| April 4
April 4 Steven Harp has run six marathons and is
training for a punishing 140 mile swim-bike-run Ironman, but he
says the most challenging thing he's done recently is try to get
Certified Financial Planner accreditation.
The 32-year old adviser with Northwestern Mutual sat for the
CFP exam March 22, along with about 1,570 others. All hope that
adding the initials CFP to their business cards will indicate
expertise, credibility, and help build their businesses.
"It's the most rigorous examination process I've ever been
through," Harp said. After 230 hours of study, just shy of the
250 hours the CFP Board of Standards recommends, he is still
waiting to hear whether he passed. Last year only 63 percent of
those who sat for the 10-hour exam passed. To do so, they have
to demonstrate expertise on everything from the tax code to
Social Security benefits and estate planning.
In addition to the exam, candidates for certification also
must complete financial planning coursework, have three years of
experience, and pass a background check.
Every hour of study was an hour Harp did not spent working in
his shared $50 million practice, which he is trying to build by
$2 or $3 million a quarter. "Every hour I'm out of work," Harp
said, "I'm not making money. That's unnerving."
Is the effort worth it? The CFP Board is spending about $10
million in marketing this year making that case to advisers and
clients. It cites a sponsored study from consulting firm Aite
Group that found brokerage teams that included a CFP holder
generated 30 percent more revenue than teams without. Individual
practitioners with certification did even better, producing 40
percent to 100 percent more than brokers without.
While they do not require advisers to get a CFP, Bank of
America Corp.'s Merrill Lynch and Raymond James Financial Inc
have incorporated the CFP education component into their new
advisers programs, said Joe Maugeri, director of firm relations
at the CFP board.
But some firms are less keen on CFP training, saying a link
between certification and an adviser's bottom line is not
"Some firms don't tie the ability to provide financial
advice to a designation," Maugeri said.
Maugeri cited "an ongoing problem - the proliferation of
designations out there." There are more than 15 different
certifications that financial planners use, including Certified
Investment Management Analyst (CIMA), Chartered Financial
Consultant (ChFC) and Chartered Life Underwriter (CLU).
Currently, there are 69,500 active CFPs - only about 20
percent of financial advisers have the certification.
SOME CLIENTS ARE CALLING
The CFP Board's public relations push may be helping some
advisers such as Marguerita Cheng, a 10-year CFP from Bethesda,
Maryland, who have held the mark for years. In November 2013,
she broke away from Ameriprise to form her own firm, Blue Ocean
Global Wealth, and recently she has fielded one or two inquiries
a month from potential clients who find her on the CFP Board's
"Let's Make a Plan" website.
Cheng and Harp both say that going through the CFP training
helped them to become better at their jobs, aside from its use
as a marketing device."It gave me the knowledge, the credibility
and ability to be able to think about all the moving parts in
one financial life. That is definitely beneficial," said Cheng.
Harp says the process provided a roadmap for client
communication, including explaining how he is paid, and asking
about all relevant aspects of a client's finances. He said he
has more confidence about what conversations with clients should
" I was doing those things before, but it wasn't well
formatted," he said. The CFP education "really lays it out in a
DOES A CFP MEAN TMI?
Not everyone thinks the soup-to-nuts comprehensive training
required for a CFP makes sense. Tom Sedoric, with the Sedoric
Group of Wells Fargo Advisors, in Portsmouth, New Hampshire, has
been in the business for 30 years and never did get the
certification or all that expertise.
"I don't know anything about estate planning, and I don't
know everything about the tax code, but I know where to find a
resource," Sedoric said. Instead of studying all those areas
himself, he instead built a network of experts he and his
clients could call in for those kinds of questions.
"To assume that I'm going to know everything about financial
planning is unrealistic," he said.
Nonetheless, Sedoric concedes that the business is changing.
He's just hired a new planner for his firm, and yes, that newbie
is working toward a CFP.
(editing by Linda Stern and David Gregorio)