I passed the CFP exam…now what?

Since I posted about passing the CFP (Certified Financial Planner) exam I’ve had a number of people, both online and off, ask me about my plans. Will I quit my current job to become a financial planner? Will I join a financial planning firm or start my own business? Has the CFP exam prepared me for a new career? Do I WANT a new career? If I have enough money to retire, why not just retire?

These are all excellent questions, and I have an excellent answer for all of them:

I don’t know!

Let’s talk about how I got here in the first place. I originally started working towards a CFP certification for 3 reasons:

  • To challenge myself
  • To fill in the gaps in areas I didn’t know much about
  • To put me in a position to start a new career, if needed or wanted

A new challenge

I love learning new things. I enjoy reading books about new topics. I like talking to interesting people and learning new things from them. I’m one of those annoying people who, when I don’t know the answer to something, just HAS to look it up on Wikipedia (usually in the middle of a conversation).

A few years ago I felt like I was falling into a bit of a rut intellectually. I didn’t have (or at least wasn’t making) the time to rigorously approach learning new things. Yes, I was still reading quite a bit (mostly books, magazines, and blogs), but there’s a HUGE difference between reading for fun and reading/retaining material that you know you’ll be tested on.

I wanted to be challenged. I wanted to really LEARN something new.

But I also knew that with a wife, a new baby (and another one planned), and a demanding job, I would need to find a challenge that I could fit around everything else in my life.

The CFP program was exactly what I needed. The courses were online, so I could watch the lectures at nights, on the weekends, or during 16 hour international flights. I could take just one class at a time. And, if family or work obligations meant that I needed to take a quarter off, I could do so.

The thing I did not anticipate was the amount of work required, especially over the final 6 months. The capstone class and studying for the CFP exam became all-consuming. I was so afraid of needing to take the CFP exam again that I really threw myself into studying and doing everything I could to ensure I passed.

I very clearly remember the feeling I had when I passed the CFP exam – it was elation combined with pure relief. I don’t know if I more excited that I’d passed or that I’d never have to study for the test again.

Taking the classes and passing the test ended up being exactly the challenge I was looking for. Total time from starting the program to passing the test was just under 3 years. Now that I’m done with this challenge I’m very much looking forward to NOT taking on any new challenges anytime soon. Instead, I’m looking forward to spending a lot more time with my family, my friends, and even taking some personal time to read some new books.

Filling in the gaps

When you combine my love of investing with my love of learning, you get a predictable result – I’ve worked hard to learn as much about investing as possible. I’ve read most of the major/popular financial books, ranging from “The Millionaire Next Door” to “The Intelligent Investor“. I even read through most of the “Rich Dad, Poor Dad” series.

I became a de facto financial advisor to my friends and family. My mom would come to me with questions about how to handle her 403(b). My sister would ask about investing in index funds. My wife’s sister would ask about real estate investing.

However, as I was being asked these questions I realized that although I could answer just about every question about investing, I didn’t have answers to the questions about tax, insurance, estate planning, or retirement planning. In short, I’d researched and learned a lot about topics that affected me directly, but I knew almost nothing about everything else.

How do you know where to start learning about a topic you know nothing about? These topics were, to quote Donald Rumsfeld, “unknown unknowns”.

The CFP classes gave me a framework to learn about these topics. Required classes were:

  • Introduction to Financial Planning: this was largely the basics – cash flow statements, balance sheets, time value of money, basic accounting concepts, etc. Simple stuff.
  • Insurance Planning and Risk Management: this was the class I was most dreading and it ended up being my favorite class. Lots of good information on the insurance industry, what constitutes an insurable risk, how various types of insurance work, etc.
  • Investment Planning: this class was harder than I thought it would be, mostly because it was all about the Efficient Market Hypothesis, which I tend to think is bullshit. I had to put my personal beliefs and answer test questions using a framework I didn’t agree with.
  • Tax Planning: another class I feared and ended up enjoying. I feel like I actually understand the US tax code now. Yes, it’s still insanely complicated. But when you work through it you understand how and why decisions were made.
  • Retirement Planning and Employee Benefits: I knew a lot about 401(k)s and IRAs, but I didn’t know much about the huge variety of other retirement plan options. It turns out that there are a ridiculous number of retirement plan options – SEP, SIMPLE IRA, SIMPLE 401k, Solo 401k, 401k, Roth 401k, IRA, Roth IRA, 403(b), 457, target benefit plans, cash balance plans, money purchase plans, Employee Stock Ownership Programs (ESOP), Keogh, and defined benefit plans. They all have different goals, different requirements, and different rules governing their use. Trying to learn all these details was a complete nightmare.
  • Estate Planning: another class I found incredibly interesting. I never understood how the gift & estate tax system worked. I never really understood what a trust is, why somebody would want one, or the advantages/disadvantages of the various flavors. Learning all of this was fascinating. The biggest surprise was discovering that trusts aren’t a magic way to avoid taxes (which is exactly what I’d always thought they were).
  • Financial Planning Capstone: this was the most time-intensive of all the classes I took. It required us to create a full financial plans for various fictional couples. We’d be presented with 5-10 pages of information about a couple and then we’d pull together plans based on their goals and finances. The final financial plan we developed was over 50 pages long.
  • Ethics: this wasn’t a full class – it was more of a short seminar. The idea was to learn about the various ethical requirements of becoming a CFP practitioner (of which there are a lot).

