Does CFP Certification Process Need Fixing?

First I need to make it clear that I’m a big fan of the IFP and believe that the CFP programme is worthwhile, arguably required for anyone keen on demonstrating high level of professionalism in financial planning. My aim here is to provoke a debate about improving the assessment process.

As someone with a relatively strong academic pedigree – a first class honours degree, a Master’s degree in which my research/dissertation found its way into an international peer-reviewed academic journal, Chartered and now (after three attempts, lots of tears and blood) finally Certified – I think I can say that I have seen just about every known form of assessment you could think of.

I have to be honest, I don’t actually think that the CFP programme is that hard. The problem is knowing exactly what is required of you and unfortunately far too much depends on your assessors. My experience and those of a few planners I have spoken to, show such a high level of inconsistency in the way plans are assessed and I think this needs to be looked at.

Off course, those who disagree with me will argue that the required standards are laid out in the CFP Certification Handbook. My point is much of this is far too generic and much more needs to be done to offer clarification and support for candidates, whatever path they choose.

One area that trips many candidates up is the assumptions – specifically life expectancy, price/wage inflation and  investment growth rate. The requirement is to ‘ensure all assumptions are adequate, reasoned and reasonable‘ but adequate and reasonable to whom exactly? The assessors of course! The trouble is what is reasonable to one assessor may not necessarily be to the other. Put 10 financial planners in the room with a client, you get 11 different plans, each with their own assumptions and recommendations.

Take asset allocation for instance, broad allocation into cash/fixed income/equity/property would be considered insufficient. You could be more specific by providing regional sub-asset classes such as European/North American Equities etc. But where does this stop, should you be country-specific as in US/UK/Japan equities? Oh and what about value, growth, small cap, large cap etc.? How far should you go and what is sufficient. You are asked to ‘provide more details’ but I couldn’t find anywhere how much more is required. And in the end, how much difference does this make to the actually plan (beyond simply frustrating the candidates?)

One other area some candidates find challenging is mortality and morbidity. In a pre-retired case study, you are often required to recommend protection to cover pension contributions in event of death or disability for instance. I saw one planner’s case where this WASN’T not done and candidate sailed through. Another planner I know got his third attempt rejected on the basis that they recommended waiver-of-premium on pension contributions (these were banned on personal pension contributions in 2004 but standalone plans are available.) I had mine second attempt rejected on the basis that I covered the net pension contributions, rather than gross and the client will be unable to get tax relief on contribution in excess of £3600!

It’s also important to bear in mind that assessors are your peers. They can and often get things completely wrong. An example in my case is how the data is expressed – real or nominal values. Most plans I have seen used nominal values and then discounted it back to today’s term. I choose an alternative route – all my figures were presented in real terms using inflation-adjusted figures and real growth rates etc. I was told by the assessor(s) I had to discount this back to today’s terms again. I challenged them on this, pointed them to my assumptions/explanation and even provided formulas used in my calculations. I resubmitted the same numbers and the point was never raised again!

Why I am raising all these? And what is the point of this entire article anyway? Well, I think if these issues continued to remain unaddressed, there is a real risk the CFP loses it real worth. This can happen in following ways….

  • Candidates write their plan primarily for the assessors, rather than being client focused.  While no assessment is a 100% reflection of the real world, the farther it is from the real world, the less its perceived value amongst practitioners and clients.
  • Less practitioners taking the assessment. This may explain why only 116 people took the CFP in 2011! (The latest figure I could find) We need more practitioners, not less, taking the CFP!
  • Negative perception among potential candidates. Some cynics claim the reason for multiple failed attempts is more commercial than academic – personally, I find it hard to agree with this. If you split the £150 submission fee equally between the FPSB and two examiners, each gets £50! I could think of 50 other ways of making 50 quid, without frustrating that many people! J
  • The assessment lacks consistency and if your assessor is changed, for whatever reason during the process, you’re screwed! Just more frustration for candidates.

I understand the CFP process has been reviewed recently but I’m yet to speak to anyone who started the process after this changes were made. As far as I know, the main change is that an exam has been introduced, in addition to the plan. I don’t see this solving the problems I have highlighted here.

For those planning on or already in the process of taking the CFP, here are my best tips!

  • Get as many recent real CFP plans from other candidates who have recently passed. This is purely for the purpose of seeing what has been assessed to meet the standards, NOT to be copied! (That ‘s  malpractice! ) The FPSB has sample plans, but alas, they were put together over 5 years ago!
  • Assume you are writing for the assessor, not the client. Sadly, this means your plan would be far longer and possibly more detailed than anything you will ever present to a client in the real world. The saying ‘the thicker the plan, the thicker the planner’ comes to mind but unfortunately, this is just the way it is, for now.
  • Use the ‘Request Further Clarification’ facility offered after each feedback – this enables you to request additional clarification from your assessor. I used this to challenge them where I felt they were wrong, they didn’t get back to me in time but I think assessors got the message!
  • I have been told that the CFP training days offered by the FPSB/IFP help and I don’t doubt this. I’m sure there are lots of people with positive experience but I know planners who went on this course and still failed their 2 (and in one case 3) attempts.
  • Ask other CFP Professionals to go through your plan and provide some feedback. If possible, get  their opinion on your assessors’ feedback too.
  • Don’t give up! Stay the course. It’s worth it in the end.
  • Oh and, good luck! You are really going to need it!

 

 

 

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4 thoughts on “Does CFP Certification Process Need Fixing?

  • Some very wise words here.

    I’m no academic – but was already DipPFS (June 1994!) and Chartered before I went through the IFP – Certified Financial Planner cm professional process.

    There is a lot to it. It is one of the most comprehensive tests of a planner’s knowledge. For me CII exams are a prescriptive knowledge test – rather than applied knowledge test that’s of much practical use in the real world.

    To quote from the IFP:

    The qualification is set at QCF level six, or the equivalent of an honours degree.

    The learning competences (cognitive or thinking competences) required includes:

    Knowledge – The recognition and recall of information
    Comprehension – Interpreting, summarising or computing given information
    Application – Using information to carry out a function
    Analysis – Separating information into parts until the relationships between them are clear in identifying problems.
    Synthesis – Combining information to produce solutions.
    Evaluation – Decision-making or judgement based on criteria or rationale.

    I attended a full day with a CFP assessor who left me in no doubt what the requirements were. I opted for the 12 weeks option whereby I did the case study from home.

    This was far from easy – first submission was rejected owing to stupid mistake assuming couple married and had 2 nil rate bands. Submission 2 it was suggested my tax calcs were out £12 and that needed attention (even though I used Sage etc) – I did fix this and submision 3 passed. Phew.

    The process takes over your life completely and I ended up hating the mythical couple! Of course they want to retire to France…..

    The fact only 1,000 planners in the UK have met the CFP mark speaks volumes.

    The process does not need dumbed down -advisers and planners need to skill up! Many advisers/planners have come from a product solution background so need a total change in mindset and the way they operate to have any chance of passing this process.

    There is plenty scope to solve the case study clients issues using a variety of solutions – there is no golden bullet – there are tolerances.

    After the infamous CII- G60 Pensions exam it was the toughest but most rewarding qualification to get under my belt.

    I do undertand the frustrations – when I was in the ‘last chance saloon’ (aka submission No.3) – I was sent somebody elses case study from the IFP in error – eek!

    For me, CFP cm professional trounces the tick box CII -Chartered Financial Planner as a useful qualification for day to day planning.

    Anyway, as Paul Armson says, ‘the top qualifications are an expectation not a benefit’! Good luck.

    Reply
  • Hmmm

    Similar experience for me (on my 2nd attempt) and my business partner (on his 3rd attempt).

    Both of us are Chartered and FPFS so decided we needed a new challenge and chose to give CFP a go. It had a great fit to the way we where developing our practice.

    From outset I decided to treat the whole experience as a learning experience rather than the chase for another qualification. I don’t really need any more letters after my name being FPFS, IMC and taken CFA Level 1.

