A simple guide to the many financial-advisor designations

As you search for advisors in your area to help you with taxes or other financial planning, you’ll notice many of them include letter designations after their names. What do these letters mean?

|
Damian Dovarganes/AP/File
Certified financial planners Aaron Munoz, left, and Gilbert Cerda, pose for a photo at their offices in Downey, Calif.

Are you looking for help with a financial plan for yourself or your family? Here’s some good news — you won’t find a shortage of financial professionals ready to offer their services to you.

As you search for advisors in your area, you’ll probably notice many of them include letters after their names. It’s usually just one or two acronyms, but some advisors include a long list. What do these letters mean?

These designations show certifications that the advisor has achieved, reflecting a certain level of accomplishment, education and experience. Often, advisors have to pass exams to earn these designations. They also may have to maintain their knowledge by fulfilling continuing education requirements every year.

Plus, these designations may show that the advisor adheres to a set of ethical standards, although how rigorous those standards are may differ between different accrediting organizations.

Are Designations Important?

They can be, although their usefulness may be limited. Many designations appear to be similar — on the surface, there doesn’t seem to be much difference between a Certified Financial Consultant (CFC) and an Accredited Financial Counselor (AFC).

Not all designations are equal in their requirements. Some may not require advisors to pass exams or have previous experience related to financial planning or investment management. And there are advisors who seek designations just for the marketing advantages they may bring.

Reading the Alphabet Soup of Designations

How can you make sense of the different designations you see? You can find a helpful, alphabetical list of professional financial advisor designations on the Financial Industry Regulatory Authority (FINRA) website.

Some designations carry more weight than others. Most often, these designations are administered by leading organizations in the financial industry. Some of the more significant and common designations are listed below.

Certified Financial Planner (CFP)

It is perhaps the most important designation for someone offering financial advice on a broad scale, not only for investment decisions but also planning for retirement, college expenses, transferring wealth and more. CFP candidates must come with some on-the-job experience with clients and also complete coursework and pass an exam.

Chartered Financial Analyst (CFA)

This may be the certification with the most rigorous requirements. A CFA must pass three different exams, each requiring a minimum of 250 hours of study. CFAs also must follow strict codes of conduct and adhere to high ethical standards. Usually, anyone holding a CFA designation wants to manage investment portfolios, not necessarily do financial planning.

Chartered Financial Consultant (ChFC)

This designation is similar to the CFP, with a focus on broad-based financial planning. But the ChFC program seeks to train advisors for “advanced planning” situations, according to its sponsor, the American College of Financial Services. Requirements include nine college-level courses on a wide range of financial topics, from insurance and taxation, to retirement and estate planning.

Chartered Retirement Planning Counselor (CRPC)

Sponsored by the College of Financial Planning (the same organization that administers the testing program for the CFP exam,) this designation identifies advisors who focus on pre- and post-retirement planning. That could include tax and estate planning, as well as guidance on retirement health care options.

What’s in a Designation? It Depends

Accredited, certified, registered—these are among the titles you’ll see when you decode these financial advisor designations. The words themselves don’t signify much—“chartered” isn’t necessarily better than “certified” or “registered.” Ultimately, a designation for a financial advisor is only as good as the organization behind it.

Do your homework on these designations as you’re shopping around for a financial advisor. Learning more about the qualifications that advisors bring to the table can help you choose one who can help with your specific financial planning needs.

This story originally appeared on ValuePenguin.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to A simple guide to the many financial-advisor designations
Read this article in
https://www.csmonitor.com/Business/Saving-Money/2017/0205/A-simple-guide-to-the-many-financial-advisor-designations
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe