Certified Financial Planners Association – What does it mean to be a CFP Certified Agent in Insurance Singapore? Is a CFP-certified financial advisor better than someone without certification?
This video titled “An Introduction to CFP” by the Financial Planning Association of Singapore (FPAS) was recently brought to my attention. What interests me is a claim that consumers should seek out financial advisors with Certified Financial Planner (CFP) certification.
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Friend: “Hi. You need a proper pension plan. Not just all these proposals. Wait. Are any of your advisors CFPs?”
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CFP holders are individuals who have attained a high level of experience, education, professional competence and ethical standards. A certified financial planner will be able to help you plan for your retirement.
He can prepare a comprehensive and detailed financial plan to help you reach your retirement goals.”
So what does a CFP-certified agent really mean, and is a CFP agent better than someone who isn’t a CFP?
First and foremost, all financial advisers are licensed and regulated by the Monetary Authority of Singapore (MAS) under the Financial Advisers Act (FAA). MAS has a set of requirements to become an appointed representative of a financial adviser, which is initially to pass a set of prescribed documents.
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Although the name “Certified Financial Planner” sounds like something all financial advisors must practice their craft, the CFP is one of many internationally recognized certifications that indicate an agent’s knowledge and skills in finance, insurance, and investing.
A CFP certification is not required by MAS to provide financial advice. In addition to the CFP, other certifications include Chartered Financial Consultant (ChFC), Associate Financial Consultant (AFC), and Chartered Life Underwriter (CLU).
To obtain a CFP certification, candidates must meet the four requirements of the certification process: education, testing, experience, and ethics.
Training: Before sitting the CFP exam, candidates must first complete mandatory modules conducted by training providers approved by FPAS. Before enrolling in the course, candidates must have at least GCE ‘A’ level or three years of work experience.
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Exam: After completing the learning material, candidates can apply to sit for the CFP certification exam, which is a series of written exams designed to assess the candidate’s ability to apply knowledge in financial planning situations.
Each exam in Modules 1 to 5 consists of three hours of multiple choice questions. Module 6 is a three-hour assignment in essay format.
The CFP certification exam is held three times in April, July, and October or November. Applicants must be existing FPAS individual members.
Experience: This requirement is intended to ensure that CFP holders have the real-world experience necessary to execute financial plans for clients.
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To meet this requirement, candidates must have three years of relevant financial planning experience, which may be before or after successfully completing their CFP exam, although 5 years of experience gained before or after the exam will not be recognized.
Relevant experience is determined by FPAS and may be in financial advisory, accounting, banking, portfolio management or taxation.
Ethics: Once the first three requirements for CFP certification are completed, candidates can submit the first formal application. This application requires applicants to disclose past and present cases or agencies and acknowledge the right of FPAS to monitor and enforce the Code of Professional Standards and Ethics, as well as to investigate consumer complaints.
In addition to taking the above pledge, CFP candidates must attend a Code of Ethics workshop within the same calendar year from their CFP certification approval date. Existing CFP holders who wish to renew their certification must attend biennial workshops.
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It is clear that any form of professional development and self-improvement to better serve one’s clients is commendable and positive. Self-disclosure is also voluntary in order to maintain a set of strict ethical guidelines.
However, CFP systems have limitations. First, it relies on self-declaration. As a trade association, FPAS may not have the resources to adequately monitor and investigate non-compliance of CFP holders in Singapore.
Additionally, whether a financial advisor acts in the best interest of their clients largely depends on each individual advisor’s internal moral compass, regardless of whether they signed an ethics pledge a year ago.
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There are many reasons why good agents don’t bother to get CFP certification. They may already have their hands full serving their happy customers and taking care of referrals. Or they may spend their time and money better elsewhere, since many consumers don’t know what the letters “CFP” at the end of a person’s name card mean, use CFP certification as a factor when selecting their financial advisor.
As the governing body for CFP certification in Singapore, FPAS is keen to reinforce the importance and value of a CFP certification, which explains the video they produced.
You have to decide whether the certificate is worth it to you along with other factors such as an agent’s sincerity, product knowledge and track record in serving real customers.
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