CFP: the most important three letters in financial planning
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Preparing for an uncertain future has never been so important. Financial wellness is the cornerstone of a healthy society and should be the goal of every individual. But achieving financial wellness is easier said than done. There are thousands of financial products on the market, and it seems that everybody has an opinion about what you should do with your savings.
This is why the Certified Financial Planner (CFP) professional designation is so valuable. It is awarded by the Financial Planning Institute of Southern Africa (FPI), a recognised professional body for financial planners, and it indicates that a financial planner has the necessary skills, knowledge and competencies to give advice impartially, professionally and ethically.
“The CFP designation is internationally recognised as the standard for financial planning professionals,” says FPI chief executive Lelané Bezuidenhout. “It gives consumers confidence that the financial planner they’re dealing with is suitably qualified and gives assurance that they remain up to date with developments in the industry.”
The four Es of being a CFP professional
To qualify as a CFP professional – and to retain that status – financial planners must meet the four Es of the profession:
1. Education. Candidates can start the journey towards becoming a CFP professional by obtaining a Postgraduate Degree or Diploma in Financial Planning from an accredited institution. An advanced degree or designation in economics, taxation, law or finance, in addition to a more onerous experience requirement, can serve as an alternative to gain entry to the professional examination through the Challenge Examination process.
2. Examination. The Professional Competency Examination (PCE) is a rigorous competency test administered by FPI. A financial planner can only qualify to apply for the CFP designation if they pass the PCE.
3. Experience. Before they write the PCE, the candidate must have three years’ experience in the field of financial planning. Qualified CFP professionals must also stay in touch with developments in the financial planning profession and must complete 35 hours of continuous professional development (CPD points) each year.
4. Ethics. Ethics is the glue that holds the CFP designation together. Professionals must display high ethical standards at all times and complete at least five CPD hours each year on professional ethics and financial planning practice standards.
A career in financial planning
“After I completed my undergraduate degree, I did some research and decided that financial planning was the ideal career for me,” says Katlego Mei, CFP. “I obtained my Postgraduate Diploma in Financial Planning in 2017 and attempted the PCE for the first time in 2019. I did not pass the PCE on the first attempt, but I did not let that get me down because I really wanted to be a professional. I wrote the PCE for the second time in 2021 and passed. Stay positive and focus. The earlier you start with your preparations, the better it will be for you.”
“The journey to becoming a CFP was my journey of self-discovery,” adds fellow FPI candidate Chantay Dlamini. “The best way forward for me was to pack away all work-related material and focus on the studying. Communicate with your family and friends. Your focus is going to shift for some time. Many of the candidates have spouses, life partners, children and parents – take them on this journey with you.”
The PCE consists of two case studies, written over consecutive days, that will test candidates’ financial planning skills, knowledge and competencies. These examinations are conducted online and can be completed from the comfort of one’s home or office.
From 2021, FPI has introduced a rewrite option, which affords certain candidates an extra opportunity to pass a case study. – supplied by the FPI.