Institutionalizing the CFP® Certification

Each year the corporate relations team travels to the headquarters of many financial services firms discussing the benefits of CFP® certification. One of our fondest memories from these trips occurred when one firm’s leader took the team through their planning department to introduce their CFP® professionals. At this firm the advisors had our gold CFP® ribbon that we hand out at conferences to attach to an ID badge repurposed and attached to their name plates so all of their peers could see that they were certified. As our team walked through the labyrinth of workstations and offices, we shook hands and chatted with them. They said how much of an impact the certification has made for their clients and their pride in completing and meeting the requirements. Those who were not certified told us where they were in the process of completing the requirements. They would say “I’m registered for the March exam” or “I have one more course to finish and hope to take the exam in November.” Clearly, CFP® certification was not just a “nice-to-have” for these planners. It was the way their firm did business and everyone knew how important it was for career growth.

Clearly, CFP® certification was not just a “nice-to-have” for these planners. It was the way their firm did business and everyone knew how important it was for career growth.

Over the years, we have had this same experience at many other firms. These firms have successfully institutionalized the CFP® certification. This phrase describes firms that go beyond simply recognizing the certification and encouraging these advisors to obtain it. At these firms, CFP® certification permeates the organization’s culture and signals to employees the firm’s commitment to competent and ethical financial planning. Advisors can take comfort in knowing they are part of an organization that leads with planning. Typically, an institutionalized firm preaches a fundamental philosophy of how they work with clients and espouses core beliefs about the skills and knowledge their advisors must have to fulfill that obligation. This article describes the characteristics of the firms, let’s call them institutionalizers, who meet this definition.

Lead with Planning

Many firms say they lead with planning, but unfortunately for some, these are just words. Firms that have institutionalized CFP® certification place financial planning at the core of their work. They have built into their culture, processes and systems the idea that every client will get a plan before they receive advice, and it will be delivered by a CFP® professional. Many seasoned financial planners will remember hearing the phrase “prescription without diagnosis is malpractice in any profession,” early in their careers. Firms that truly lead with planning not only build planning into their business model, but also remind their advisors and clients that this is the only way they can properly serve their clients. Our team has even met some firms that will refuse to work with clients unless they share this belief.

Building a culture around advice and planning is not easy. It starts with leadership sending a message that the firm’s mission is dedicated to improving their clients’ financial goals and objectives; that is the true client-focused service model. Institutionalizers are firms that have successfully built such a culture by aligning their hiring, training, systems, goals and incentives with this mission.

Designation Policy to Designation Strategy

Institutionalizers also possess a core belief that CFP® certification is the better way to do financial planning. Their leadership touts the benefits of CFP® certification using words like “acumen,” “recognized standard” and “highest standard” of designations in financial services. Executives at these firms have told us that if they could wave a wand and make all of their advisors CFP® professionals, they would.

These firms not only support and promote certification, but also recognize and celebrate when one of their associates reaches that important career milestone.

These firms not only support and promote certification, but also recognize and celebrate when one of their associates reaches that important career milestone. Firm communications, annual meetings, social media, newsletters, are all ways to spread the word on the importance of becoming certified and emphasize how the firm views the designation.

Institutionalizers are not “agnostic” about the designations their advisors hold. Not all designations are equal, in rigor, awareness, and recognition — they may not be aligned with the firm’s strategy. Many firms now may allow multiple designations, but institutionalizers limit the ones they support and promote. These are the designations that align with their strategic priorities. For the many firms that are moving towards holistic advice, the CFP® certification is the clear choice, since it is the recognized standard for financial planning professionals.

But these steps are just the beginning steps towards creating a culture of competent and ethical planning as represented by the CFP® certification.

Hiring and Training

Creating pathways for the CFP® certification is critical for firms looking to become institutionalizers to ensure that employees understand how to advance within the firm and how building acumen in your profession is the only way to succeed. A firm can do this by building career paths into new advisor training that has the trainee starting the CFP® certification education soon after they are hired. This is typically how firms onboard career changers, or college graduates from non-financial planning degree programs.

If someone is hired from one of CFP Board’s registered programs, the college graduate is already qualified to take the CFP® exam. Firms build in time for the graduate to study for the exam during work hours, while also gaining experience to eventually qualify to be certified. CFP Board’s “Apprenticeship” pathway can shorten the experience requirements if a firm meets certain requirements.

Incentives and Rewards

To encourage their advisors to become certified, many institutionalizers either provide a bonus to new certificants, or help an advisor pay for the cost of certification. While this policy may be impacted by the type of firm (for example, employee vs. independent broker-dealer), 42% of CFP® exam takers have told us their firm covers the cost of obtaining the education requirement for CFP® certification. Another 29% of CFP® exam takers said that their firm partially covers the cost.

Beyond monetary incentives, institutionalizers also build in minimum job requirements that require the CFP® certification. A large direct retail firm we work with requires CFP® certification for all advisors working with clients above a certain investable asset level, ensuring that advisor acumen is commensurate with the complexity of the client situation. This incentivizes advisors to pursue the certification early so that they can continue to advance their career and reap the rewards of serving a higher needs client (i.e., more compensation, more challenging work, and job satisfaction). This certification standard also sends a message to clients that the firm takes advice seriously and that they will be given competent and ethical advice.

Leading from the Top

CFP® professionals are now seen in the C-Suite and even at the CEO level of financial services firms. This alone provides evidence that firms are thinking differently about advice. By having CFP® professionals as leaders, firms ensure that their strategic priorities are aligned around the client receiving sound financial planning services by qualified individuals.

By having CFP® professionals as leaders, firms ensure that their strategic priorities are aligned around the client receiving sound financial planning services by qualified individuals.

These individuals also can articulate this vision to firm clients and advisors. We call this leading from the top. It is the best way to transform a business from leading with products to leading with comprehensive advice that accounts for a client’s whole financial life. In this way, CFP® professionals in leadership roles are indicative of a firm that has created a culture of advice and planning and institutionalized the CFP® certification.

On the Road to Success

To be successful in a marketplace that puts a premium on the quality of advice, firms will need to be intentional about which certifications their client-facing associates obtain before moving into such a role. The rapid pace of change that has expanded the scope and scale of advice now requires institutional changes at the firm level to ensure advisors can deliver quality advice that fulfills that new value proposition.

Institutionalizing the CFP® certification will be easier for some firms than others. Stating that the CFP® certification is the better way to deliver financial planning may alienate some associates that are unable or unwilling to obtain the certification. For firms going down this path, some tough choices may need to be made to ensure success. However for those leaders that are able to create the right culture, incentives and clear pathways for their financial planners to advance, the rewards will be loyal advisors, loyal clients and an attractive opportunity for the college graduates and career changers that are seeking careers in financial planning.

Interested in discussing how CFP Board can support your firm’s certification efforts? Contact [email protected].