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Professionals with which financial services designations (e.g., CFP) are the best to seek out at the time of retirement?

Feb 20, 2013 by Shannon from Manhattan, NY in  |  Flag
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5 votes
Peter C. Karp Level 20


CFP, CEBS, CRPC, CRPS, QPA are just letters which designate classes and tests that were passed. Certifications are important but recommendations and retirement planning experience are paramount. The more experience a financial professional has regarding retirement planning and asset management the better equiped they will be to answer questions and concerns. Also there is a difference between representing a product vs. a service. A consultant for one type of service might not be appropriate for another type. It is important to understand your needs and the expected outcome. Also, you want to understand how the retirement plan consultant is paid. There is more to picking a retirement plan consultant than a letter after their name. If you have additional questions give us a call at 415-345-8185 or email peter@karpcapital.com for a retirement market overview.

Disclosure: The posted information is for informational purposes only. This message does not constitute an offer to sell or a solicitation of an offer to buy any security. All opinions and estimates constitute Karp Capital's judgment as of the date of the report and are subject to change without notice. Accordingly, no representation or warranty, expressed or otherwise, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or timeliness of the information contained herein. Securities offered through Financial Telesis Inc., member SIPC/FINRA. Financial Telesis Inc. and Karp Capital Management are not affiliated companies.

Comment   |  Flag   |  Feb 21, 2013 from San Francisco, CA

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3 votes
Kevin J. McNab Level 19

The financial planning designation generally held in the highest regard is a Certified Financial Planner (CFP). However, there are some other good certifications including a Chartered Financial Consultant (ChFC). One of the nice things about working with a Certified Financial Planner is the organization that regulates CFPs has criteria including at least three years in the industry, a college education, and a background check of complaints. In addition, a CFP is required to have ongoing continuing education. While it is not necessary to work with a CFP, there are advantages.

Comment   |  Flag   |  Feb 21, 2013 from Westminster, CO

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3 votes

I agree with much of what has been stated above, professional designations should be a starting point when evaluating a financial planner or investment manager. The most important designations you should look at are the CFP and the CFA.

CFP The Certified Financial Planner (CFP) designation is the gold standard within the financial planning profession. It's a substantial commitment of time and energy. To even sit for the exam you are required to take multiple years of undergraduate level financial planning courses and then pass the exam. I took the exam a few months after I left school, even after studying financial planning during undergrad for a few years and still being in school mode, it required about 300 hours of study.

CFA The Chartered Financial Analyst (CFA) designation is actually broken into three exams, which each take a considerable amount of study to pass. Portfolio managers that have made the commitment to become a charter holder have demonstrated their dedication to the craft. I'm studying for the level 1 exam and I'll probably need to study every bit as much for this test as I did for the CFP.

Despite the rigorous exams and education requirements of these designations, simply holding a designation does not make an advisor an expert. Passing the CFA does not make an investment manager the next Warren Buffett, nor does passing the CFP make a planner the next....well, the next financial planning equivalent to Warren Buffet.

Instead, these designations should act as a baseline. By passing the CFP or CFA exam you know the advisor must have the skills needed to pass the exam, but you shouldn't jump blindly into a relationship with them. Instead, interview the planner to determine whether their financial planning process, their investment strategy, the specific services they offer, exactly how they are compensated (fee-only, commission-based, or a mix), how often they meet with you, etc, etc.

Use the designations as a guideline, but not as a hard and fast rule. Along with the document posted above, here are some good resources you can use when evaluating a planner:

http://www.fpanet.org/ToolsResources/BrochuresGuidesWorksheets/Brochures/ http://www.napfa.org/UserFiles/File/PursuitofaFinancialAdvisorFieldGuide.pdf

Comment   |  Flag   |  Feb 22, 2013 from Chester, MD

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2 votes
Anthony Level 8

Hi Shannon, Designations often show a commitment to their profession by a financial advisor. Some are more rigorous than others and it's worthwhile to check into the requirements for receiving and maintaining a designation. CFP certificants, for example, must complete a course of study covering the main aspects of financial planning and pass a substantial exam. They must then maintain the designation through continuing education and agreeing to abide by the rules and principals of the CFP Board. You can find out more by searching the internet for the designation and going to the site of the issuer, for example, www.cfp.net.
No two financial planners are exactly alike in their experience and methods. I'd suggest talking to two or more to find out who fits best with your goals. Most planners offer a free initial meeting to determine if working together would be mutually beneficial.

Comment   |  Flag   |  Feb 20, 2013 from Osprey, FL

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1 vote

"What Every Investor Should Know" is the best piece I have read on this topic. Even though it is published by the CFA Institute, the article provides a fair assessment of the major professional credentials. Download it from the CFA Institute website: http://www.cfainstitute.org/about/investor/Documents/choosing_financial_adviser.pdf I recommend that you read the article and draw you own conclusions about the value of these designations.

As other advisors have mentioned, credentials are a starting point not an ending point. You should carefully evaluate your prospective advisor's experience and qualifications before making any choices. I would add that you also should consider the compensation scheme employed by the advisor. These factors, as much as the advisor's credentials, should guide your search and selection process.

Comment   |  Flag   |  Feb 21, 2013 from San Francisco, CA

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1 vote

One thing I would add to this discussion. A way to check out a designation. To check out the value of a designations:

  1. Google the designation
  2. Go to the desination's website
  3. You'll read how great the designation is
  4. Click on the link that says, "Become an XYZ"
  5. Read the requirements to earn the designation and then make your assessment of whether the designation has "chops" or whether it is more of a "take a class and pay a fee".

Two other things to remember. None of these designations (except EA and CPA) are granted by government entities. They are trademarks owned by organizations. That fact is neither good nor bad, but should be known. Two, as mentioned above, a designation will not necessarily guarantee that an advisor is the right one for your retirement planning needs.

Good Luck!


Comment   |  Flag   |  Feb 23, 2013 from Alexandria, VA

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0 votes

CFP® and ChFC are the most common. The CFP® testing requirements and their standards are extremely rigorous, and CFP® designation is considered to be the highest designation in the financial industry.

With that said, having a designation does not mean that you are a great financial planner. And not having any designation does not mean that you are not a great financial planner. There are only 67,000 CFP’s nationwide, and there are a whole lot more good financial planners than that. Interview several. If you are referred to a financial advisor, don’t discard them just because they do not have a designation. I have been a CFP® for 7 years, but I think I was pretty good before then. Conversely, just because someone has qualified for a designation does not mean he/she is a good match for you.

Comment   |  Flag   |  Mar 08, 2013 from Delray Beach, FL

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