Executive Summary
For parents these days, there's a huge focus these days on not just getting kids into college, but getting them into the "right" college. And whether it's realistic or not, many people by default want to plan for their kids getting into recognized Ivy League schools like Harvard, Yale, or Stanford, in the hopes that studying at a "top school" will help their kids' future career prospects. Accordingly, it's perhaps no great surprise that more and more people who are looking to study for their CFP certification are also asking the question of what the "best" or "top ranked" CFP programs are, and whether it matters where you go to get your CFP. Particularly in light of the fact that some of the largest CFP education programs are completely unknown outside of our industry.
In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, I discuss why for most people, it doesn't really matter if you get your CFP certification from a "top ranked" CFP program or not, and what criteria you should really focus on instead when getting your CFP education.
First and foremost, the primary reason that it doesn't matter where you get your CFP education is that most clients really don't care what school you went to school. They just rarely ask. And even when it does happen, it's not difficult to explain the credentials of an industry -specific educational institution like the American College or the College for Financial Planning - and then move on. Because ultimately, if of getting your CFP marks gives you expertise and confidence that you communicate accordingly, that is the primary benefit of CFP certification! Not getting the "right" institution at the top of your degree.
That being said, tt is worth noting that there are some situations where the school you get your CFP from may matter, at least a little. The first is when you are trying to get a financial planning job. Not a position where you need to go and get clients, but an internal position at a financial planning firm. Because when a firm is hiring someone, they have very little to look at... and as a result, having a school like Texas Tech or Virginia Tech on your resume – since these are schools known to have reputable CFP programs – can at least cast a positive "halo effect" on you. But don't count on that getting you the job. It might help you get an interview and tilt the scales in your favor a bit, but it ultimately comes down to what you learned in your CFP program. And that means if you ultimately want to land a job, focus on picking the program that allows you to learn the material best, because that is what will get you past an interview to an actual financial planning job!
The other time you may want to consider where you get your CFP is if you plan to go into academia. Although even in academia, it still isn't about where you get your six CFP education courses per se, but where you get a masters degree or a Ph.D. could truly matter. In this case, you aren't trying to win over consumers or persuade an employer to hire you, but in academia, school rankings simply matter more. Many schools like to have a good "academic pedigree" for their professors. Yet, even within academia, it's going to matter what type of job you ultimately want. If you want to help start a new CFP program or primarily teach undergraduates, then where you get your degree won't matter as much. If you want a tenure-track research position at an R1 research university or business school, then where you get your degree will be more important, even if it doesn't matter so much where you took your CFP courses.
The bottom line is, for most people getting their CFP certification – especially those who are just wanting to get a job or build an advisory firm getting clients – don't stress about where you get your CFP education. Instead, stress about finding a program where you can do well, and actually learn the content! Because, in the end, the biggest determinant of your success will be how well you actually learn the material and can confidently use it. Ultimately, this comes down to educational fit – not academic pedigree!
(Michael’s Note: The video below was recorded using Periscope, and announced via Twitter. If you want to participate in the next #OfficeHours live, please download the Periscope app on your mobile device, and follow @MichaelKitces on Twitter, so you get the announcement when the broadcast is starting, at/around 1PM EST every Tuesday! You can also submit your question in advance through our Contact page!)
#OfficeHours with @MichaelKitces Video Transcript
Welcome, everyone! Welcome to Office Hours with Michael Kitces!
Today, I want to talk about picking a CFP education program and, specifically, the question of whether it matters what school you get your CFP education from. Today's question comes from Chad, who asks:
"I've been an advisor for four years now. And now that I've survived," as he puts it, "the most difficult stage, I'm looking to get my CFP certification. My firm has a discount deal with The American College. And I've also been checking out the College for Financial Planning in Denver and Boston University's CFP program. Right now, I'm leaning towards the Boston University program as while College for Financial Planning is actually the cheapest, I'm worried that no one outside of our industry has ever heard of American College or College for Financial Planning, but people do know Boston University. What do you think? Does it matter what school you get your CFP from?"
