Academic journal article Financial Services Review

A Study of For-Credit Introductory Personal Financial Planning Courses

Academic journal article Financial Services Review

A Study of For-Credit Introductory Personal Financial Planning Courses

Article excerpt


The purpose of this study is to ascertain the extent to which certain of the Certified Financial Planning Board of Standards (the Board) prescribed topics are covered in for-credit introductory Personal Financial Planning courses delivered by AACSB accredited business schools. Time value of money, financial planning process, personal financial statements, and mutual funds receive the most emphasis. While many prescribed topics receive significant course time, little coverage is given to many others, such as forms of business organizations and financial services industry regulations. The authors conclude that there is a disparity between the Personal Financial Planning course in the CFP Board Model Financial Planning curriculum and what is taught at surveyed schools. © 2006 Academy of Financial Services. All rights reserved.

JEL classification: G29

Keywords: Financial planning; AACSB finance course; Personal finance course; CFP introductory course

1. Introduction

This study examines the introductory level, for-credit, Personal Financial Planning (PFP) course that satisfies some of the program requirements stipulated by the Certified Financial Planning (CFP) Board of Standards (the Board). Academic institutions register programs with the CFP Board, designed to encourage novices, as well as seasoned professionals, in the financial planning field, to seek the CFP designation. The Board requires that academic institutions, with registered programs, include 101 mandated topics in their curriculum. At the time we undertook this study the 101 required topics were grouped into seven content segments that were called: (1) General Principles of Financial Planning; (2) Insurance Planning and Risk Management; (3) Employee Benefits Planning; (4) Investment Planning; (5) Income Tax Planning; (6) Retirement Planning; and (7) Estate Planning. In 2004 the Board, in partnership with the Academy of Financial Services, issued its model curriculum, essentially a reconfiguration for teaching the 101 topics.

Some schools offer an introductory PFP course as part of their curriculum. This course usually includes specific topics that can satisfy some or all of the "General Principles of Financial Planning" or "Personal Financial Planning" content segments. Certain schools do not offer an introductory PFP course, but integrate the material in their other content segments. There are also schools that offer a capstone course, which reviews mandated materials and/or covers those topics not taught elsewhere.

The Guide to CFP Certification (2002) reports that, effective January 1, 2007, the CFP Board will require that candidates must have a bachelor's degree from an accredited college or university to qualify for CFP certification. Longo's (1998) study views the CFP designation "emerging as the dominant credential in terms of recognition among not only investors, but also the American press and even many planners." The CFP credential does not belong to any one financial service sector as those individuals who have earned it have a variety of backgrounds. The CFP designation is marketed very well and professionals with other financial planning credentials have been considering adding this credential. Prime candidates for adding the designation are Chartered Life Underwriters (CLU) and Chartered Financial Consultant (ChFC) in the insurance fields and the Personal Financial Specialist (PFS) in the accounting field. Anthes (2002) believes that the acceptance of the CFP designation has been a result of spreading financial planning education throughout colleges and universities in the United States.

Studies show that the general population has little understanding of basic personal finance issues. Chen and Volpe (1998) state that college students have little knowledge about personal finance. While most college students may not yet be investors, the findings of Chen and Volpe are consistent with Singletary (2002), who reported that "year after year, surveys show that investors get a failing grade when quizzed about their basic knowledge of personal finance. …

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