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Gold Standard Advice – Part 2

This is part 2 of the ‘Gold Standard’ series. In part 1 I mentioned the Twitter conversation I read that talked about the key factors in providing ‘gold standard’ advice being an adviser who…

  • Is a Chartered Financial Planner
  • Is a Certified Financial Planner (CFP)
  • Practices ‘Lifestyle Financial Planning’
  • Uses an ‘evidence based’ approach to investment strategies

In this blog I will be exploring what a Certified Financial Planner (CFP) is, and what it means for the advice process.

Certified Financial Planner (CFP)

Certified Financial Planner certification is a global qualification that is awarded by the Chartered Institute for Securities & Investments (CISI) in the UK. There are currently over 170,000 CFP professionals all over the world, however, in the UK there are currently only just over 1,000 CFP professionals.

In order to gain the Certified Financial Planner certification, you have to complete a written exam as well as create a financial plan based on a case study set by the examiners. The case study is a comprehensive and challenging task as it tests, not only the technical aspects of advising, but also the ability to create a solution to a number of goals that knit together to create a complete solution. The pass rate for the case study element has always been quite low.

Once the exams have been passed, in order to gain the Certified Financial Planner certification, you then need to show a certain amount of relevant experience, sign up to a code of ethics and commit to a program of continuous professional development.

The Certified Financial Planner certification is very different to the Chartered Financial Planner qualification as it takes a more holistic approach. Chartered Financial Planners have an in depth knowledge on product and tax rules. However, Certified Financial Planners are taught to follow a six step process to get to know a clients goals, construct a financial plan to meet all of those goals and keep reviewing the financial plan to ensure it remains on track.

By combining Chartered status and Certified Financial Planner certification, the adviser will have a high level of technical knowledge, combined with the ability to apply that knowledge in a well worked strategy that meets a clients goals and objectives.

Next week I will be exploring what practising ‘Lifestyle Financial Planning’ means and why it’s so very important.