Great question, Chad. You know, there's a huge focus these days on, not just getting into college, but getting into the "right" college. We see this constantly with our own clients doing college planning for kids. It seems like, whether it's even realistic or not, everybody wants a plan that starts out with their kids going to go to Harvard or Yale or Stanford. And then we back off from there once we see what happens when the little 2-year-old actually finishes high school 15 years from now.
I suppose it's no great surprise that with more and more families focusing on where their kids go to get their college education, the same question is starting coming up regarding CFP programs and whether it matters where you go to get your CFP education? Does going to the right school give you a leg up on your financial planning career?
(Most) Clients Really Don’t Care What School You Went To [Time - 1:50]
When it comes to clients, the simple answer is this: The reality is, that most people will not care at all what school you went to for your CFP education. And I say this as someone who got my CFP from The American College, that very institution that you noted that virtually no one outside of our industry has heard of. And you know what? You're right. They haven't heard of it. And it just doesn't matter.
It's been 15 years since I finished my CFP education. I think the grand number of times I can ever recall a client asking where I got my CFP marks is miniscule. Now, I'll grant it isn't zero. I can think of maybe one or two times over the years. But, you know, I can count it on one hand. And in all these cases where it did happen, I simply responded:
"Well, I took my CFP classes from The American College. They're not actually well-known outside of our industry. But they're the longest-standing higher educational institution that teaches financial advisors. They've been doing it for almost 100 years in our industry."
And you know what happens after that? The client says, "Oh, okay." And then that's that. And we move on. And, frankly, this isn't really unique to where you get your CFP. We see the same thing regarding where people get their college education as well, both undergraduate degrees and graduate degrees. There are small set of well-known Ivy League schools whose names have some cache. But for the other, I don't know, 99% of the schools, most people don't even know where schools rank.
This is particularly true when you get in the industries and specializations. Think about this for other professionals. Do you ask your doctor where they got their medical degree? And would it matter if they said University of Washington versus Harvard. Would it matter if I told you that under the U.S. News rankings, University of Washington is actually number one on the list for primary care physicians and Harvard isn't even top 10? What about law school? Would you prefer a lawyer that went to University of Pennsylvania or Baylor University? University of Pennsylvania, top 10 law school. Baylor, not even in the top 50.
Now, I'm not trying to knock some of the schools or the other. But the point is, that when you're not in an industry or you don't happen to live close to the relevant university, most people have no idea what the top schools actually are, especially when it comes to any kind of graduate level or professional education beyond just the big name undergrad degrees. And because of that, in practice, I find clients just don't ask.
Now, if your marketing strategy is to network through the alumni association at your school, then it kind of matters, but that's really not about the educational program per se. That's about a niche marketing strategy working through your school. If your niche is going to be Harvard alums, then try to figure out how to get your degree from Harvard. But there your school only matters because it's a marketing strategy to that school and those alumni. It's not because "Hey, I want to make sure that every client, no matter who I work with, asks me so I can respond with a pedigree school."
And, again, short of that scenario, the truth is I just find clients virtually never ask. Or if they do, it's kind of a lightweight question that any reasonable explanation of where you got your degree will cover.
So, specifically focusing on The American College, did you know they originated professional education for financial advisor – the CLU program – almost a century ago? College of Financial Planning, did you know they're the longest-standing CFP educational program of any in existence, since they taught the first class of CFPs 45 years ago? The college was actually part of the CFP Board for its first 13 years. They split apart in 1985 to become what we now know as College for Financial Planning and CFP Board.
As a result, at worst, if you go to one of those schools that an average consumer hasn't heard of and someone asks, you can explain the pedigree of the school in our industry, and that's that. As American College graduate myself, I've never had a client ask a follow-up. And, again, I can count on one hand the number that have even asked the question at all in 15 years.
