Alphabet soup
These days it seems like everyone in the financial services industry has a few letters after their name, indicating that they have some kind of professional designation. There is CPA, CFP, CLU, ChFC, PFS, CMFC just to name a few. Like alphabet soup, there are a lot of letters and they don’t really seem to spell anything. Many people do not understand what these designations mean, such as “Senior Specialist” or “Retirement Advisor”, or what is required to obtain and maintain the various designations.
Currently, there are more than 90 designations, degrees, degrees, certifications, and accreditations available in the financial services industry. For this reason, investors should be very careful not to assume that just because a person has a few letters after their name, they are an expert in handling their financial needs. Some designations represent legitimate expertise, while others are simply marketing tools. For more information on the meaning of various designations, visit the FINRA website and click on the “Investor Information” tab and search for “understanding professional designations.” You will be able to type the letters of the designation you would like to learn more about the issuing organization, education and prerequisites, continuing education requirements, and exams that must be passed.
Here are some good designations to look for:
CFP or certified financial planner
The CFP is the most comprehensive financial planning designation a professional can earn. Requires a candidate to complete a series of courses approved by the Certified Financial Planning Standards Board. Each course requires passing a final exam, and then a full final exam must be passed at the end. A CFP has studied all areas of financial planning including: retirement planning, estate planning, investments, insurance, and taxes. Candidates must also have 3 years of personal financial planning experience and a bachelor’s degree, or have 5 years of personal financial planning experience.
Another great benefit of working with a CFP is that they are required to act as fiduciaries for their clients. This means that they must do what is best for their client, no matter what. This reduces the risk of an advisor selling something to a client that may not be in the clients best interest, all because the advisor was thinking about how they would be compensated. CFP is required to complete 30 hours of continuing education training every two years. This helps keep them ahead of changes in the industry.
ChFC or Chartered Financial Consultant
The ChFC designation is issued by The American College, an accredited university that specializes in financial education. A candidate must have at least 3 years of full-time financial services business experience in the 5 years prior to the award of the designation. They must complete 6 core courses and 2 electives that cover most of the same information that a CFP will study. Each course has a final exam, but a full final exam is not required. 30 hours of continuing education training is required every 2 years, which also helps keep an advisor at the forefront of the financial services industry.
be cautious
Beware of designations that require a few days of classroom study or a few hours of self-study, plus a fee to earn. These types of titles are usually just marketing tools to trick people into thinking they are working with an expert (and a way for the issuing organization to make some money). Do some homework and don’t be afraid to ask a few questions, you’ll be so glad you did.
