Passing the CFP® Exam - What it means and why I took it

The CFP® means something to me - but it's not "just the letters"

I passed the CFP® exam a few weeks ago and I’m very excited to submit for approval to use the designation. I will also say (to spare anyone who doesn’t want to read it) that this has ZERO market commentary.

However - if you believe that an advisor should be doing more than just “managing your portfolio of money” and you are looking for real advice on topics like “when can I retire? How much will I owe in taxes? Do I need life insurance? Should I incorporate? Who will get my money when I die? etc” then you need to read on.

What is the CFP® ?

The Certified Financial Planner ® is an internationally recognized designation. FP Canada governs it here in Canada but there are CFP’s in a variety of countries. This is a designation that symbolizes commitment and expertise in “Financial Planning”. Notice I said “commitment” - I chose my words carefully.

The Financial Services industry is only partially regulated and at this moment - there aren’t a lot of standards that govern who is allowed to do the “act” of financial planning.

In Ontario - while the act of Financial Planning isn’t directly regulated by the government - the “Title” of Financial Planner is. Only certain designations are allowed to use the title “Financial Planner”. This is why you see so many titles online such as “Wealth Planner, Financial Consultant, Money Guide, etc etc”

For my Midwifery/Psychotherapist/Physician clients I often compare it to their jobs. Their specific jobs/duties AND their official job title are both protected by regulation and law. Someone who is not a Licensed Doctor cannot provide direct medical advice OR call themselves a “Medical Doctor”.

On the other hand - anyone can provide financial planning advice - regardless of education/knowledge/experience/background. Not everyone can call themselves a “Financial Planner” though.

So is that it? You just get to change your title?

Fair Question.

There are a lot of mixed messages about designations in general and why people choose to pursue them. I know many advisors (and clients) who will say “It doesn’t matter what letters are behind your name - just do good work and be the best and you will be fine”. This is a topic that applies in just about any field. Education vs experience as well as the “quality” of both will be a debate forever.

In a way - I agree with what everyone says. The letters don’t matter - it’s the work you do that counts. I like to think my work has been good - but I will also be the first to point to a dozen things I want to improve. As a self - employed person who also finds their own clients I can say with a straight face that sales is a reality in this business as well. Can’t be the smartest person in the world with 0 clients.

It’s not the letters but what they represent - the breadth and depth of knowledge

Now that I am on the other side of the exam - I can tell you it is broad. There is a LOT of content to cover. The case studies barely overlap so what you know about one core financial planning topic like registered accounts may not really overlap in another area like insurance or estate planning. Here’s a tiny selection of topics that came up that I needed to have knowledge on:

• What happens if you die and you don’t have a proper will? Or if you had an executor who has since moved out of the province or country but is still alive?

• What if you own two personal properties (Ex. Cottage and Personal home) - it’s not as simple as “oh my house is tax free and my cottage is taxable”. Not knowing the nuances here could cost you THOUSANDS in tax.

• What if you don’t establish a trust for your rapidly expanding incorporated business that could potentially qualify for the Lifetime Capital Gains Exemption? What are the implications when it comes to handing it off to your kids or the next generation of family taking over the business?

My first thought when I finished writing the exam was “I’m tired. That was a lot.”
My second thought was “Anyone who has the CFP® behind their name - I will always give a nod of respect to.”

So do you need the CFP® to know all that? No. But I would flip it and say if someone has the CFP® designation…the likelihood that they have the requisite knowledge to help you will be higher than someone who does not.

Additionally - there are specific codes of conduct and ethical requirements that CFP® Professionals are held to by FP Canada in terms of their duty to their clients and the way they are expected to conduct themselves. Complaints are taken seriously, investigated, and can result in loss of the designation. If you are wondering if that is the case for all people in the financial services industry - the answer is somewhat messy. There are different standards set based on the credentials an advisor/planner has and the services they provide.

Before this - I was held only to the standards that existed around my investment license and my insurance license. A CFP® designation means there is a codified set of standards around “financial planning” I will be held to that never existed for me before.

What this means for you if you’re searching for qualified and competent financial advice?

It’s common to be asked by prospective clients “what credentials do you have or are you working towards”. I always believed I was “good” at financial planning - but studying for this exam (and passing) showed me how much more there is to still learn and be an expert on. For people who ask about credentials and are looking for a CFP® Professional as their ideal advisor/planner - I fully support it. It’s a good bar to strive for.

BUT keep in mind that this means you are seeking out someone who has worked hard and studied A LOT to earn those letters. They will likely be focused on really good financial planning. You will get a lot out of them - but you will be expected to give a lot in return. Yes I’m talking about money/cost…but I’m also talking about the time and emotions you invest with me.

As an example - I can’t review your estate plan and make an outline of the tax implications at death and who will receive your money without looking at your Wills ( & chatting with your lawyer), looking at recent corporate financials, and also asking you about what tensions may exist between you, your kids, your grandkids...and each other. It’s a lot to ask…but the rewards are in some ways priceless.

After all - what’s the price on knowing that you have a plan that leaves your spouse, kids, and grandkids happy and peaceful after you die?

Where we go from here*

This is not the end but rather the beginning of a new journey. I’m excited for what we are building for all of you to make the planning journey more fulfilling, easy to execute, and easy to understand. If you liked what we have been doing for you till now…you’re going to LOVE what your experiences look like a year or two from now.

See you tomorrow.

*For advisors/aspiring financial planners looking to learn more about the exam and how I prepped for it as well as key people/resources to learn from - I will be sharing more on LinkedIn within the next few days.

Aravind Sithamparapillai is an Investment Advisor with Aligned Capital Partners Inc. (“ACPI”). The opinions expressed are those of the author and not necessarily those of ACPI. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances. ACPI is a full-service investment dealer and a member of the Canadian Investor Protection Fund (“CIPF”) and the Canadian Investment Regulatory Organization (“CIRO”). Investment services are provided through ACPI or Ironwood Securities of Aligned Capital Partners Inc, an approved trade name of ACPI. Only investment-related products and services are offered through ACPI/ Ironwood Securities of Aligned Capital Partners Inc. and covered by the CIPF. Financial planning and insurance services are provided through Ironwood Wealth Management Group. Ironwood Wealth Management Group is an independent company separate and distinct from ACPI/ Ironwood Securities of Aligned Capital Partners Inc.