Differentiating Yourself Among 70,000 CFP Professionals

The American College of Financial Services
October 5, 2016

All financial advisors — those just getting their start in the profession and those with decades of experience alike — have something in common: an obligation to serve clients well.

Serving clients well requires a strong and ongoing financial services education, which is why professional qualifications such as the CFP® certification exist.

By earning a professional certification, an advisor commits to becoming better, to being more capable, and to serving as a trustworthy steward of the financial well-being of clients. Earning and maintaining a professional designation in financial services is a sign of competence — your clients and peers alike will immediately recognize the value you offer as an advisor, as well as the value you place on the importance of professional education itself.

As the profession continues to mature, advisors who have earned a professional credential will come to realize that they are not alone — holding a designation is quickly becoming the norm. If you don’t have letters behind your name, what does it say about your qualifications to be a professional financial advisor?

CFP® Certification — Public Awareness Is Raising The Bar

If you’ve tuned into NPR or ESPN lately, you may have encountered an advertisement for the CFP® certification — part of the CFP Board’s $10 million public awareness campaign.

That the CFP Board is advertising its namesake credential in prime time across two national media outlets is significant. It suggests that it’s not just financial advisors who need to know about the CFP®, but their clients as well.

By generating more public awareness around the CFP® certification, more consumers (i.e. your present and future clients) are able to recognize the credential by its name and start to form opinions about its value.

Your Education Should Never End

Michael Kitces, director of wealth management at Pinnacle Advisory Group and publisher of the popular Nerd’s Eye View blog, knows a thing or two about the importance of professional qualifications; he has eight of them, after all.

Kitces, who holds his MSFS, MTAX, CFP®, ChFC®, RHU®, REBC® and CASL® qualifications, is a firm believer in the importance of continued education.

In an interview with The American College of Financial Services, Kitces suggested that the CFP® certification should be a minimum requirement for today’s financial advisor, adding that the mark should not be a sign of “best” competency, but a sign of “minimally acceptable” competency.

“With the ongoing growth of financial planning, the CFP marks are increasingly shifting from best practice to a minimum standard,” he said. While earning a CFP® certification is still legally voluntary, Kitces characterized it as “baseline” because so many advisors seek it.

“It’s not the end of your professional education,” he said. “It’s the beginning.”

After CFP®: What’s Next?

With so many advisors earning their CFP® certification — more than 70,000 people already have the credential — there becomes a need to take your education beyond the CFP® by pursuing a specialization.

As a record number of baby boomers transition into retirement, more advisors are bringing retirement income planning into their wheelhouse. Retirement income planning expertise, however, is not something that can be attained overnight.

“It’s important to recognize that retirement planning really is a specialization,” Kitces said. “A lot of us got trained on a couple products appropriate for retirees and dubbed ourselves ‘retirement specialists.’ Real retirement specialization is more holistic. It’s not just profits, it’s advice. It’s timing on Social Security withdrawals, on Medicare decisions, on senior living decisions.” These are all areas that don’t tie directly to retirement products, but being knowledgeable and trustworthy on each is incumbent on an advisor who offers professional retirement income advice.

The Retirement Income Certified Professional® designation (RICP®) is designed to give advisors the specialized training they need to provide clients with holistic retirement income advice.

“As the CFP mark becomes the minimum standard for financial advice, the pressure is on advisors to go beyond the CFP and find an area to specialize in,” Kitces said. “RICP is one of the few programs out there that’s a pure specialization program.”

Indeed, as advisors come under intensified scrutiny as the U.S. Department of Labor’s new fiduciary rule takes effect, an advanced specialization and the comprehensive education that comes with it will benefit those offering retirement income advice.

“The rising fiduciary standard not only requires advisors to act in the best interest of clients, it requires them to have the education and training to know what would be ‘in the best interest’ in the first place,” Kitces said. “From a competency standard, the RICP is extremely well positioned.”