The bottom line in this is if you're proud of getting your CFP marks and it gives you expertise and confidence and you communicate that accordingly, that is the primary benefit – the designation. That's what matters, not getting the right institution at the top of your degree, but actually being more knowledgeable and confident and using that to communicate more effectively with clients.
Getting A Financial Planning Job – Where You Got Your CFP Sorta Matters [Time - 6:11]
All that being said, I think there actually are some situations where where you get your CFP does matter – at least a little. The first is if you're trying to get a financial planning job. Not go and get clients... not in a sales job or a business development role... but an internal job as a paraplanner or an associate planner.
Because, the reality from hiring side as an employer, having done this over the years with our advisory firm at Pinnacle Advisory Group, when you're hiring a new person into the industry, there's really not much to go on. You don't have much job skills as of yet. You don't have much experience yet. So, as a hiring firm, all I've got to go on is your grades, maybe some extracurriculars, and where you went to school.
And so I'll admit, in that context, going to a known CFP program helps a little, because we don't know much about you at all. If you've got Texas Tech or Virginia Tech on your resume, and I know those schools with very reputable CFP programs, it at least casts a little bit of a positive halo on you. They're good schools, so you at least get the benefit of the doubt that you're probably a decent candidate.
That being said, the truth is, at least in a firm like ours, at best, that might get you an interview. It might get you into the screening process. It's not going to get you the job. In fact, over the years, we've created our own tools to vet candidates that we evaluate. And, ultimately, we look at skills. We look at passion. We don't look at your alma mater. And the same is true when we're hiring for paraplanners and associate planners at New Planner Recruiting. We hire for passion. We hire for skills. We try to identify raw talent. We barely look at your alma mater.
And part of this is because the reality in today's environment is that good students can come from programs all over the country. We're just not so hypercompetitive of an industry yet where all the super top talent only goes to a handful of top schools and then you have to pick from those schools to get the top people. We know, we see it in practice at New Planner Recruiting. Good talent can come from anywhere.
We're actually much more interested in what you learned in your CFP program. We actually give a fake CFP test that we created just to test how much people really know. And the score is based on how many questions you got right, not what school taught you the answers!
I'll grant not every firm evaluates candidates as thoroughly as we do. And for those that don't, maybe the halo effect of a good school or at least a known school...because the truth is no one's actually done rankings of CFP programs to truly determine which are the best schools...the halo effect of a known school might get you an interview and tilt things a little in your favor. But it's still probably not going to get you the job all by itself. If you want the job, worry more about learning to be a good CFP, not where you get your CFP education.
If You Plan To Teach In Academia – Where You Got Your CFP Can Matter [Time - 8:49]
The one other case I'll note where it might actually matter where you get your CFP education is if you plan to go into academia and teach, because the truth is, for academia, it's still not necessarily actually about where you got your CFP education (those six core classes, which are really undergrad equivalent content), but where you get your master's degree or PhD may matter, because when it comes to academia, you're not competing for consumer minds here. You're not trying to get a job from a firm that says, "Well, you're so new that it's hard to evaluate you. You went to a good school. Let's go for it." In academia, school rankings matter more. There is a hierarchy. And many schools like to have a good pedigree for their professors.
That being said, even with the academia, I'm actually still skeptical about just how much this matters. The truth is that so many schools are still starting up CFP programs that right now they're not that selective yet. I mean, they're more interested in hiring people who have good teaching skills, the ability to build an effective program, maybe even some connections to help raise money for getting the program started or doing research, not necessarily about academic pedigree.
But I'll grant that will vary from school to school. There are some schools that are more strict about this than others, especially if you want to teach graduate-level financial planning in a business school, because business schools in particular, which is where a lot of the CFP Board is trying to push growth now, business schools tend to hire professors who got degrees from other ACSP-accredited business schools. So it's fair to recognize that where you get an advanced degree could matter. Still, many of the new PhD job opportunities in recent years were going to start new financial planning programs, and they just wanted recently qualified PhD candidates. School pedigree may have shown up somewhere as a factor, but probably not a driver of the decision.
