Is a CFP® a Fiduciary?

The financial advisory industry comprises a multitude of professionals, services and products. But when it comes to financial planning, advisors who hold the Certified Financial Planner™ (CFP®) designation are the gold standard. These financial advisors must go through a rigorous certification process. This includes passing an exam and logging thousands of hours of professional experience. However, the qualifications to be a CFP® do not end with accreditation. Many investors ask, “Is a CFP® a fiduciary?” A CFP® not only has an ethical responsibility to operate with honesty and integrity. They also have a fiduciary obligation to act in their client’s best interests.

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What Is a Certified Financial Planner™?

Simply put, a CFP® is a financial advisor who helps clients set and achieve their financial goals. CFP®s offer comprehensive and holistic financial planning services. These range from creating a budget and managing investments to planning for retirement and establishing an estate plan. CFP®s take a wide-angle approach to clients’ finances, which may include their insurance needs, employer-sponsored retirement plans, inherited assets and household expenses.

As mentioned above, there is a wide variety of professionals who operate within the financial advisory industry. While there is technically no legal or regulatory requirements for calling yourself a financial advisor, that certainly is not the case for a CFP®.

Only a fraction of financial advisors hold the CFP® designation, having undergone an accreditation process that’s administered by the Certified Financial Planner™ Board of Standards, Inc., commonly known as the CFP® Board. This nonprofit organization sets the professional and ethical requirements that all CFP®s must meet.

To earn CFP® accreditation, a financial professional must first:

• Complete the CFP® Board-approved course work and hold a bachelor’s degree in any discipline from an accredited college or university
• Pass the CFP® exam, a computer-based test consisting of 170 multiple-choice questions that’s administered over the course of two three-hour sessions
• Have 6,000 hours of professional experience related to the financial planning process or record 4,000 hours of apprenticeship experience that meets additional requirements
• Commit to act as a fiduciary and serve the best interests of clients at all times when providing financial advice

So if you were wondering whether CFP®s are in fact fiduciaries, the answer is yes. Acting as a fiduciary is central to what it means to be a CFP®.

Additionally, CFP® professionals are required to complete 30 hours of continuing education each reporting period. These advisors must undergo two hours of CFP® Board-approved ethics course work and 28 hours covering one or more of the CFP® Board’s principal topics.

What Makes a CFP® a Fiduciary?

A fiduciary is a person or entity that acts on behalf of another individual or group. While fiduciaries can be lawyers, trustees, and even real estate agents, the term is often associated with money. As a result, a fiduciary financial advisor puts the financial needs and interests of the client ahead of their own.

There are three specific components to the fiduciary duty that CFP®s adhere to when working with clients:

• duty of loyalty
• duty of care
• duty to follow client instructions

Beyond prioritizing the client’s interests, duty of loyalty also means avoiding conflicts of interest and fully disclosing any conflicts when they do arise.

A CFP® must also act with the “care, skill, prudence, and diligence that a prudent professional would exercise in light of the client’s goals, risk tolerance, objectives, and financial and personal circumstances.” This is known as duty of care.

Lastly, a CFP® must comply with the objectives, restrictions and other “reasonable and lawful directions” that a client may impose. This is considered the duty to follow client instructions.

Together, these three requirements comprise fiduciary duty, which guides a CFP® in their relationships with clients. However, fiduciary duty is but one of the ethics requirements a CFP® must follow. CFP®s must also perform their professional duties with integrity, competence, and diligence while offering sound and objective professional judgement.

CFP®s vs. Non-Fiduciary Advisors

As referenced earlier, all CFP®s are financial advisors, but not all financial advisors are CFP®s. The same rings true for fiduciaries. Anyone who offers financial advice can call themselves a financial advisor. But only those who abide by fiduciary duty can be considered a fiduciary.

You should note that the CFP® fiduciary obligation is established by the CFP Board’s professional standards and code of ethics and, while it requires advisors to act in their clients’ best interests, it differs from the statutory fiduciary duty imposed under federal securities laws on SEC-registered investment advisors.

This is particularly important when it comes to government regulation. All investment advisors registered with the Securities and Exchange Commission – the government agency that regulates the securities industry – are required to act as fiduciaries. So if you’re working with an advisor or planner who is not officially registered with the SEC, they may not be a fiduciary.

Some financial professionals, like stock brokers and insurance agents, are not bound by fiduciary duty. Instead, they follow the less stringent suitability standard. This obligation requires only that investments be suitable to the investor’s circumstances. It may allow a broker to recommend an investment that is more costly and generates a higher commission than a similar low-priced option.

As a result, it’s typically preferable to work with a fiduciary advisor than one who is not obligated to work in your best interests. And when it comes to holistic financial planning, advisors with the CFP® designation carry additional credibility.

When a CFP® Must Act as a Fiduciary

A CFP® is required to act as a fiduciary whenever they are providing financial advice to a client. That obligation is tied to the advice itself, not to a specific product, account or moment in time. When a CFP® is helping you make decisions about investments, retirement strategy, taxes, insurance, estate planning or cash flow, they are operating under a fiduciary standard that requires them to put your interests ahead of their own.

This standard applies regardless of how the CFP® is compensated or which type of financial professional they are registered as. Whether the advisor works for a registered investment advisory firm, a brokerage or an insurance company, the CFP® Board’s rules require fiduciary conduct during the delivery of financial advice. That means recommendations must be based on your goals, risk tolerance and overall financial situation, with conflicts disclosed and managed.

There can be confusion around implementation versus advice. For example, executing a trade or processing paperwork is not, by itself, financial advice. But the recommendation that led to that action is covered by fiduciary duty. A CFP® cannot sidestep their obligation by framing guidance as informal or by focusing on a single transaction rather than a full financial plan.

This distinction matters because it separates the CFP® standard from other advisory roles that may only follow a suitability rule. With a CFP®, the fiduciary duty is embedded in the certification itself. When advice is given, the standard applies. That clarity is one reason many investors view the CFP® designation as a meaningful signal of accountability rather than just a professional title.

Bottom Line

The Certified Financial Planner™ accreditation is among the most prestigious certifications that a financial professional can hold. These professionals are bound by fiduciary duty and must always act in the best interest of their clients when dispensing financial advice. This makes CFP®s a choice provider of financial planning services within the advisory industry.

That fiduciary obligation is one of the key reasons the designation carries weight within the profession and among clients seeking objective advice.

“Working with a CFP® ensures your advisor has technical competence, and a fiduciary relationship ensures that they are working in your best interest,” says Brandon Renfro, CFP®, RICP, EA.

Brandon Renfro, CFP®, RICP, EA, provided the quote used in this article. Please note that Brandon is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinion voiced in the quote is for general information only and is not intended to provide specific advice or recommendations.

Tips for Picking a Financial Advisor

• If you want a financial advisor but don’t know how to go about hiring one, we can help. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• The CFP® designation is just one of many certifications that financial advisors may hold. Advisors with the chartered financial analyst (CFA) designation have expertise in investments and securities. Meanwhile, certified public accountants (CPAs) can help reduce your tax burden and organize your investments. Find an advisor with certifications in the areas that best align with your needs.

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