number of people who have reached out to ask me what this process entails.

I’ve broken these inquiries down into three categories, those from people:

  1. Looking to create a second career or do volunteer work around their passion for personal finance post financial independence and/or early retirement, 
  2. Trying to better manage their own personal finances and who want to “know what they don’t know,” 
  3. Needing help from a real financial advisor and wanting to know what value CFP® credentials add.

This blog post addresses each of those issues. I am writing it just days after taking my exam while these ideas are fresh in my head.

I will give a behind the scenes look at what you learn and what you don’t on the path to CFP® certification. I’ll also share exactly what this process cost me in dollars and time….

Investing In Becoming a CFP®

Becoming a CFP® is a significant investment of both time and money. As with any investment, you should evaluate it based on what it costs and the return you anticipate.

The process of becoming CFP® certified requires fulfilling the “4 E’s”:

  1. Education: Having a bachelor’s degree (in any discipline, from any accredited college) and completing CFP® specific coursework through an accredited education program.
  2. Exam: Passing a one day, comprehensive, 170 question multiple-choice examination.
  3. Experience: Fulfilling one of two pathways requiring either 4,000 hours of apprenticeship experience that has more stringent criteria or a more lenient but longer 6,000 hours of “professional experience related to the financial planning process.”
  4. Ethics: Meeting ethics standards as established by the CFP® board.

How Much Does It Cost To Become a CFP®?

Financial Costs

The financial costs of obtaining CFP® certification are accrued in meeting the education and exam components. I completed my education and exam prep through Bryant University’s Boston Institute of Finance (BIF). All classes were virtual and online, so there were no required travel expenses.

I completed the ten month Instructor-Led Program and their Premium Exam Prep program. My total expenses for the year were $5,645. The breakdown is as follows:

  • $4,590 (Package including tuition for education, exam-prep, and all materials for both),
  • $75 for recommended Hewlett-Packard 12C financial calculator,
  • $825 CFP exam registration,
  • $5 to submit college transcripts to fulfill education requirement,
  • $150 hotel room close to the testing center (optional but recommended to decrease exam day stress).

This was a very reasonable financial cost for the knowledge gained. I was extremely impressed with the BIF program. The instructors were all knowledgeable in their domains.

The BIF program exceeded my expectations because the instructors were fully invested in each student’s success. I was amazed by the speed and detail with which every one of my questions was answered over the course of the year.

Instructors did not limit questions to those specifically about classes or exam prep. They were willing to get into the weeds about scenarios unlikely to ever get tested on the CFP® exam, sit and talk with me about fulfilling the experience component of getting certified, and offer encouragement and support at points when the process was stressful.

I can’t speak to the cost or quality of other education and exam prep programs. I consider every dollar invested into the BIF programs as money well spent. (Disclosure: I have no financial relationship with BIF other than having been a paying customer.)

Time Costs

The financial costs to fulfill the requirements for CFP® education and examination are reasonable. The time costs are likely not, particularly for the exam prep and meeting the experience requirements, unless you plan to use the CFP® designation.

Education Time Investment

From January until August, I had one two-hour class every other week. In addition to this, I spent on average ten hours per week on independent reading/study for my coursework.

Investing this amount of time was plenty for me to feel prepared for the required exams and to feel that I was retaining important information.

In August, the pace picked up. I completed my Financial Planning Capstone course, which was essentially a series of progressively longer and more detailed case studies. They were designed to test comprehensive knowledge gained over the course of the eight month program.

Exam Prep Time Investment

I completely stepped away from my materials for a week-long end of summer family trip after completing the Capstone course. We returned the weekend before starting the exam review course. I immediately jumped into the readings to prepare for the first class the following Monday.

From that point forward, the time commitment increased substantially. The 10 week review process was intense!

I attended online classes every Monday (2.5 hours) and Thursday (1.5 hours). I also attended most of the weekly pop-up sessions with the instructors (approximately 1 hour each) and participated in a weekly online study group (typically about 1.5 hours each).

In addition to this regularly scheduled 6+ hours each week, I estimate I spent an additional fifteen to twenty hours each week on independent reading, review, and practice questions. After taking the exam, I was grateful for all the effort I invested. I don’t think I could have passed the exam without it.

I consider myself a good test taker. The CFP® exam was the hardest exam I’ve taken. I’ve seen online discussions of attorney/CFPs comparing it to the Bar Exam. I can’t personally validate that.

This exam was far harder than my physical therapist comprehensive licensure, athletic trainer certification, and orthopedic certified specialist exams I took for my original career. None of those were easy. (Of course, I was twenty years younger then.)

Experience Time Investment

The other major time investment if you want to complete the certification process and use the CFP® designation is meeting either the 4,000 or 6,000 hour experience requirement. If you have no industry experience, this would require working the full-time equivalent of two or three years.

I learned that the 6,000 hour pathway can be met in a variety of ways. In my case, I submitted the time spent writing the Choose FI book and my time working on this blog since 2018. Both were approved, placing me well on the way to meeting the 6,000 hour requirement, but not quite there yet.

What Is the Benefit of the CFP® Education and Certification Process?

