Home  >  Financial Articles and Q&A  >  Which financial planner designations are meaningful?

Which financial planner designations are meaningful?

Jan 11, 2012 by Ava from Boston, MA in  |  Flag
10 Answers  |  13 Followers
Follow Question
4 votes

I would look for the designations that require a broad and deep commitment to education, a rigorous test for competence, and strict requirements for ethics and continuing education. Among these are: CFP (Certified Financial Planner professional), ChFC (Chartered Financial Consultant) usually attained by insurance professionals, and PFS (Personal Financial Specialist) available to CPAs through the AICPA. CFA (Chartered Financial Analyst) is perhaps the most rigorous designation and focuses on investment analysis and portfolio management skills, not financial planning.

1 Comment   |  Flag   |  Feb 09, 2012 from San Diego, CA
Gary Ray Duell

Just because a designation is well-known or sounds authoritative doesn't mean it means anything. And, on the other hand, just because you've never heard of it doesn't mean a financial designation is illegitimate. FINRA has a great research tool with which to compare the alphabet soup after your adviser's name: http://www.finra.org/investors/professional-designations
The keys are (1)Is it a designation that can merely be purchased or obtained after a token "training"? (2)Is there an established, respected organization behind it that requires continuing education and enforcement of codes of ethics?

Flag |  Jun 10, 2016

1|600 characters needed characters left
3 votes

As a clarification, CPA's are held to the fiduciary standard at all times. On the other hand, CFP's are NOT always required to be fiduciaries. From the CFP's Board of Profession Conduct: "When the certificant provides financial planning or material elements of financial planning, the certificant owes to the client the duty of care of a fiduciary as defined by CFP Board. " So when the advisor is simply selling securities (which is not necessarily considered financial planning), the fiduciary standard does not apply to them, thereby allowing them to collect commissions on sales of financial products. I hope this helps to clarify the distinction between these designations.

1 Comment   |  Flag   |  Jan 12, 2012 from Staten Island, NY
Victor Guettlein, CFP®

To be clear, there is nothing anywhere in the law or in the definitions of a fiduciary standard of care that precludes commission compensation. In other words, receiving a commission is not a violation of a fiduciary standard. Nor does "fee-only" protect an individual from unethical practices. Just look at the headlines these days. Look at the Legal profession's reputation for hourly billing practices. An advisor's acknowledgement of a fiduciary obligation must be met with some due diligence on an advisee's part to look into the regulatory history of ANY advisor, no matter how they get paid. Fortunately, the SEC and FINRA make it much easier for an individual to discover this type of information than do state insurance commissioners and other bodies, such as the AICPA.

2 likes | 
Flag |  Jan 12, 2012 near Arvada, CO

1|600 characters needed characters left
3 votes

One of the most respected sources of education is the American College www.theamericancollege.edu and it provides clear details on the designations CFP, ChFC, CLU, CAP and other programs. I am by nature more bias to my choice of ChFC over the CFP. I went through 10 courses of which 6 of these were the same materials of the CFP. The CFP is comprehensive cram course rather than ChFC with 10 separate exams each 2+ hours and 150 detailed questions. I wanted to learn and apply deeply more materials and more testing and work over a longer period of time.

Comment   |  Flag   |  Feb 09, 2012 from Maitland, FL

1|600 characters needed characters left
3 votes

I would like to expand upon on a few points made in other posts.

First, CFA charter holders are required to develop proficiency in financial planning in addition to investment analysis and portfolio management. A significant block of the curriculum focuses on the role of planning (determining client needs and goals, constraints, special circumstances, etc.) in the investment management process. It would be inaccurate to imply that because the CFA program includes other program areas, that it is not appropriate or does not adequately train an advisor who is engaged in financial planning in their advisory practice. Take a look at the Private Wealth Management section of the CFA Institute Website (http://cfainstitute.org/learning/topics/Pages/privatewealth.aspx) and you will appreciate the breadth and depth of topics and issues that are covered.

Second, the term "fiduciary" may not tell you everything you should know about how an advisor works with clients. As Victor points out, an advisor may both claim to be a fiduciary (as all investment advisor representatives have a fiduciary obligation by law) and accept commission-based compensation as a registered representative of a broker-dealer. In my view, this anomaly is indicative of a flawed regulatory system and it highlights two critical questions that you should ask of your prospective advisor: (1) how do you determine which investments to recommend to your clients, and (2) how are you compensated? If the advisor starts to squirm, look elsewhere for impartial advice.