As you can see, the CFP curriculum taught me about a broad range of financial topics. It absolutely accomplished my goal of filling in the gaps in my financial knowledge.

Putting me in a position to start a new career

This was perhaps the biggest reason I started down the CFP path – I wanted to create some options for myself. I’ve seen many colleagues and customers get downsized, have their employer go out of business, or otherwise have an involuntary change in employment. Frankly, it would be irresponsible of me to not have a few backup options. After all, I’m the sole breadwinner in the family. My wife and our two kids rely on my income to pay the bills and put food on the table.

I’ve been with the same company for almost 20 years. It’s a stable but small company that’s almost entirely owned by our President/CEO. What would happen if he got hit by a bus? What if he decides to retire and his successor runs the company into the ground? What if a competitor comes along and puts us out of business?

In addition, sales is an unstable profession. If I miss my numbers for a few months in a row I might be looking for a new job, regardless of how many years I’ve worked here.

Getting fired isn’t the only reason I might need a new job at some point. An equally large concern is that at some point I might not want to do this job any more.

I realized this around the time I had kids. I started to become unhappy with the amount of travel I was doing – for the last decade I’ve been flying somewhere between 100,000 to 150,000 miles per year. That’s a LOT of travel. The travel was fine when it was just me and my wife, but leaving her and the kids alone while I’m on international travel for 4-5 days at a time is becoming harder and harder. It’s tough on the kids to have me gone. It’s tough on my wife to deal with both kids all by herself. And not only do I miss my family, it’s also pretty taxing physically. I fly economy class, so I don’t get much sleep on the plane. Then I get to where I’m going and it’s tough to sleep because of the jet lag.

I’m confident that, if I got fired or needed a job with less travel, I could get another job in the same industry. I’m smart. I’m a hard worker. I’m very, very good at what I do. I could find another job within a few weeks.

Here’s the problem – that job would almost certainly be in a different city. That’s the downside to living in a small town like Santa Barbara. Employment opportunities are limited. There aren’t many high-tech companies in Santa Barbara where I could work. The upside to living in Santa Barbara is that we absolutely love it here. Santa Barbara has great food, great weather, and tons of things to do all year for both adults and kids. And on top of all that it’s a small town with limited traffic, no pollution, and low crime.

But the most important reason we don’t want to move is that we’ve built a great social network here. Both my wife and I have lots of friends. And on top of that, my wife’s mom moved to town a few years ago to be closer to the grandchildren.

Moving would be painful.

So the goal of going down the CFP path was to create a backup plan. If I lose my job or decide I can’t handle the travel anymore I need a new career that’s interesting and wouldn’t require me to move.

Passing the CFP exam hasn’t really changed this plan. The reality is that you don’t need to have passed the CFP exam to be a financial planner. Anybody can call themselves a financial planner. It’s a largely unregulated industry. The goal of getting the CFP designation was to provide me some additional credibility if/when I decide to switch careers and become a financial planner.

But unfortunately, even thought I’ve passed the exam, I can’t use the CFP designation because I don’t have the requisite experience. In order to use the CFP marks you must:

  • Have a BS or BA from an accredited university (DONE)
  • Have taken the CFP curriculum from a CFP accredited school (DONE)
  • Pass the CFP exam (DONE)
  • Have either 3 years of relevant experience or 2 years of being mentored by a CFP professional (INCOMPLETE)

If I were to change careers today I wouldn’t be able to use the CFP designation for 2-3 years (depending on if I could find another CFP professional to mentor me).

And here’s the really tricky part – you must have the experience requirement completed within 5 years of passing the CFP exam. That means I have, at most, 2-3 years before I need to start working in the industry.

