Whats the Difference Between a ChFC and CFP?
Financial advisors can earn several professional designations and certificates, and two of the most popular are the chartered financial consultant,  Financial advisors can earn several professional designations and certificates, and two of the most popular are the chartered financial consultant, or ChFC, and certified financial planner, or CFP. Some advisors have one of those designations, and others have both. Although there is significant overlap between the two, they are distinctly different. Heres what you should know before pursuing one or the other. [SUBSCRIBE: Get the weekly U.S. News newsletter for financial advisors. ] A CFP mark is bestowed by the Certified Financial Planner Board of Standards and is among the most widely recognized certifications for the financial planning industry, says Joseph Maugeri, CFP and managing director of corporate relations for the CFP Board. It is accredited by the National Commission for Certifying Agencies. To become a CFP, professionals must take coursework on financial planning, says Christopher Woehrle, professor and chair of the tax and estate planning department at the College for Financial Planning, a Kaplan company. Topics include investment planning, insurance planning, estate planning, tax planning, retirement planning and ethics, plus a capstone course. Some traditional, accredited universities offer these courses as part of their finance and business degree programs. In addition to the core financial planning classes, students seeking a ChFC designation must take a course about contemporary planning applications, says Ross Riskin, director of CFP and ChFC education programs at The American College of Financial Services. In that final course, students study topics such as behavioral finance, special-needs planning, small-business planning and other topics. Those (contemporary) topics are maybe touched on here and there in other CFP programs, but we know thats a major focus for advisors today, Riskin says, which is why they are included in coursework requirements for the ChFC designation. Differences Between a ChFC and CFP  Educational requirements. The first step to receiving a CFP designation is having at least a bachelors degree from an accredited college or university in any discipline. People who dont have financial planning backgrounds would also need to take those core courses. Advisors need between 4,000 and 6,000 hours of professional experience as well, Maugeri says. A college degree is not necessary to enroll to become a ChFC, Riskin says. But most individuals taking classes to become a ChFC are nontraditional students who may already be working in the field, he says. Exam requirements. To earn CFP marks, candidates must pass the board-level CFP exam, which tests their financial planning knowledge and their ability to apply that knowledge to real-life situations. The exam lasts six hours and has about 170 multiple-choice questions. It is offered three times a year and is a proctored exam. It is a pass-fail exam, and on average theres about a 60% to 65% passing rate, Maugeri says. ChFC students must pass eight financial planning courses, and there is a final comprehensive exam on those foundational courses, Riskin says. The exam consists of about 100 multiple-choice questions. During the final course for the ChFC program, students are required to actually participate and complete case studies with these relevant financial planning topics, Riskin says. Were looking at how students write and respond to case studies and create a financial plan and demonstrate their mastery of that knowledge through an objective assessment.  Fiduciary standard. People who earn a CFP mark are bound by the CFP Boards fiduciary standard, and that duty applies to whenever a professional is offering advice, Maugeri says. The standard spells out an advisors duty of loyalty, duty of care and a duty to follow the clients instructions, he adds. The board also enforces the standard, investigates complaints and issues any potential sanctions. Advisors who receive the ChFC are bound by The American College of Financial Services code of ethics, Riskin says. Its not the same as the CFP fiduciary standard, but it is founded on the principles of acting in the interests of clients and in an ethical manner, he says. There is definitely an ethics standard they must abide by, and they take that pledge before theyre able to become a ChFC. Riskin adds that the college enforces the ethics standard. [Read: CFA vs. CFP: What They Are and How They Differ]  How to Choose Between a ChFC and CFP  Both designations require continuing education to keep the license active. Both the CFP Board and The American College require 30 hours of continuing education every two years. The CFP Board requires two of those hours to be ethics training, and The American College requires one hour of ethics training. Both require quality education for financial planning, Woehrle says, although the CFP mark may be better known to the general public. Rick Myers, founder and president of Integrated Financial Services in Grand Rapids, Michigan, holds both designations. He says people with insurance backgrounds tend to gravitate to the ChFC license, and those who pursue the CFP mark usually come from the investing or brokerage side of the industry. Dan White, ChFC and founder of Daniel A. White & Associates, says CFPs may lean more toward being fee-based advisors who put together a financial plan and allow the client to implement the plan. ChFCs tend to put together the financial plan and make money on the implementation of that plan and selecting products. Both Myers and White agree that the coursework for the ChFC is more comprehensive, especially since it touches more on insurance needs. Either designation is helpful for advisors who are looking to broaden their knowledge, they say. Every client has a different situation. These are very complex areas, and theres a lot to know, Myers says, adding that both designations are good indicators of an advisors professionalism. originally appeared on usnews.com