36 Comments

1. GREAT article, Chris! You addressed the three separate questions well with honest and insightful comments. This is an area that I have wanted to delve into for a variety of reasons but mostly to challenge myself. Also, one career is nearing an end and this is a topic I am passionate about so maybe that should be my next chapter. Thank you!

   1. Glad you found it helpful Roseanne. If you do go down this path, feel free to send any questions my way if I can help you.

      Cheers!
      Chris

2. Congratulations, Chris! I likewise considered the possibility of obtaining this certification and for a variety of the reasons you mentioned I decided against it. Reading your post leads me to think I made the right decision for me. Good luck going forward.

   1. Thanks for the kind words Judith.

3. Very interesting and very well done. Enjoyed reading this.

   1. Thanks Suzie!

4. Love the write up on CFP application for personal planning. Very insightful on the process and effort required. I am particularly interested in planning for high net worth investors. Did the course work include tax planning scenarios?

   Thanks

   1. Ron,

      Yes, there was a disproportionate amount of time to planning for the needs of high net worth individuals. This includes extensive attention paid to gifting strategies and the use of a variety of trusts to accomplish goals of controlling assets and directing where they will ultimately go while minimizing estate taxes. There was also in depth education about non-qualified retirement plans, ISO and NQSO mechanics and planning strategies, and planning strategies for those subject to AMT and net investment income tax.

      To contrast this to my point about helping the less fortunate, there was little emphasis on budgeting, emergency fund planning was boiled down to the 3-6 months of spending rule common in personal finance circles, and a simple low-cost tax-efficient index investing strategy got the same or less attention in the investment section as complex options strategies, hedging strategies, etc.

      So if your goal is to serve high net worth investors, then you will learn a lot.

      Chris

5. Hi Chris,
   Thank you for the insight. I thought about trying for the CFP to increase my own education as you mentioned in the article. However, you confirmed my fears of information overload in areas that wouldn’t pertain to my situation.

   Have you considered studying for the RICP designation? It seems more geared to actual retirement strategies.

   https://www.theamericancollege.edu/designations-degrees/ricp

   1. I have not looked into it in detail YET, but I am aware of it and the faculty behind it is impressive. Stay tuned!

      Chris

6. Thanks for the useful article. I’ve always wondered about this. Do you know of any useful Canadian Retirement Calculators?

   1. Susan,

      I do not. The big advantage of the NewRetirement and Pralana calculators that we affiliate with over some others is the detailed federal and state tax analysis and calculations provided. I am not aware of any similar functionality with Canadian specific calculators.

      Sorry!
      Chris

7. Thank you for this very thoughtful article. You answered many of the questions that I had. And you confirmed that getting more financial education primarily to help me with my own finances, going through the CFP route is probably not the best use of my time. Thanks again!

   1. Glad you found in helpful Owen.

      Best,
      Chris

8. Congratulations on completing the course material and exam. Was there any data on what percentage of potential client pool were high net worth individuals? I’ve always thought they were the only segment, and a very small one at that, of the population that required any expertise. For the very vast majority, it’s meat and potatoes basics that are can be easily and inexpensively be applied with success determined by discipline to one’s plan. That expensive planners sell themselves to this group as valuable and needed advisors is shameful.

   1. Scott,

      Traditionally, reimbursement has driven who clients are. Those who serve lower net worth individuals tend to rely on commission based sales. Those who serve higher net worth individuals would tend to charge an assets under management (AUM) arrangement. For this to make sense, you tend to need a larger asset base from which to generate fees, so there tend to be minimum net worth to be a client. In both models, the fees lack transparency, and most people have little idea what they are paying. This works well for advisors. For clients, not so much as it creates a major drag on wealth over time.

      Where I hope to see this industry going is to advice only, meaning a potential client has to pull out their credit card or check book and play a transparent fee for advice. If the client perceives value, they will pay for it and tell others. If they don’t, they won’t.

      This model is not without conflicts, the most notable being the temptation to make things more complex than necessary. But I do believe it is the best model for consumers. See: Conflicts of Interest with Investment Advice.