The answer to this question is dependent on what your goals are for pursuing this knowledge. I would give different answers to someone who wants to actually become and utilize the CFP® designation than to someone simply wanting to obtain the knowledge required to complete the CFP® certification.

The Value of the CFP® Designation for Those Looking to Start an Encore Career

The value of obtaining the CFP® designation for those who want to help others is demonstrating a minimum level of competence and education in all areas of financial planning. This is in contrast to virtually anyone who can hold themselves out as a financial “advisor” or “coach.”

Having a CFP® designation will increase your credibility with at least a segment of the general public. That may translate to a financial benefit.

I want to be clear that when I use the term “minimum level” that I don’t mean to disrespect or detract from the effort spent and knowledge gained pursuing a CFP® designation. As noted above, the process is hard and the breadth of knowledge is considerable.

I’ve spent the past decade studying and writing about DIY investing, wealth building, taxes, and retirement planning. I learned a bit more in each of these areas, to build on my previous knowledge. The primary benefit of my CFP® education was filling the substantial gaps in my knowledge in other areas, allowing me to gain a minimal level of competence where I previously had little to no knowledge.

I do not consider myself an instant expert on topics like incentive or non-qualified stock options or complicated estate planning for ultra-high net worth individuals. I now understand these topics at a higher level, but I would still need to level up or refer people who need help in these or similar areas to someone who is an expert.

The Value of the Information in the CFP® Curriculum for Someone Who Doesn’t Want to Work in the Financial Industry

The return on investment is more questionable for people who don’t actually want to practice as a financial planner. I would separate my advice to people in this area into three subcategories of people who:

  • Are looking for a personal challenge
  • Want to help others who are less fortunate
  • Plan to utilize this knowledge to improve their own finances.

Those Looking For a Personal Challenge

When I started down the path to CFP® certification, I wasn’t sure if I would ever practice as a financial planner, mostly because I didn’t yet have a plan to meet the experience requirement. Still, I felt this was a good investment of my time for several reasons.

First and foremost, as I explained in another blog post, I enjoy learning and taking on big projects. I chose to complete the CFP® education requirement to scratch that itch of taking on a big challenge for myself. There was no definitive plan to take the certification exam or ever practice as a financial planner.

Second, I had zero financial risk because I knew that information I was learning could be material for blog posts, meaning the education would easily pay for itself. The ideas for these recent blog posts grew directly out of CFP® education materials:

The CFP® curriculum can be completed for a reasonable financial cost. If you have a way to recoup those costs or are willing to pay those expenses out of pocket, then completing the CFP® curriculum and exam is reasonably affordable and will absolutely provide a mentally stimulating challenge.

Those Who Want to Help the Less Fortunate

Several people have expressed interest in becoming a CFP® and then starting community, school, or church based programs to help those traditionally underserved. I love this idea in theory. 

My friend from the FIRE community Mark Trautman shared in a guest post on this blog that he is doing this with school and community programs. He obtained CFP® certification after early retirement.

However, I’m not sure the CFP® is the best means to these ends. Most of the information learned in CFP® curriculum and preparation for the exam is not necessary to do this work. 

The vast majority of the population need basic behavioral interventions, methods to increase their income, simple budgeting and debt elimination plans, and hopefully they will progress to being able to implement a simple saving, investing, and tax planning strategy. 

These are not strong points of the CFP® curriculum. Again, the one possible advantage having CFP® certification may provide is increased credibility. That credibility may in turn help in getting funding and support for these types of programs.

Those Who Want to Obtain CFP® Knowledge to Improve Their Own Finances

This was a factor in my decision to pursue at least the education component earlier this year. I had the fear that I don’t know what I don’t know. With the benefit of hindsight, becoming a CFP® is a massively wasteful and expensive means to addressing these fears.

The financial costs to complete the CFP® required curriculum and certification exam are not exhorbinant. Time spent doing so is!

It is important to reiterate that CFP® certification does not make you an expert on any particular topic. You will achieve a minimum level of competence in a wide variety of topics. Most will be irrelevant to you personally.

For example, I assume someone reading this blog would like to be an expert on planning your own retirement. The retirement planning components of my CFP® education and exam prep emphasized topics like understanding the rules that govern qualified defined contribution, defined benefit, 403(b), 457, and IRA based retirement plans. 

This is important information if you are advising or educating a diverse set of people who may have different types of these accounts or who may be responsible for choosing between these account types for their companies. It is an epic waste of time to learn all of these details if you have only one or two accounts as most people do.

You could spend around $100 on the NewRetirement or Pralana retirement calculators affiliated with this blog. Each serve as a masterclass in planning your own retirement, understanding the important variables that impact your outcome, creating reasonable assumptions around each, and learning how they all interact.

You can also choose to spend money to buy the time of an advice only financial planner. They can provide an unbiased outside perspective in a time efficient manner.

Either option provides insights, expertise, and confidence you won’t gain after spending thousands of dollars and hundreds of hours pursuing a CFP® designation.

Any Questions?

Those are the big take home messages at the front of my mind after completing the CFP® curriculum and taking and passing the exam. These ideas grew directly out of questions and conversations with blog readers and reflections on my experience.

If there is anything I omitted that you are curious about, leave me a question in the comments below.

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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