CFP Board Proposes Broad Changes To CE Requirements

Posted by Michael Kitces on Monday, August 20th, 11:16 am, 2012 in Planning Profession

For the first time in almost 20 years, the CFP Board has proposed a broad range of changes to the CE requirements that apply to all CFP certificants. The new rules would include an increase in the total number of CE credits required from 30 hours every 2 years up to 40 hours, an increase in the required Ethics education from 2 hours to 4 hours (but half of those hours can be earned from general ethics content, not only "ethics" content on the CFP Board's own Standards of Professional Conduct), and the opportunity to earn up to 4 hours of CE credit from pro bono services and/or practice management content. The changes under consideration address virtually every area for which the CFP Board has been criticized in recent years, although some areas - notably, CE credit for practice management - will be debated more actively than others. At this point, the proposed changes are only a proposal - and open for comment - but unless significant objections arise, it seems likely that these new requirements could be in place as soon as next year!

This past Friday, the CFP Board issued proposed changes to its Continuing Education requirements - the first substantive "updates" to the rules since the 1990s. The proposals are open for a 45-day comment period that closes on September 30th, and will be considered by the Board of Directors in their November meeting. Although an effective date for the new rules is not explicitly proposed, the proposals - if passed by the Board - would ostensibly take effect sometime in 2013. Comments can be emailed to the CFP Board at

Proposed Changes And Initial Thoughts

The major proposed changes to the CE requirements, along with some initial thoughts in each area, are listed below:

- Total required Continuing Education increased from 30 hours (every 2-year renewal cycle) to 40 hours.

A positive in the efforts to elevate the standards for financial planning. Given that many states require as much as 30-40 hours of CE per year for CPAs, some might make the case that raising the standard to "just" 40 hours every 2 years (which is "only" 20 hours per year) still isn't enough; nonetheless, it's certainly a step in the right direction.

Notably, an increase in the CE requirements may also be a boon to some of the membership associations that struggle with attendance at local chapter meetings and/or national conferences; with an increase in required CE hours, it seems likely that more planners will choose to leverage their time with full-day CE events and/or conferences to fulfill large segments of their CE requirements all at once.

On the other hand, an increase in CE requirements also has an increased cost for advisors, given that there's only a limited amount of "free" CE available. Fortunately for those who are cost sensitive, some of the CFP Board proposals (discussed further below) will make it a little easier to get some CE credits for free.

Overall, though, if financial planning wants to be recognized as a bona fide profession, it needs professional CE requirements that are comparable to other recognized professions. This new requirement seems to be a good step in the right direction.

- CE credit for practice management content and/or pro bono services, limited to a maximum of 4 hours per renewal cycle (2 hours per year).

- "Practice Management" is defined for these purposes as "programs focused on the planning, development and management of a CFP® professional’s business operations, office management, business model design, budgeting processes, and leadership."

- For pro bono, 4 hours of service counts as 1 hour of CE credit. Thus, earning the maximum 4 hours of CE credit for pro bono activities would require 16 hours of pro bono services

Many planners have long lamented the fact that practice management content is not eligible for CE credit, and will likely applaud this proposed change (along with a number of practice management consultants). However, I have to admit that I am not a supporter of the proposal. Someone who owns their own financial planning practice should be capable of making the personal investment of 1 hour of practice management content every 6 months simply for the sake of his/her own practice, regardless of whether it is eligible for CE. And given that the fundamental purpose of Continuing Education is to maintain one's technical competence and skillset, I fail to see the relevance of practice management content as continuing education for a professional certification. In fact, this new rule arguably creates an odd double-standard for practitioners; those who decide to own their businesses can get 4 hours of CE credit for practice management and only require an additional 36 hours of other credit, while those who are employees in a practice are expected to get all 40 hours from traditional CE content (given that most practice management content has little relevance for the huge number of planners who don't own or control their practice in the first place). Why can't investing time and effort in good practice management content be its own reward for someone who chooses to own his/her own business?

Regarding the eligibility of pro bono service for CE credit, this seems to be nothing but a plus to me. Not only does this recognize the value of pro bono service as a way to practice and hone financial planning skills, but it also creates some additional incentive for firms to support pro bono activities (because it allows their financial planners to earn CE credits in addition to providing the services themselves). The "conversion rate" of 4 hours of pro bono service for 1 hour of CE seems stringent but reasonable.

- Ethics CE requirement increased from 2 hours (per 2-year renewal cycle) to 4 hours.

- The existing 2 hours of ethics content on CFP Board Standards of Professional Conduct is still required. The remaining 2 hours of ethics content can also be on CFP Board standards, or can be general ethics-related content.

In 2011, the CFP Board changed their Ethics CE rules to require all Ethics content to specifically be about the CFP Board's own Standards of Professional Conduct (and further required all instructors to be CFP certificants), to the total exclusion of any/all other Ethics content (and other Ethics instructors). While I do think it's important for CFP certificants to understand their own professional conduct standards, it seemed somewhat ridiculous at the time for the CFP Board to declare that all Ethics content was ineligible for Ethics CE unless it was specifically about CFP Board rules and regulations.

Accordingly, I had suggested at the time that the CFP Board should require education on the Standards of Professional Conduct in addition to allowing for (and expecting/requiring) additional training on general ethics - and it appears that the proposed solution here from the CFP Board does exactly that.

Ultimately, I would probably draw a distinction here, and suggest that the CFP Board relabel its CE requirement for the Standards of Professional Conduct as "Rules CE" and differentiate it from true Ethics content which would remain "Ethics CE", but linguistic semantics aside, it's a big positive in my opinion to see the CFP Board once again acknowledge the value of Ethics education outside of the Standards of Professional Conduct (and Ethics instructors outside of those who have their CFP certification). At least, I'm assuming that with the allowance for general ethics-related content, the CFP Board will also update their Ethics instructor requirements!

