It is important that investors understand titles of “Financial Analyst,” “Financial Adviser” and “Financial Consultant” are merely job titles. That title is not indicative of education or affiliation. To add further to the confusion, a professional planner’s designations can often look like alphabet soup. Let’s take a look at some of the more popular initials and acronyms you may encounter:
The Certified Financial Planner™ (CFP®) certification is issued by the Certified Financial Planner Board of Standards. Professionals seeking this certification must pass a two-day, ten-hour exam, covering investment management, employee benefits, insurance, taxes, retirement and estate planning. The emphasis of the educational program is the interrelationship of the financial areas, and the need for an objective analysis of a client’s circumstances and goals. A CFP® professional must also have at least three years of personal financial planning experience and meet educational and ethical standards to maintain the right to use the CFP® mark. Additionally, CFP® professionals must complete 30 hours of continuing education every two years.
A Chartered Financial Consultant (ChFC) will have a background in the insurance industry in addition to having passed an examination on the fundamentals of financial planning, including income tax, insurance, investment and estate planning. The ChFC program builds on that knowledge with advanced coverage of estate, retirement, and financial planning applications. Individuals who hold the ChFC designation must complete 30 hours of continuing education every two years.
The Chartered Financial Analyst® (CFA) designation is awarded by the CFA® Institute to experienced financial analysts who successfully pass three examinations covering economics, financial accounting, portfolio management, securities analysis and ethics. A CFA charterholder must have an undergraduate degree and at least four years of acceptable professional work experience involving investment decision-making.
The Personal Financial Specialist (PFS) credential is granted exclusively to Certified Public Accountants (C.P.A.) who have considerable personal financial planning experience. The C.P.A./P.F.S. designation is authorized by the American Institute of Certified Public Accountants (AICPA). It can only be acquired by C.P.A.s who are AICPA members, have completed 75 hours of personal financial planning education, have at least two years of experience in financial planning, and pass a comprehensive and rigorous personal financial planning exam.
A Certified Wealth Strategist® (CWS®): This designation is administered by Cannon Financial Institute. The mission of a CWS® is to provide financial services professionals with the technical knowledge, the practice management formula, and the critical client interaction skills to create and build a dynamic wealth advisory practice that works effectively with more complex client issues. The program consists of four days of classroom training, months of directed study, completion of a final Capstone project, and 33-hours of continuing education every two years.
There are more than 100 designations or certifications available for financial experts. Obtaining one of these doesn’t always indicate the individual has a degree from an accredited college or university. Designations most often indicate that the individual has passed specific exams and is obligated to adhere to ethical standards. There are other key areas that you should consider, such as, areas of experience, affiliations and investment philosophy. Next week we’ll look at the questions you should be asking when you are considering working with a financial expert.
William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.