CFP Board is pleased to provide CFP® professionals with a sample explanation statement regarding your CFP® certification that may be included on Form ADV, Part 2, a document which the Securities and Exchange Commission (SEC) requires registered investment advisers to provide to clients.
As background, effective October 12, 2010, the SEC amended Form ADV, Part 2B, which now provides that an adviser “may list any professional designation held by the supervised person.” If the adviser chooses to do so, the adviser “must provide a sufficient explanation of the minimum qualifications required for each designation to allow clients to understand the value of the designation.” (emphasis added)
The sample explanation statement below was created to assist CFP® professionals in providing clients an accurate and consistent explanation of the CFP® certification and its value. The statement is also available for download.
CFP Board appreciates the assistance Bob Veres provided in drafting this sample statement. We hope the statement is a useful resource for your ongoing compliance efforts. If you have questions regarding the statement or about CFP Board’s Standards of Professional Conduct, please contact us at firstname.lastname@example.org.
Background on the SEC’s Amended Form ADV
Each adviser applying for registration with the Commission after January 1, 2011 must file a Form ADV that meets the requirements of amended Part 2A as part of the application for registration on Form ADV. Such advisers must, upon registering, begin to deliver to their clients the required brochure and brochure supplements that meet the requirements of amended Form ADV. Each adviser currently registered with the Commission whose fiscal year ends on or after December 31, 2010, must include in its next annual updating amendment to its Form ADV a brochure or brochures that meet the requirements of the amended form. Accordingly, each adviser with a fiscal year end of December 31, 2010 must file an annual updating amendment with the new brochures no later than March 31, 2011. Within 60 days of filing, the SEC requires the adviser to deliver to existing clients the required brochure and brochure supplement that meet the requirements of amended Form ADV.
Sample CFP® Certification Explanation Statement
The CERTIFIED FINANCIAL PLANNER™, CFP® and federally registered CFP (with flame design) marks (collectively, the “CFP® marks”) are professional certification marks granted in the United States by Certified Financial Planner Board of Standards, Inc. (“CFP Board”).
The CFP® certification is a voluntary certification; no federal or state law or regulation requires financial planners to hold CFP® certification. It is recognized in the United States and a number of other countries for its (1) high standard of professional education; (2) stringent code of conduct and standards of practice; and (3) ethical requirements that govern professional engagements with clients. Currently, more than 71,000 individuals have obtained CFP® certification in the United States.
To attain the right to use the CFP® marks, an individual must satisfactorily fulfill the following requirements:
- Education – Complete an advanced college-level course of study addressing the financial planning subject areas that CFP Board’s studies have determined as necessary for the competent and professional delivery of financial planning services, and attain a Bachelor’s Degree from a regionally accredited United States college or university (or its equivalent from a foreign university). CFP Board’s financial planning subject areas include insurance planning and risk management, employee benefits planning, investment planning, income tax planning, retirement planning, and estate planning;
- Examination – Pass the comprehensive CFP® Certification Examination. The examination includes case studies and client scenarios designed to test one’s ability to correctly diagnose financial planning issues and apply one’s knowledge of financial planning to real world circumstances;
- Experience – Complete at least three years of full-time financial planning-related experience (or the equivalent, measured as 2,000 hours per year); and
- Ethics – Agree to be bound by CFP Board’s Standards of Professional Conduct, a set of documents outlining the ethical and practice standards for CFP® professionals.
Individuals who become certified must complete the following ongoing education and ethics requirements in order to maintain the right to continue to use the CFP® marks:
- Continuing Education – Complete 30 hours of continuing education hours every two years, including two hours on the Code of Ethics and other parts of the Standards of Professional Conduct, to maintain competence and keep up with developments in the financial planning field; and
- Ethics – Renew an agreement to be bound by the Standards of Professional Conduct. The Standards prominently require that CFP® professionals provide financial planning services at a fiduciary standard of care. This means CFP® professionals must provide financial planning services in the best interests of their clients.
CFP® professionals who fail to comply with the above standards and requirements may be subject to CFP Board’s enforcement process, which could result in suspension or permanent revocation of their CFP® certification.