Fifty-six year old, Raul Garay of American Fork practiced dentistry for over a decade, but he never had a license.  Apparently Garay had set up a chair in his basement and was performing everything from exams to extractions. He was using old tools, some of which were found to be dirty and rusted. Yikes. You gotta admit, with no overhead and cash-only patients, life would be pretty sweet. Maybe Mr. Garay will stimulate a new business model.  If you would like to read the whole story, click here.

The moral of this story is definitely quite clear.  If he says he’s a dentist, talks like a dentist, and uses tools like a dentist, there are no guarantees that he is actually a dentist. Well, maybe the moral wasn’t super clear.  But either way, don’t worry, I’m going to switch dentists now. That was the last straw. While it’s not likely that people will ask their dentist about his competency or licensing, it’s probably a good idea. While there are varying degrees of competency and licensure among dentists, there is an even greater disparity among financial planners.

Some of you have asked me what the CFP® marks are on my business card. I want to take a second to explain what is involved in this certification. If nothing else, knowing this information might help someone from running into a disaster in some “financial planners” basement.

Most people think that all financial planners are “certified,” but this isn’t true. Anyone can call himself or herself a “financial planner.” Only those who have fulfilled the certification and renewal requirements of the CFP Board can display the CFP® certification marks. When selecting a financial planner, you need to feel confident that the person you choose to help you plan for your future is competent and ethical. The CFP® certification provides that sense of security by allowing only those who meet the following requirements the right to use the CFP® certification marks.

Education: CFP® professionals must develop their theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering a financial planning curriculum approved by the CFP Board. Other options for satisfying the education component include submitting a transcript review or previous financial planning-related course work to the CFP Board for review and credit, or showing the attainment of certain professional designations or academic degrees.

Examination: CFP® practitioners must pass a comprehensive two-day, 10-hour CFP®Certification Examination that tests their ability to apply financial planning knowledge in an integrated format. Based on regular research of what planners do, the exam covers the financial planning process, tax planning, employee benefits and retirement planning, estate planning, investment management and insurance.

Experience: CFP® professionals must have three years minimum experience in the financial planning process prior to earning the right to use the CFP® certification marks. As a result, CFP® practitioners possess financial counseling skills in addition to financial planning knowledge.

Ethics: As a final step to certification, CFP® practitioners agree to abide by a strict code of professional conduct, known as the CFP Board’s Code of Ethics and Professional Responsibility,that sets forth their ethical responsibilities to the public, clients and employers. The CFP Board also performs a background check during this process, and each individual must disclose any investigations or legal proceedings related to their professional or business conduct.

How does the CFP Board’s Code of Ethics Benefit me as a client?

Through the Code of Ethics, CFP® practitioners agree to act fairly and diligently when providing you with financial planning advice and services, putting your interests first. The Code of Ethicsstates that CFP® practitioners are to act with integrity, offering you professional services that are objective and based on your needs. They are required to provide you with information about their sources of compensation and conflicts of interest in writing.

Ongoing Certification: Once certified, CFP® practitioners are required to maintain technical competence and fulfill ethical obligations. Every two years, they must complete a minimum 30 hours of continuing education to stay current with developments in the financial planning profession and better serve clients. Two of these hours are spent studying or discussing the CFP Board’s Code of Ethics or Practice Standards. In addition to the biennial continuing education requirement, all CFP® practitioners voluntarily disclose any public, civil, criminal or disciplinary actions that may have been taken against them during the previous two years as part of the renewal process. If you would like to learn more about the CFP designation, check out CFP.net.

While the mere obtaining of a professional credential like the CFP® does not automatically make someone a qualified advisor for your situation, it is one of the most widely respected credentials available in the industry. If you can interview and work with an advisor that holds the CFP® designation, you will likely avoid a few dark basements and rusty tools that result in some unpleasant recall visits.  Have a good week.