QUESTION – Wait a minute! What am I doing here? You promised me I wouldn’t hear from you for some time!
ANSWER – I know and I apologize. There is just something I wanted to think through.
Q – Great. I was just about to solve String Theory, but I will put that on the back burner for now.
A – Who are you kidding? Your brain is not a scientific one.
Q – I know that. I was referring to string cheese. What’s so important you brought me here?
A – CFP
Q – Come again?
A – My CFP designation. Well, more importantly, how it is treated in my world.
Q – You are really reaching here. Help me out.
A – So I just paid my annual fee for my CFP designation and realized it has been over a decade I have held this designation. It started some rumination on my part.
Q – Oh boy. You busted out one of your SAT Verbal words so you must be wound up about something. Let’s hear it.
A – Well, my CFP designation is rather important to me. When I passed the test nearly a decade ago I didn’t think much of it. But how times have changed.
Q – Before we get any deeper, what exactly is the CFP designation?
A – Oh, I shouldn’t have assumed you were familiar with the term. CFP stands for CERTIFIED FINANCIAL PLANNER™. We shorten it to CFP®.
Q – Why is it in all caps?
A – I don’t know. It is just something the CFP Board requires. Seems silly, but then again I have a degree from Ohio State. I mean, THE Ohio State University.
Q – Back on topic.
A – Yes. The CFP designation basically means I have a college degree, a minimum number of years in the financial services industry, passed a bunch of individual tests and a comprehensive one (it was two days back when I took it), always put my clients first, and cover a half-dozen different areas related to personal finance with all financial planning clients. That is the short version.
Q – Okay. I get it. But why am I here?
A – I was thinking back to the first time I heard about the CFP designation.
Q – Oh no. Is this a “back in my day story?” I was hoping you only made your sons suffer through those stories.
A – You’re not funny. The short version is to “graduate” the training program at Merrill Lynch when I was there meant you had to pass two portions of the CFP test. I don’t recall what sections they were only that my “trainers” used to mock the CFP designation.
Q – What do you mean mock?
A – The “senior” advisors used to refer to “CFP” as standing for “Can’t F…. Produce.”
Q – Uh, why?
A – Well, the focus at wirehouses and most firms is to gather assets and produce.
Q – What do you mean by “produce?”
A – It simply means how much revenue you create for the firm on a regular basis. So, maybe you “produce” $100,000 of revenue for the firm every month. Whether it is through managing assets, selling insurance products like annuities, or putting clients in new mortgages.
Q – Mocking the CFP designation seems silly.
A – Yeah, I think it was mostly out of fear of change. Many of those “senior” advisors knew what was coming.
Q – What was that?
A – Wirehouses would eventually encourage and/or require the majority of their advisors to have the CFP designation. And most advisors would not want to sit for the test. Heck, I knew one who said he could not pass both of those sections I mentioned I had to pass just to graduate training.
Q – Where are we going with this?
A – Oh, good question. Where we are going is about the CFP designation and how it is used. Again, short version is many CFP holders have the credentials because it is a good thing to have and is the designation consumers most easily recognize. But.
Q – But what?
A – But, I wonder how many advisors use the CFP credentials to their full potential? It’s a question I really can’t answer, nor do I think even the CFP really knows.
Q – I am still kind of lost here.
A – I guess what I wanted to talk through is how much my use of the CFP designation has changed. It started with me having to pass two sections to complete some wirehouse training. Then I figured if I passed two sections I might as well pass the rest of the tests, do the two-day comprehensive exam and get the full designation. Nearly ten years later I am at the point where I have gone through intensive training so I can really use financial planning in a way that is updated with the needs of my clients.
Q – Maturity is a hell of a thing.
A – It sure is. And I have certainly come a long way from dealing with the “Can’t F…. Produce” crowd.
Q – Anything else related to this you want to cover?
A – I guess like all things it is important for clients to trust, but verify. If your advisor is a CFP, be sure to get clarity on how they use it in their practice. There’s a big gap between using it for marketing/asset gathering purposes and doing comprehensive financial planning.
Q – Good advice. Can I go back to work now?
A – Absolutely. And if you solve your version of string theory, let me know what exactly is a cheese curd.
I’m Dan Johnson, CFP®, founder of Forward Thinking Wealth Management. I run a flat-fee financial planning and investment management firm located in beautiful Akron, OH. Although I am in Akron, OH, I work with clients regardless of location. I cater to owners of equity compensation positions who are looking to organize their financial lives, keep more of what they make, and do the things they want in retirement and even now.