The Certified Financial Planner-CFP Designation
The Certified Financial Planner (CFP®) designation can be of critical importance for reasons that are largely hidden by the financial services industry. That's because the industry allows anyone to call themselves a financial planner whether they have the necessary knowledge or not. But, they do not want you to know that. This means your planner could have three months of planning experience or is an insurance agent masquerading as a financial planner. This deceptive sales tactic produces substantial sales for less ethical representatives and agents.
This form of deception started with the rise of the financial planning industry and the realization that titles like life insurance agent and sales representative created sales resistance. A high percentage of investors did not want sales people investing their assets for them. The industry solution for thousands of agents and reps was to change to a new title that was more acceptable to consumers. They settled on financial planner because everyone needs a financial plan.
This deceptive sales tactic was taken a step further when fake planners began using cheap financial planning software that produced recommendations for large amounts of insurance and investment products. Fake planners let the software sell their products for them. This process sells billions of dollars of insurance and investment products every year with minimal sales resistance.
So how do you know people who say they are financial planners actually have specialized planning knowledge? One way is to ask them if they a current holders of the CFP® designation. If the answer is yes, ask to see a certificate that proves the professional has earned this credential. You should also go to www.cfp.net and make sure the planner is a current CFP® holder.
The CFP® designation means the professional has successfully passed the tests necessary to earn the designation. It does not guarantee they will provide competent, ethical advice, but it is a good indicator you are talking to a real planner.