      I used to think, like you, that the vast majority of people could be DIYers and don’t need any outside advice or planning. After helping out my parents and talking with many readers of this blog, I think many people would benefit from advice for a variety of reasons. Among them are the complexity of our financial system and seeing how the pieces all fit together. Another is behavioral. Some people are natural savers, others are natural spenders. But to build wealth AND be able to enjoy the fruits of your labor requires switching between them at different points. This isn’t easy for many people.

      So I would agree that the way some advisors sell themselves is dishonest, and maybe even shameful as you describe. But there is value to be added depending on the circumstances.

      Best,
      Chris

      1. Chris,
         I agree in hoping the industry evolves into a fee for the time involved providing valued advice model. I also agree that there are a lot of DIY’ers that could use some advice and behavioral monitoring. However, they should be billed for the relatively little amount of time that requires. There is just too much money being made by advisors with the current system for our hope of change to happen any time soon. I worked in the industry for a few years (not as an advisor) and the only thing the firm focused on for advisors was their “production” – meaning how much money they generated for the firm. I’ve thought of entering the field myself but commissions and assets under management fees as the compensation structure is something I could never feel good about. Good luck to you in whatever path you take.

         1. I’m with you 100% here Scott. My goal/plan is to start offering advice only on a very limited basis. I’ve been told by a number of people that the demand is overwhelming for this type of service, which is encouraging that consumers are getting the message and seeing the value in this.

            However, this is much more work to add value to customers and get them to pay you in a transparent way than to charge fees in an opaque (being generous here) way. It also doesn’t scale well. So I am not expecting to see AUM or commission models going anywhere.

            Best,
            Chris

9. What an achievement. Thanks for sharing your story and thoughts. It has been fun following your journey and learning from you (specifically this pasy year). Very basic question. How many hours is the final exam? Break for lunch?

   1. Thanks Andrea. The test is two sections. You have up to 3 hours for each half with a 40 minute break in the middle.

10. Congratulations!!! I had complete faith in you, Chris, and knew you could (and would!) be successful. The fact that your exam is in the rear-view mirror will allow you to relax and enjoy the holidays with your family – perfect timing.

    This was an intriguing read. I appreciate the fact that the requirements for the program are stringent, the exam is difficult and ethics are stressed. Certainly, there are situations in which a client’s entire financial future may be held in the hands of a CFP, much like the life of a patient in a doctor’s. It’s a staggering responsibility. Thanks for your honest and transparent evaluation of the certification process. It was both informative and reassuring.

    1. Thanks for the kind words and support Mary.

       I will say that while I agree with you on the responsibility involved in working with someone’s finances, I’m not reassured by the ethics requirements and fiduciary standard.

       On one hand, fiduciary duties are jammed down your throat in the CFP curriculum. On the other, you are taught that you can be a commissions based salesman and practice as a CFP under the fiduciary standard, as long as that method of compensation is disclosed and you act in the client’s best interest.

       I’m sure it is possible to choose your client’s interests over your own, but how often that actually happens when you are only paid if you sell a product that may not be in the client’s best interest…. I’m a skeptic. And I am not implying that only the commissions based model is conflicted. All financial advice comes with conflicts of interest. I’ll continue to write about and highlight this and do my part to move this industry in a better direction.

       Best,
       Chris

       1. With all due respect to honest, hard-working CFPs everywhere, it is my skepticism and cynicism (which I carefully tamped down in my original comment) that led me to continue managing our investments after our portfolio reached a point where it would have been attractive to a professional. My concerns are also responsible for the instructions on how to hire a fee-based planner that are tucked in with the copies of our wills accessible to our son.

          1. I agree with your approach for yourself and for your son. The one big challenge of being a DIYer, even if you are competent to do things completely on your own, is that none of us is getting younger and at some point most of us will likely need someone to help us. I like your approach of thinking about this proactively for your son, and doing that research for him may also help you should you ever need help for yourself.

             Best,
             Chris

          2. Mary, one route to consider. You do not have to have ALL your assets handled by an advisor. I have certainly learned from financial advisors over my lifetime, but at times I was definitely paying too much in fees for the advice received. I currently have part of my portfolio with Personal Capital, but most of it I handle myself, TSP being a large chunk. I have enjoyed challenging the Personal Capital advisor with some specific situations. Just another option.

