ChFC vs. CFP: What's the Difference? (2024)

The certified financial planner (CFP) designation and the chartered financial consultants (ChFCs) are both designations for financial advisors. Neither is easy to qualify for but both carry a distinction or validation that makes it easier for advisors. Of course, to the issuing organizations, the differences between the two designations are huge. To clients, though, the differences may not seem so significant when consideringfinancial advisors.

What Is a ChFC?

In 1982, the ChFC designation was introduced as an alternative to the CFP designation. It’s awarded by the American College of Financial Services in Bryn Mawr, Pennsylvania. The ChFC is less known than the CFP, but still stands as a distinguished certification infinancial planning. The biggest difference between the two is the process ofbecoming certified.

The education portion for a ChFC is lengthier, comprising nine college-level courses. But at the core, it is a similar education to the CFP education. Courses focus on financial planning, covering topics likeinvesting, insurance planning, and retirement planning. There are also courses that focus on planning with different types of clients, such as divorcees or special needs families.

These courses are self-paced and can be done online. There is no final, comprehensive exam, as there is for the CFP designation. Instead, you take a final exam at the end of each course.

To enroll in the program, you must have at least three years of experience in the finance industry. Having a degree in finance or business will help you in the courses and can count as one of your years of experience. Again, you mustsubscribe to aprofessional pledge and a codeof ethics.

Like the CFP, you must continue to earn CE credits to maintain your designation. This involves taking courses and participating in programs to keep you current on financial planning practices.

Meeting all of these requirements leads to a ChFC designation. These high standards ensure that a ChFC is prepared as a financial advisor to give knowledgeable and helpful advice that suits clients’ needs. In turn, clients will be assured that an advisor with this designation knows what they’re talking about.

What Is a CFP?

The CFP designation remains the most widely known certification for financial planning. It is awarded by the Certified Financial Planner Board of Standards. There are four requirements to receive the designation: education, a comprehensive exam, work experience, and ethics. Here is an explanation of each of the four “E’s”.

Once you meet all “four e’s” (education, examination, experience and ethics) you may receive your CFP certification. Holding a CFP certification proves to clients that you are knowledgeable in financial planning and have achieved the high standards enforced by the CFP Board.

What’s the Difference Between a CFP and a ChFC?

In practice, certified financial planners (CFPs) and chartered financial consultants (ChFCs) aren’t all that different. The differences lie more in what’s required to earn each certification. The ChFC designation requires more coursework,but both CFPs and ChFCs study the same basic topics. A CFP is required to take seven courses, while a ChFC must take nine courses, two of which are application-based courses. While a CFP must take a comprehensive board exam after completing all coursework, a ChFC takes a test at the end of each course. However, both must have certain levels of professional experience and uphold the high ethical standards required by each issuing organization.

Financial advisors who work infinancial planning may be either CFPs or ChFCs. Some may even be both – the coursework overlaps so much that you can take ChFC courses to prepare for the CFP exam. All can advise clients on how to achieve their financial goals andmanage their finances.

ChFC vs. CFP: Which One Is Better for Financial Planning?

Naturally, you might wonder which type of certification makes an advisor more qualified in financial planning. From a client standpoint, there is not much of a difference between advisors with these two different certifications. Some financial advisors even have both designations. Both issuing organizations maintain high standards and the CE requirement shows that both advisors adapt to the times. Because the CFP is more common, you are more likely to find someone with a CFP designation than a ChFC designation.

That said, the CFP Board and the American College feel that the differences between their designations are enormous. For example, the CFP Board stresses that their designees are held to a fiduciary standard, while ChFCs are not. It also argues that its comprehensive exam requires CFPs to have a deeper and better command of the subject matter. On the other hand, the American College points out that its coursework is more up-to-date and that it requires two electives that have modern-day applications.

As noted earlier, either designation is positive, clearly showing theexpertise of the advisor. If you’re trying to choose between a CFP or ChFC and all other factors are equal, you may want to base your decision on personality. Who do you feel most comfortable talking to? Who do you think listens – and hears you – best?

Bottom Line

From a client standpoint, the differences between a ChFC and CFP are minor. Even with the educational differences, they are fairly similar in practice as financial advisors. Both still require extensive education and experience that prepares advisors to give the best financial advice. So, when it comes to choosing an advisor, it is better to judge an advisor on an individual basis, rather than based on which one of these two designations the advisor holds.

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