A certified financial planner (CFP) is a designation that is recognised in 27 territories around the world, and is the standard of excellence when it comes to financial planning
Although there are now – in large part thanks to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry – far more stringent guidelines around financial planning and the financial services industry than ever before, there is a need as a consumer of any service to undertake some due diligence.
Just like every chef, doctor, mechanic, or accounting professional are not created equally, nor are financial planners. However, thanks to certification standards, industry governance bodies, government regulatory bodies (such as APRA and ASIC), the professionals in the financial industry are being held to a higher standard than ever before.
What is the standard in financial planning in Australia?
According to the Financial Planning Association of Australia (FPA) “For more than 30 years, the Certified Financial Planner® certification has been the standard of excellence for financial planners. CFP professionals have met extensive training and experience requirements and commit to the highest ethical standards that require them to put their clients’ interests first.
The CFP® designation is fast becoming the first choice for clients and employers – and it’s easy to see why. The highest designation in financial planning, coupled with commitment to the highest ethical standards, sets CFP® professionals apart from the rest.”[1]
What does the CFP standard provide for a client?
When you engage a financial planner with the CFP certification, you should expect an extremely high level of care, industry best practice skills and expert service.
This is in large part thanks to the high degree of CPD or ‘compulsory professional development’ that is expected of members, the minimum entry requirements and the industry professional standards that govern them as individuals – both professionally and personally.
Although this may sound somewhat dramatic, in the wake of the activities by many financial planners prior to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, many practices that wouldn’t stand up to the ‘pub test’ were routinely rolled out by many so-called professionals in the industry.
For a CFP to achieve the certification and accreditation, they must adhere to not only industry best practice, but be leaders within the industry.
As a client, you can be rest assured that when your financial planner is a CFP, they will be held more accountable, as the CFP accreditation holds them to that standard, but also brings them business and allows them to charge the applicable fees.
What happens if I am not happy with my CFP?
If you are not happy with the performance of your CFP, and you feel they have acted inappropriately or recommended products or services outside your risk tolerance, or potentially provided false or misleading information – then you have yet another avenue for restitution when they are a CFP.
However, it isn’t all about doom and gloom, quite the contrary, a CFP is an industry professional, one that has worked extremely hard to not only be recognised by their industry as a top practitioner, but has to ensure their skills – both technical and interpersonal – are developed each and every year to better service you as a client. So, next time you speak to your financial planner, ask if they are a CFP, if not, why not?
[1] https://fpa.com.au/education/cfp-certification/