Absolutely not! The designation means the Certified Financial Planner™ completed some coursework and passed an examination. It does not mean the planner is an expert on the multiple disciplines that make-up the planning profession.
On the other hand, selecting a planner who holds the CFP® designation goes a long way toward reducing your risk of selecting a fake financial planner. In general, fakes are sales representatives who claim to be planners to reduce sales resistance and sell investment and insurance products.
If your predisposition is to select a CFP® as your planner you should have some basic knowledge about what it means to hold this designation.
The educational prerequisites for the CFP® program are pretty nominal: The completion of college level course work that is registered with the CFP® Board or a BA degree from an accredited institution. Experience is the same: Three years of applicable experience or a two year apprenticeship that is supervised by a CFP®.
A BA degree and three years of experience selling financial plans does not make the CFP® an expert on all of the disciplines that make-up the profession. It takes years of experience to be an expert in each one of the disciplines.
CFP® applicants must complete six courses that cover such diverse topics as insurance, investments, and estate planning before they can sign-up to take the exam. More than 200 institutions provide these courses.
The last step in the completion of the certification process is a two day proctored examination. Approximately 55% of the participants pass the exam on the first try.
CPAs® have a Personal Financial Specialist (PFS®) designation that is supposed to mean they are planning experts. This designation is earned by experience and not study and examinations. Although experience is a great teacher, where do they obtain specialized knowledge such as insurance and estate planning? A better set of credentials would be a CPA® who is also a CFP®.
Thousands of Certified Financial Planners™ are insurance agents who use the designation to reduce sales resistance and sell insurance products. Most people have automatic sales resistance when they hear the words “insurance agent”. The industry has a bad name due to its aggressive sales tactics and low quality agents. Selling is much easier if they tell people they are planners and imbed their products in financial plans that are produced by cheap, ineffective software.
A large number of financial advisors provide planning services for the same reason insurance agents provide the services. Their job is easier and they sell more products. Also, professionals who only provide planning services for fees have a hard time making a good living. They can make a much better living if they provide planning and investment services, planning and insurance products, or planning, investment, and insurance products. The fact that they make more money does not mean they are experts in all three fields.