Ultimately, the bottom line is that for most people, especially anyone who's doing this to get a job or get started with an advisory firm, don't stress about where you get your CFP. Stress about finding a program that you can do well in. And "well" doesn't mean get a good grade. "Well" means actually learn the content.
For most people looking at a CFP education, my four tips are:
1. Look at the educational curricula of the programs you're checking out. What classes do they offer? What electives do they have? Which ones are relevant and appealing to you? Is it a good match?
2. What's the learning platform? Is it a virtual program where you're going to be at a distance, or is it in person? Which one's better for you? Do you prefer in-person, or would you rather do it online? What fits your learning style?
3. Which one fits your schedule? I mean, the truth is sometimes it just comes down to schedule. Hey, I found a cool program, but they teach on Tuesdays, and I can't do Tuesdays because I got stuff with my kids. I can do Thursdays, so I'm going to do this other program. Or I'm going to do a virtual one that's asynchronous so I can study on the weekends, and it doesn't matter when the classes are.
4. Which one fits your budget. The truth is, the costs do vary from one program to another.
If you want actually more info on this, I'd encourage you to go check out the article that we did back in 2015 on the blog, specifically regarding this question of how to pick the best CFP registered program for you, based on your needs. In the end, the biggest determinant of success is going to be how well you really learn the material and how confidently you can use it. And we see that now in a research studies coming forth on what's the value of a CFP education, no one says pedigree. They say, "It gave me expertise to help my clients more." They say, "It gave me confidence to talk to my clients more effectively." That's what matters.
Pick the program that lets you actually be a better advisor and let the good business results come from that. Focus on educational fit, not academic pedigree. Maybe that'll be different someday. But I don't see that changing in any real near-term for anyone who is looking at schools today.
I hope that helps a little as food for thought about whether it really matters or not what school is listed at the top of your degree when you get your CFP certification and whether pedigree really matters.
This is "Office Hours with Michael Kitces," 1 p.m. East Coast time on Tuesdays. We're a little late today due to a conflict in my schedule, but thanks for joining us late, and have a great day, everyone.
So what do you think? Has anyone ever asked where you got your CFP education? Do you think it matters where you get your CFP education? Are there any special circumstances when where you got your education really might matter? Please share your thoughts in the comments below!
Maybe I’m not rubbing elbows with the really big firms, but I don’t see a whole lot of practices lining up to hire someone just because they have a CFP! I’ve literally met with 5 young CFPs just out of school in the past 2 years who were shocked that they were being told by firms that they interviewed with that they would have to get on the phones and schedule appointments. They just want to do planning! Better make sure you have the stomach for prospecting before you get the degree!
That is one of the problems we have in this profession. The big firms are still sales engines and they want cold call cowboys. Very few college graduates of any sort are interested in that. We’ve got some growing to do. Those five young CFPs should be looking elsewhere. I know firms that are begging for solid candidates who want to get started as planners; not clerks or sales staff.
Jim, I’m one of those “young soon-to-be CFP’s” and you’re correct in that we don’t want to cold-call clients all day. History has proven time and time again that the old antiquated model of licensing up new advisors then throwing them up against the wall to prospect and see who sticks doesn’t work. Unless you come from affluence and/or have a strong network of affluent individuals ready to invest with you from day one. Most young people coming out of college don’t have that. While business development is important, the cold-calling model for the most part hasn’t worked, doesn’t presently work, and will not work in the future, especially as the RIA model and the rise of the “fiduciary standard” continues to proliferate.
What about this? I’ve been in the industry as an FA for 15 years. I’ve been a fee-only planner with an AIF credential for 6 years. I am in solo practice as an IAR with an independent RIA. Why would I consider getting a CFP. Is the referral database from the CFP board worth $5,000 and a year of my life?
