Validating the Knowledge and Competency Required to Provide Financial Planning to Clients
Like all professional certifications, CFP Board’s CERTIFIED FINANCIAL PLANNER™ certification signifies that someone has mastered a profession’s body of knowledge. But financial planning knowledge alone is not enough to become a proficient financial planner. Competence and skill are required for professionals to put their knowledge to good use.
In general, professions tend to test only knowledge. Even exams that require a person to have an integrated understanding of the profession’s body of knowledge — like the CFP® exam — still do a better job of validating an examinee’s knowledge than the examinee’s ability to put that knowledge into practice.
Some organizations that set professional standards, like CFP Board, have experience requirements that require candidates to put in a certain amount of time in roles that require them to demonstrate their knowledge. But even if that experience is verified by a seasoned professional, it may or may not grow someone’s professional competency.
So how do we validate and measure competency?
To ensure the CFP® certification program reflects the current practice of financial planning, CFP Board conducts a Practice Analysis Study approximately every 5 years.
First, it is natural to begin with knowledge. To ensure the CFP® certification program reflects the current practice of financial planning, CFP Board conducts a Practice Analysis Study approximately every 5 years. This research validates which previously identified knowledge topics and tasks are still important to the practice of financial planning, and it identifies new topics and tasks that have become part of the practice of financial planning or will impact it in the near future.
CFP Board recently wrapped up our latest Practice Analysis Study, which resulted in an updated Principal Knowledge Topics. That list established the topics covered in the curriculum of each CFP Board-registered academic program, the topics assessed on the CFP® exam, and the topics we accept for continuing education credit.
For this recent study, CFP Board took a new step forward and sought to identify and validate the competencies that financial planners use to successfully use the knowledge represented by the Principal Knowledge Topics in their interactions with clients. Along with the updated Principal Knowledge Topics list, we released the first Financial Planning Competency Framework. The new Competency Framework identifies the knowledge, skills and abilities (“attributes”) that enable CFP® professionals to achieve high performance.
The framework is made up of three clusters:
- The Technical cluster includes attributes related to financial needs analysis, financial advice and technological savvy;
- The Interpersonal cluster includes attributes related to coaching, emotional intelligence and consulting; and
- The Leadership cluster includes attributes related to professionalism, integrity and client advocacy.
What does this framework of competencies do for financial planners and their clients?
First, these competencies can be a helpful guide to professional development for CFP® professionals and those pursuing CFP® certification. They identify attributes that reinforce a financial planner’s value through helping people. Financial planning is much more than managing money. It requires a talent for taking a big picture view of a client’s situation and learning about a client’s needs, goals and motivations before making recommendations.
Financial planning is much more than managing money. It requires a talent for taking a big picture view of a client’s situation and learning about a client’s needs, goals and motivations before making recommendations.
The competencies also benefit clients of financial planners. They reinforce that financial planning is a client-centered profession. The practice of financial planning requires not only knowledge and expertise in technical matters, but also sensitivity to and understanding of the emotional context of money and finance. Both knowledge and interpersonal attributes are necessary to provide good service to financial planning clients.
CFP Board is pleased to lead the way in identifying and validating the elements that make up financial planning competency. It is a natural progression from our role in identifying and validating the financial planning knowledge relevant to practice. We hope to see CFP® professionals, financial planning educators and students, and the firms that hire financial advisors take a look at the Financial Planning Competency Framework and consider how it can inform their professional development plans.
Greater integration of competency with knowledge will only enhance the already well-recognized benefits that financial planners provide for the public.
This article was originally published on LinkedIn on May 5, 2021.
About the Author: Kevin Keller, CAE is Chief Executive Officer of CFP Board. CFP Board’s mission is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.