What is a Chartered Financial Consultant (ChFC)?

A chartered financial consultant (ChFC) could be a good place to start for money-conscious individuals in need of sophisticated financial planning services. While the ChFC title is less well-known than the CFP distinction, advisers who acquire it receive additional training to improve their financial planning skills.

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Requirements for ChFC

The American College of Financial Services introduced the ChFC designation in 1982 as a competitor to the CFP certificate. It necessitates the same basic curriculum as the CFP, as well as additional coursework that sharpens an applicant's skills as a professional wealth manager.

To become a ChFC, a candidate must complete eight courses covering all aspects of financial planning. In addition, they must have worked full-time in a related field for three of the last five years. One year of business experience is equivalent to an undergraduate or graduate degree from an authorized university.

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ChFC vs. CFP: What’s the Difference?

The services offered by chartered financial consultants and certified financial planners are broadly comparable in practice. The difference between ChFC and CFP is in the training required for each designation.

The CFP certification is administered and awarded by the nonprofit Certified Financial Planner Board of Standards, Inc., also known as the CFP Board. The American College of Financial Services, an accredited private educational institution that offers both undergraduate and graduate training programs, awards the ChFC. It also supports the Chartered Life Underwriter (CLU) certification and prepares students to sit for CFP Board’s national certification exam.

People studying to get a CFP or a ChFC designation have to pass a core curriculum of seven
courses. (Some CFP programs may package this as six courses instead.) ChFC candidates then must take an additional course on contemporary applications in financial planning that is not currently required of CFP candidates. The table below outlines the courses required for each designation:

There is no comprehensive examination required to obtain a ChFC, like there is with the CFP, which tests candidates’ retention of their financial planning coursework cumulatively. Instead, ChFC candidates take exams after each course is completed. Advisors with their CFP certification in good standing can get their ChFC by completing the Contemporary Applications in Financial Planning course and passing that class’s exam.

Both CFP and ChFC charterholders are held to a fiduciary standard, which means they are bound by law to consider the best financial interests of their clients when pursuing any investment decision. Both certifications require 30 hours of continuing education every two years, including an ethics course.

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Fees Charged by ChFCs

Cost-wise, working with a ChFC is fairly similar to working with a certified financial planner. There are several fee structures generally used by financial advisors, no matter what their certification. Most ChFCs and CFPs will either be fee-only or fee-based.

Fee-based indicates the advisor may receive commissions from investment and financial firms that sell products, under certain circumstances. Think of these as finder’s fees or rewards paid to the advisor for getting their clients to buy certain products. Fee-only advisors are ones that do not accept these third-party commissions.

Here are the most common fee types that may be charged by chartered financial consultants:

• Hourly fee: Some clients are charged a flat hourly rate for services. You can expect to pay between $200 and $400 for a trusted ChFC. Azoury warns that you need to keep on top of hours billed, especially if the advisor recommends active portfolio management, which requires more billable hours.
• Percentage of assets: Some may charge an annual fee equal to the investment portfolio they manage, with costs ranging from 0.50% to 1.25% annually.
• Commissions: With a commission model, a ChFC may not charge you anything directly. They’ll facilitate the process of you buying the products they recommend, and you’ll pay that as well as potentially the cost of the transaction. They’ll then receive a referral payment from the company you purchased the product from. Azoury recommends this treatment only for clients who are knowledgeable about their finances and want to be involved in portfolio management so you remain well-versed enough to determine if a commission-based product works best for you.
• Annual retainer: Some chartered financial consultants may charge an annual retainer fee in addition to a percentage or hourly fee. Yearly costs generally run from $2,000 to $7,500.
• A mix of the above: Some ChFCs may use fee structures that borrow from bits of each of the previous fee types. An advisor might charge an hourly fee as well as receive some amount of commission, for instance.

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How to Choose a ChFC

The American College of Financial Services provides a portal for finding and evaluating chartered financial consultants. Once you’ve identified one or more prospects, head over to the Securities and Exchange Commission’s (SEC) investment adviser public disclosure website to research your potential financial advisor and make sure they haven’t had formal complaints filed against them. The SEC site searches FINRA’s BrokerCheck as well.

You may also ask your friends and family for a referral when looking for a ChFC, says Asher. Regardless of how you find your advisor, though, make sure you find time to sit down with them before hiring them. “Interview the advisor and see if you like their personality, demeanor, and knowledge. Ask them how they are paid. Do they accept commissions or kickbacks to place investments in certain products?” says Asher.

You’ll want to make sure you work with someone you trust who is open and transparent about payment, has good references, listens to and understands your needs and is someone you can relate with and speak to openly, Asher says.

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Should You Hire a ChFC?

If it’s knowledge and expertise you’re seeking from a financial advisor, a chartered financial consultant can be a smart move, just so long as you do your homework.

The presence of a ChFC credential should give you at least some comfort that the advisor you’re working with has comprehensive knowledge of financial planning.