    It has a real ‘rite of passage’ feel about it – you just have to go through the process. This can be frustrating at times and you feel like saying:

    ‘ I am Chartered don’t you know’

    Having said this, looking at my business partners feed back for his 2nd submission the questions raised did border on the pedantic. The powers that be need to be careful with this so not to loose credibility.

    Whilst I sit and wait for my 2nd submission result, my refection is:

    I have gained a lot from going through the process, it has been a great learning experience and given me new skills that can only complement the technical knowledge learnt from years of CII examinations.

    The two are a perfect match for me and I hate when advisers classify themselves in one camp or the other. Both have an important role to play our our profession bringing very different skills to the table.

    When we eventually get the award on a 2nd or 3rd attempt we will sit back and reminisce and tell new candidates ‘Things were much tougher in the old days’

    Reply
  • Hmmm

    Similar experience for me (on my 2nd attempt) and my business partner (on his 3rd attempt).

    Both of us are Chartered and FPFS so decided we needed a new challenge and chose to give CFP a go. It had a great fit to the way we where developing our practice.

    From outset I decided to treat the whole experience as a learning experience rather than the chase for another qualification. I don’t really need any more letters after my name being FPFS, IMC and taken CFA Level 1.

    It has a real ‘rite of passage’ feel about it – you just have to go through the process. This can be frustrating at times and you feel like saying:

    ‘ I am Chartered don’t you know’

    Having said this, looking at my business partners feed back for his 2nd submission the questions raised did border on the pedantic. The powers that be need to be careful with this so not to loose credibility.

    Whilst I sit and wait for my 2nd submission result, my refection is:

    I have gained a lot from going through the process, it has been a great learning experience and given me new skills that can only complement the technical knowledge learnt from years of CII examinations.

    The two are a perfect match for me and I hate when advisers classify themselves in one camp or the other. Both have an important role to play our our profession bringing very different skills to the table.

    When we eventually get the award on a 2nd or 3rd attempt we will sit back and reminisce and tell new candidates ‘Things were much tougher in the old days’

    Reply
  • Some very wise words here.

    I’m no academic – but was already DipPFS (June 1994!) and Chartered before I went through the IFP – Certified Financial Planner cm professional process.

    There is a lot to it. It is one of the most comprehensive tests of a planner’s knowledge. For me CII exams are a prescriptive knowledge test – rather than applied knowledge test that’s of much practical use in the real world.

    To quote from the IFP:

    The qualification is set at QCF level six, or the equivalent of an honours degree.

    The learning competences (cognitive or thinking competences) required includes:

    Knowledge – The recognition and recall of information
    Comprehension – Interpreting, summarising or computing given information
    Application – Using information to carry out a function
    Analysis – Separating information into parts until the relationships between them are clear in identifying problems.
    Synthesis – Combining information to produce solutions.
    Evaluation – Decision-making or judgement based on criteria or rationale.

    I attended a full day with a CFP assessor who left me in no doubt what the requirements were. I opted for the 12 weeks option whereby I did the case study from home.

    This was far from easy – first submission was rejected owing to stupid mistake assuming couple married and had 2 nil rate bands. Submission 2 it was suggested my tax calcs were out £12 and that needed attention (even though I used Sage etc) – I did fix this and submision 3 passed. Phew.

    The process takes over your life completely and I ended up hating the mythical couple! Of course they want to retire to France…..

    The fact only 1,000 planners in the UK have met the CFP mark speaks volumes.

    The process does not need dumbed down -advisers and planners need to skill up! Many advisers/planners have come from a product solution background so need a total change in mindset and the way they operate to have any chance of passing this process.

    There is plenty scope to solve the case study clients issues using a variety of solutions – there is no golden bullet – there are tolerances.

    After the infamous CII- G60 Pensions exam it was the toughest but most rewarding qualification to get under my belt.

    I do undertand the frustrations – when I was in the ‘last chance saloon’ (aka submission No.3) – I was sent somebody elses case study from the IFP in error – eek!

    For me, CFP cm professional trounces the tick box CII -Chartered Financial Planner as a useful qualification for day to day planning.

    Anyway, as Paul Armson says, ‘the top qualifications are an expectation not a benefit’! Good luck.

    Reply

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