According to the Certified Financial Planner Board of Standards, Inc. (CFP Board), Advisors holding CERTIFIED FINANCIAL PLANNER™ (CFP®) designations provide a greater level of quality service to their clients, compared to those without the certification, resulting in higher client satisfaction. Higher client satisfaction in turn translates to increased revenue.
This information is based on a CFP Board of Standards study conducted by the Aite Group. As stated by Tom Crowder, the CFP Board’s Managing Director for Marketing and Business Development, “We’ve kind of known for years that CFP® certification leads to higher quality advice.” However, their sole basis before was their subjective claims regarding the benefits of certification in its promotional campaigns and outreach efforts. Now, on the basis of the new study, they are able to quantify their notion.
Data was gathered through different sources, including interviews with executives from leading brokerage firms and a survey of financial advisors conducted last March. This research revealed that 87% of clients who hired the services of advisors with CFP® certification were “satisfied” or “very satisfied.”
As claimed by Aite Group’s senior analyst and author of this new report, Sophie Schmitt, the level of satisfaction clients enjoyed from advisors with CFP® certification results in an increase in revenue. Specifically, the study showed that advisors with CFP® certification who are working solo earn between 40% and 100% more than non-certified advisors. Individuals who work on a team with a certified advisor earn an average of 30% more revenue than those working without a certified team member.
Translating their findings into dollars, the study revealed that certified advisors with less than 10 years of industry experience were twice as likely to earn more than $215,000 per year than their colleagues who were not certified. It was also reported that 35% of those certified advisors with more than 10 years of experience earned at least that same amount compared to 23% of similarly tenured advisors without the certification.
Furthermore, CFP® certification has proven to become more beneficial to financial advisors when offering their services to high-net-worth clients because they are focusing on a more holistic financial plan rather than just recommending products or services. “Since they’re very good at providing comprehensive financial planning,” Schmitt said, “we also see that they’re charging more of their clients for financial plans. So they’re able to generate revenue from financial planning where a lot of advisors aren’t.”
Lastly, it was also revealed in the study that the CFP® certification has contributed to increased client retention rates.
The result of the new study further encourages the CFP Board to continue to endorse their certification as the gold standard for financial advisors. “Firms are increasingly seeing the value of certification and what that does for their client relationships,” Crowder said, “We’re seeing some firms… baking CFP® certification into their training programs, which is new.”
Currently, within the United States, the CFP Board has certified 67,000 financial professionals and, within 5 years, their rate of membership has increased by 22%.