Finally, there is an excellent brochure titled "Cutting Through the Confusion: Where to Turn for Help With Your Investments." It is produced by the Coalition on Investor Education, whose members include the Consumer Federation of America, the North American Securities Administrators Association, the Investment Adviser Association, the Financial Planning Association, and the CFA Institute. I recommend this publication to anyone who wishes to understand the significance of different professional credentials and regulatory registrations. You can download a PDF version of the document at the Consumer Federation of America website (search "Cutting Through the Confusion" and it is the top hit at Google).

Comment   |  Flag   |  Feb 09, 2012 from San Francisco, CA

1|600 characters needed characters left
3 votes

As A CFP® I am biased, but like choosing a doctor you need to see what you most need help with. I have always felt that the Certified Financial Planner tm practitioner is like a general practitioner. I often refer my clients to CFA (Chartered Financial Analyst), CLU (Certified Life Underwriters), CPA (Certified Public Accountants), Attorneys, etc because they provide better depth on a subject, but as a CFP® I need to have general knowledge on all subjects and know when and who to refer people to for the best answers to their questions. I wish I was smart enough to know all things, but a designation does not guarantee expertise it only means you have core competence to pass an exam. The experience and how it is applied is what is really important. I would look for an advisor that is comfortable enough with their own skills to refer clients to others when needed.

Comment   |  Flag   |  Feb 16, 2012 from Raleigh, NC

1|600 characters needed characters left
3 votes

The most common and highly regarded designations are CFA, CFP, CPA, CLU, and ChFC. All require a different level of education and experience to obtain. The most important question to ask, as highlighted by other's answers, is what type of questions/concerns you are looking to address by working with a planner/advisor. Most professionals tend to specialize in a few areas or develop a niche that they excel at. Designations may help you decipher what niche or specialty that may be.

Comment   |  Flag   |  Feb 25, 2014 from Appleton, WI

1|600 characters needed characters left
2 votes

CIMA is also a useful certification - Certified Investment Management Analyst

Comment   |  Flag   |  Jan 12, 2012 from Arvada, CO

1|600 characters needed characters left
1 vote
Barry Rabinowitz Level 19

According to all objective 3rd parties: CFP, CPA, CFA, RIA are the professional designations that are recognized as being meaningful, and that require some minimum level of education, experience and require upholding of the Fiduciary Standard of Care. Most of the other alphabet soup of designations can be gotten through a 3 hour course online.

View all 4 Comments   |  Flag   |  Jan 12, 2012 from Fort Lauderdale, FL
Alexander Efros, MBA, CPA

Actually, "RIA" is not a professional designation. In fact, state securities regulators have warned individuals not to hold themselves out as an "RIA" because this is indeed not a certification. A recent article in InvestmentNews.com covered this issue and stated the following: "Advertising deficiencies included issues with websites, correspondence and business cards, as well as advisers' calling themselves “registered investment advisers” as if it were an industry designation, said Mike Huggs, director of the Mississippi Securities Division and chair of NASAA's IA Operations Project Group, which prepared the report. The violation can occur if an adviser signs his name and includes “RIA” after it, he said. “A firm is an RIA; a person is not an RIA,” he said. “When you sign a letter that way, it implies it is a designation that's earned, and it is not.”" - In general, individuals may refer to themselves as "Investment Adviser Representatives" but "RIA" is not allowed.

6 likes | 
Flag |  Jan 12, 2012 near Staten Island, NY
Victor Guettlein, CFP®

Alexander is correct. Guidelines for the ADV Part 2 require a disclosure that RIA or Registered Investment Advisor does not mean an individual or advisor is qualified; it indicates nothing more than registration status. However, as you note, the 1940 Act imposes a fiduciary obligation on anyone holding himself out as an investment advisor.

5 likes | 
Flag |  Jan 12, 2012 near Arvada, CO

1|600 characters needed characters left
1 vote

CFP is the gold standard. I would further check to ensure your advisor is a FIDUCIARY and Independent so they are not looking to sell you high priced products and services, but rather put your interests before their own.

Comment   |  Flag   |  May 28, 2017 from Boston, MA

1|600 characters needed characters left
0 votes

CFP--Certified Financial Planner for run of the mill financial planning.

RMA--Retirement Management Analyst for full on retirement income planning.

Comment   |  Flag   |  Feb 24, 2016

1|600 characters needed characters left