- Expanding Professional Activities Eligible for CE credit (which currently includes teaching, and authoring articles), to also include:

- Participation in a course grading panel for the Capstone course for a CFP Board-registered Financial Planning program.

- Certain study group activities (pending further clarification).

- Research, including research into future trends in financial planning beyond the current CFP Board Job Task domains and Topics list.

Overall, this seems like a nice expansion of available CE opportunities. I'll be curious to see further details of what constitutes eligible "study group activities" for CE credit (as opposed to simply having the study group registered as a CFP CE provider and obtaining credit for some of its content that way?), given the growing popularity of study groups.

Supporting research for CE credit - including research not necessarily tied to current CFP topics - is also a plus, although as with the study group it remains to be seen how the CFP Board clarifies and refines this to ensure it's not abused. Does the research have to be published for credit (and if so, why/how is this option different than getting CE credit for authorship?)? Who oversees the research to ensure it's legitimate work and should be eligible for CE? How do you translate "research time" into hours of CE credit? The devil may be in the details, but overall this still seems like a positive.

- Implementing a "50% cap rule" that limits CE credit for any particular topic area (or aforementioned professional activity) to no more than 50% of the total required CE hours.

While I suspect most CFP certificants will not be affected by this at all, some CPA/CFP professionals might be, where "too much" tax-related content to complete the CPA CE requirements might violate this new 50% rule. While that may be a hassle for some, overall I think this new requirement is a good decision. If the focus of financial planning is intended to be comprehensive in nature, some requirement for CE to be distributed amongst more than one topic area doesn't seem like much of a stretch.

And notably, this new requirement is also a limit on professional activities - ostensibly to ensure someone doesn't try to qualify for all of their CFP CE from just doing research, or just meeting with a study group. Notably, it's not clear from the CFP Board guidance whether the 50% rule limit is a constraint on all professional activity CE, or just one area of it (i.e., it's not clear if you could satisfy the CE requirements by doing 45% research, 45% study groups, and the other 10% in something else, where each area is less than 50% but the total for professional activities is 90%).

- Eliminating CE credit for completing professional licenses and designation examinations. (Educational content itself remains eligible for CE; just not the time it takes to complete the tests, nor time spent on exam prep/review courses.)

This seems pretty straightforward. Learning content is eligible for CE. Taking an exam on the content (or prepping for the exam) is not.

- Re-classify online courses that grant graded academic credit as "live" CE programs, rather than "self study" programs when reviewing program for CE eligibility.

A nod to the accreditation requirements for educational institutions, this adjustment seems reasonable - if the school wants to maintain its credentials, it's going to run its content with sufficient rigor. The key distinction here is that with self study CE programs, CE providers need to provide a CE exam at the end, and may need to utilize pilot groups to set the amount of CE credit; when treated as a "live" CE program, participation itself is sufficient (assuming the participation is legitimate), which eliminates the need for bona fide academic credit programs to also create CE quizzes for their classes just to satisfy the CFP Board.

- Encourage increased rigor and quality of CE program delivery methods.

Although it's certainly a positive to see the CFP Board continue to focus and try to reduce the number of low quality CE programs, it remains to be seen exactly how the CFP Board intends to further advance this objective. Will the CFP Board be more stringent when reviewing proposed CE courses to ensure they are quality education? Will there be new procedures evaluating the instructors of CE programs? Will there be other changes to more substantively enforce the rigor and quality of CE programs? Or is this provision more bark than bite?

Overall Thoughts

Overall, the proposed changes to the CFP Board's CE requirements appear to be a step in the right direction, and address many areas for which the CFP Board's requirements have been criticized in the past, from the overly narrow view of what constitutes "Ethics" content, to recognizing research for CE credit (especially research outside of the traditional topic list), to the option for practice management content to qualify for CE credit. I suspect the latter provision will be the most controversial proposed, as there are some good reasons on both sides to allow or disallow practice management content for CE.

Some practitioners may also simply object to the overall increase in the required CE hours, given the amount of effort already required to complete the existing CE obligations. However, when comparing where financial planning stands relative to other professions, it seems clear that our standards have been lagging, and that ultimately an increase like this (or even further) needs to happen. On the other hand, it will be interesting to see what impact the proposed changes have on a number of the membership associations that have struggled in recent years to maintain and grow meeting attendance; will an increase in CE requirements be a boon to registrations for the national conferences?

As noted earlier, the comment period remains open until the end of September, so whether you agree or disagree with my thoughts here, or wish to add your own, I hope you'll submit comments to the CFP Board with your feedback at!

So what do you think? Do you agree with all the proposed changes? Does financial planning need more required CE hours? Should practice management be eligible for CE credit? Are there other parts of the proposed changes you find notable?

  • Elissa Buie

    Hi Michael – thanks for this overview. I noticed you clarified the second-to-last point by using the word “Re-classifying” instead of the CFP Board’s word “Reviewing”. Much clearer. Thanks.

    Did you also notice that the Ethics CE requirement will now require a CFP-Board PRODUCED Ethics Program. This sounds like a shift to us having to take a program FROM CFP Board, not just one APPROVED by them. Am I interpreting this correctly? What do you think the ramifications of that will be?

    • Michael Kitces

      I was just looking into this myself. I’m not certain if the wording CFP Board-PRODUCED was an intentional change, or just a poor choice of words. I have an inquiry in to the CFP Board to clarify!
      – Michael

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Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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