11. Great takeaways Chris!
    30 years ago I looked into taking the CFP course (then around $3K) to bolster my financial knowledge as I was not in the field, nor was I planning to enter the field as a profession. So what I did instead was borrow the course materials from a friend and studied them on my own. You’re correct to say that you don’t become an expert in any one area, but it does give you an excellent broad perspective. I was 30 years old at the time and starting to command a respectable salary. The more material you read about investing, the more you realize that the time value of money is key. I made a commitment to save 30-50% of my salary and live on what was left. I couldn’t keep up that level of investing due to the marriage and 4 kids that came along, but I have been financially secure for many years now thanks at least in part due to the CFP research I did a long time ago.

    1. DJ,

       Interesting perspective. Thanks for sharing your experience and insights gained from it.

       Cheers!
       Chris

12. Very cool, I know a lot of people are interested in this but do not know where to start. I toyed with it when I first retired but ultimately decided I was already kind of swamped with volunteer work, and I have no need nor desire to earn any more money, so I passed on it. But I bet some of your readers will be inspired to follow your lead.

    1. Steveark,

       Like you, many people “toy with” this idea. I’ve been surprised by how many questions I have gotten about it. Hopefully this will be a good resource to point them to.

       I also hope to inspire others who are, or are near, FI to follow me down this road. The financial advice business has a lot of inherent conflicts of interest. Having wealth does not eliminate greed or bad actors who will always want more (see the current FTX blow up), but it does put people in position to at least be able to act in a client’s best interest which is frankly difficult if the decision requires sacrificing putting food on your own family’s table and you rely on that income to do so.

       Best,
       Chris

13. It’s a good thing for all the reasons you state. However, instilling a false sense of trust can be a dangerous thing for the people we serve. My contrarian opinion https://emancipare.com/why-im-not-a-cfp

    1. And I forgot to say, congrats Chris! This is valuable information, as always from you and Darrow.

       1. Bill,

          I agree with your insights fully. I love the idea that people should be fiduciaries and appreciate that the CFP board emphasizes this. But in reality, I don’t think you can regulate ethics and I absolutely don’t think you should ever blindly trust anyone with your money.

          Thanks for taking the time to read and share your thoughts.

          Best,
          Chris

14. Congrats Chris, that’s a great accomplishment!

    1. Thank you sir! I’m happy to be done and ready to move on to the next steps.

15. Hi Chris…

    Congratulations on your efforts and hard work! Two questions:

    1) In your studying during the instructor led part (prior to the dedicated exam prep), among online lessons, video lessons, and the ME books and quizzes, what parts would you say are best to focus on and would you characterize the sheer amount of reading in the ME books as paramount.

    2) Any strategies you employed during the instructor led part (or dedicated exam prep) that helped in terms of retaining the sheer amount of information over time?

    Thanks.

    1. Will,

       I’m not 100% sure I understand your first question. But I’ll give it a crack.

       1.) As far as what to focus on, I looked at things as to why I am learning about them. Some things are simply things you have to learn in order to pass a test, be it to get through the education portion or to pass the CFP exam. Other things are critical to serve the niche of people I want to serve, namely those trying to answer the “Can I Retire Yet?” question, be they traditional retirees or FIRE types looking to make a drastic life change. Those topics related to that niche I would try to understand at a deeper level. One way I did so was by writing about them. You can see the list of articles I cited above as examples. I have about a dozen more partially written posts which I’ll be posting in the coming months. Due to the volume of info that I was taking in, I didn’t get a chance to edit and polish those to the quality I would be happy publishing yet, but just the process of starting and doing a brain dump and then seeing how the information fit together helped. I think teaching is a great way to learn as it forces you to understand information at a deeper level in order to be able to teach it to others.

       2.) Variety. The BIF program was a good combination of written materials, classroom sessions, and question banks to mix things up. I also participated in a study group. We all brought different perspectives including my FIRE perspective, someone who worked for an investment management firm, and a widow getting back into the work force. Therefore we all had different experiences, perspectives, and areas of strength and weakness. It was helpful to have people who could share their expertise, and again sharing mine in other areas only further strengthened it by explaining and teaching to others.

       Hope that helps.

       Best,
       Chris

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