The realization

That plan was always to stay in my current job until I received my large commission checks and had passed the CFP exam. If/when those things happened I’d be able to either retire completely or switch careers (and start earning the necessary experience).

But here’s the thing…now that I’m able to leave my job I’m realizing that I’m not sure I want to. In fact, other than the travel, I actually enjoy my job for a variety of reasons:

  • Flexibility – I am 100% in charge of my schedule. I decide what customers to visit and when to visit them. I can work around personal and family commitments.
  • My coworkers – I really like the people I work with and I’ve developed great friendships with many of them.
  • Great pay – as long as I hit my numbers I’m well compensated. Walking away from this job would mean walking away from somewhere around $300k per year (not including the occasional large commission checks).
  • Solid benefits, including awesome health insurance – health insurance is a surprisingly large factor. The reality is that the future of health care in the US is very much up in the air right now. With ObamaCare in place I know that I can get a private plan on the health insurance exchange marketplace. If the Affordable Care Act is repealed or replaced I’m not sure what our options would be. My employer pays 100% of the insurance premiums, and the coverage is excellent.
  • Challenge – there’s enough mental stimulation in my current job to keep me engaged. I enjoy the sales process. I LOVE winning big deals. I like keeping up with the latest and greatest in technology.

Basically, now that I’m in the position of being able to switch jobs I’m realized that I don’t really want to, at least not right now. I think that walking away from my current salary will be especially tough until my kids are out of (expensive) preschool and into public schools. In addition, I’m convinced we are going to see a significant downturn in the market sometime soon and I’d like to be in the best possible position to take advantage of stocks going on sale.

The plan

When somebody wins the lottery or otherwise receives a huge windfall the advice is always to do nothing for a little while. In the span of 2 days I passed the CFP exam and received a life-changing commission check. I have options I just didn’t have 2 weeks ago, and I want to make sure that I consider the effects of these potential changes on me and my family.

All of that was a very long-winded way to say that, right now, the plan is to change nothing.

As mentioned above, I have 2-3 years before I need to start earning the necessary experience. That gives me plenty of time to consider my options and determine what’s best for me and my family.

In the meantime I’m going to enjoy being done with classes and not needing to study for the CFP exam!

10 thoughts on “I passed the CFP exam…now what?

  1. Congratulations on passing your exam. That is quite an accomplishment, especially given the demands on your time with all your responsibilities. I have tossed around the idea of pursuing the CFP in the past, but I did not realize just how much was involved.

    I like your plan to hang tight and do nothing for the time being. You definitely have options, which is an awesome position to be in. I look forward to seeing how things play out and which path you ultimately choose.

    1. Thanks for the congrats. It’s been a strange last week or so. I keep feeling like I should be doing…something. It’s been hard to relax and enjoy being with my family. I suspect it will be that way for another month or two.

  2. Thanks for the CFP series. Which CFP approved program did you complete? Did you have to pay for the program? I thought that several years ago, you needed an industry sponsor to be able to participate in an approved program.

        1. Yeah, that sounds about right. The classes were about $700 each. Add in books at another $200 or so each and you get 8 classes at $900 each for $7,200.

          Definitely a sizable investment, but if you consider I would be paying at least .5%/year for an advisor on my ~2M portfolio, it’s an investment I think will pay off quickly.

          1. Yes, I think knowledge would definitely be worth it! I’m interested as well. Funny thing is, I am early retired and would struggle to find time to complete coursework, while you work, have kids, and still managed to see it to completion! Kudos!

          2. Well, if you’ve retired early perhaps you’d be willing to be the next subject of my “Profiles of Badass Investors” series. Would it be ok if I emailed you directly to discuss?

            As for having time to do the work – I’ve always been a believer in the idea that you don’t find the time to do this, you make the time. I had to make the time by waking up at 5 am so I had time to study. It sucked, but the result was worth it.

  3. Congrats, and thanks for the follow-up post. I’m not sure I will take up the challenge, but you’ve given me some good things to think about if I decide to do. The “now what” has always been my biggest impediment so sharing your thoughts helps.

    1. Yeah, the hard part for me is that I’d be taking a significant pay cut to change careers. I know that lots of people say that you’ll find ways to make money in an early retirement, but given that I don’t hate my job I figure I can easily do another few years (at least through whatever downturn is on the horizon).

      I figure that if nothing else I’ll be able to use my new found CFP knowledge to optimize my family’s finances (and share with you what I’ve learned).

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