New Research: CFP® Certification Provides Value to Clients, Firms and Financial Professionals

Study by Aite Group is First to Demonstrate Quantitative Impact of CFP® Certification

New research by Aite Group shows that CFP® certification can be a key differentiator for firms and individual financial professionals looking to improve the quality of their advice and provide additional value to clients.

According to the new research released today – “Adding Expertise to a Financial Advisor’s Practice: Measuring the Contributions of CFP® Professionals” – Aite Group took an in-depth quantitative look at how CFP® certification impacts a financial professional’s performance and contributes to his or her firms’ and clients’ success. Aite Group examined this impact across multiple business models (broker-dealer, RIA, insurance) and firm sizes.

Key findings of the research – which was commissioned by Certified Financial Planner Board of Standards, Inc. – include:

• While 20 percent of all financial advisors hold the CFP® certification, more than 70 percent of all team practices have at least one CFP® professional, providing a holistic view of clients’ finances;
• 87 percent of clients who work with a financial advisor who has CFP® certification are satisfied or very satisfied compared with 72 percent of those who work with an advisor without certification;
• Sole CFP® professionals generate between 40 and 100 percent more revenue than those financial professionals who do not hold the certification; team practices with a CFP® professional on staff generate 30 percent more in revenue;
• Financial professionals with CFP® certification “work with more of their clients on a long-term, recurring basis, managing 45 (percent) of client assets for an AUM-based fee;”
• 87 percent of CFP® professionals said that financial planning was “equally important” or “more important” than investment management to their advisory practice; and
• CFP® professionals with less than ten years of industry experience are twice as likely to earn more than $215,000 annually (17 percent to 8 percent); and 35 percent of CFP® professionals with more than ten years of experience earn $215,000 annually compared to 23 percent of those advisors without the certification.

“This study is an important step in aligning a firm’s economic interests with CFP Board’s mission to benefit the public and promote competent and ethical financial planning,” said Tom Crowder, Managing Director for Marketing and Business Development. “For many years, CFP Board has heard that CFP® professionals had a leg up over their peers – this research proves that indeed they do.”

Methodology and Data Sources

Aite Group’s research is largely based on data gathered through a March 2012 online Aite Group survey of 515 U.S. financial advisors, on advisor performance data contributed by a top 50 U.S. financial services firm and interviews of top executives at top 20 brokerage firms.

Aite Group also conducted a December 2011 survey of more than 1,000 U.S. investors with a margin of error of +/- 3 percentage points at the 95 percent confidence level.