First, I’m certain you won’t get any calls from the CFP database. Second, all these courses would be tax-deductible as business education (but this isn’t tax advice). If you decide to do it, it would simply be a dedication and commitment to your clients to being the best and providing the best advice to your clients. You can (and are) obviously do just fine without it, but I bet your clients would feel that much better that you continuously invest in your professional education.
Richard, I’m sure the AIF designation is important, especially in this day and age where having a fiduciary standard really matters, but as Kitces has stated in the past “fiduciary intent alone is not enough.” All advisors/planners must have competency and the CFP mark is increasingly becoming that minimum standard to measure competency. Just like passing the state bar or the U.S. Medical Licensing Exam is important for lawyers and doctors to display their competency. The main impetus for pursuing the CFP should be to attain the highest level of education standards in the industry, not to gain access to the “referral database” from the CFP Board.
1) The CFP is not the “highest level of education standards” in the industry. It is the most marketed, and I do agree that it is a MINIMUM standard. If you want the “highest level of education standards”, you need an MSFS, MSFP, and/or PhD. And yes, all of those are available. (See Kitces article about Post-CFP education and designation programs.)
2) To assume that an advisor WITHOUT a CFP mark after 15 years based on “All advisors/planners must have competency and the CFP mark is increasingly becoming that minimum standard to measure competency”… shows that you don’t understand that the true learning is done in the field, with real clients, with real situations, and learning from people who have gone before us. There are people I know that have NO designations that could “run circles” around CFP’s because they not only KNOW the information, but they know how to CONVEY the information to get their clients to ACT.
Designations does not mean you are “religiously ordained” to give financial advice and everyone else is practicing priest craft. It DOES mean that you’ve taken some exams and can be held liable for KNOWING that information for all your client interactions and putting your client’s best interests first. But CFP alone… without experience, knowledge, wisdom, and communication skills… is simply not enough.
This is a relationship business. And many times, competency is measured in the quality of relationships advisors have with their clients, not the letters after their name.
I’ve been licensed as a CFP for 24 years and have had my own practice and RIA for about the same period. Never once has anyone asked where I got my CFP education from. (It was the BU program BTW). I don’t think I’ve ever asked a contemporary either. I suspect that is because, IMHO, the course work isn’t academically rigorous. It isn’t easy, one learns a great deal, and one must study hard and do good work, but it doesn’t have the intellectual content I generally associate with degree programs. It might help one get an initial job, but it has little value in client engagement.
I have a slightly different take because I began my ChFC studies back in 2005 – a little too late to meet the January 2007 deadline to obtain CFP certification before the bachelor’s degree requirement went into effect. I did finish my ChFC by December, 2007.
That being said, I picked The American College, not just because they offered the ChFC – a viable alternative to the CFP – but because:
1) You could pay for one course at a time (much more affordable than buying an entire curriculum).
2) Distance learning, versus traveling to a classroom.
3) Regional accreditation eligible for my firm’s educational reimbursement program.
The American College was good, but I’m not much of a “book learner”. At the time, the College also offered DVD lectures for an additional up-charge, but those were quite dry as well. Finally, I discovered (get this) “BigDaddyU”. Scott Wasserman (and he’s got a bunch of designations himself and knows plenty of the faculty at The American College) taught each of the ChFC courses in a clear and concise way. I didn’t even have to read the books! I took the 12 hours of DVD coursework, practice exams, and passed each exam one at a time. http://www.bigdaddyu.com
The neat thing is, I learned the way I learned best and I still remember some of the lessons in the way he taught it!
So yeah, it’s not about the school itself, but the effectiveness of the learning, how you learn it, and how you use that education to help your clients to understand the various planning principles. While my designation says “The American College”, I’m really a graduate of “Big Daddy U”!