Financial Advisor Alphabet Soup

What all those letters really mean

With so many people tossing around the title “financial advisor”, it can be hard to get a clear understanding of what that means, but sometimes a clue can be found in the credentials the professional has earned. If you’re looking for a financial advisor and doing research online or through friends and relatives, you’ve probably noticed that there are a lot of different acronyms that can appear after someone’s name. There are literally dozens of different credentials that can be earned by financial professionals. While some designate a specialty, others indicate a level of education or an association with a regulatory and disciplinary organization. Before you choose an advisor based on credentials, you need to know what they mean.

CFP – Certified Financial Planner

To be a CFP, a person needs a bachelor’s degree and thee years of experience, as well as an additional financial planning curriculum of about two years. CFPs must also pass a certification exam. Every two years, a CFP has to complete 30 hours of continuing education, and any complaints are investigated through a disciplinary board and hearing. The CFP Board of Standards issues and monitors CFP designees.

CPA/PFS – Certified Public Accountant / Personal Financial Specialist

CPAs (a certification attained through a combination of education and experience) can continue their education to become a PFS by adding two years of financial planning experience, 80 hours of financial planning education, and a thorough (more than six hour) examination. Continuing education and experience are required to remain certified, and a disciplinary board and process are in place through the American Institute of Certified Public Accountants and the state Board of Accountancy.

CFA – Chartered Financial Analyst

Designated by the CFA Institute, CFAs must supplement an undergraduate degree with at least four years of specific investment experience. They must also complete an additional four years of CFA education, and three rigorous exams. While the CFA Institute imposes a disciplinary review process, it doesn’t require continuing education for ongoing certification.

CIMA – Certified Investment Management Analyst

To be a CIMA, an advisor must have three years of financial service experience as well as additional education, consisting of several months of self-study, an online exam and a week of in-class education with a final exam. To remain certified, CIMAs must have 40 hours of continuing education every two years and are held to a public disciplinary process through the Investment Management Consultants Association.

ChFC – Chartered Financial Consultant

The ChFC designation is conferred by The American College. ChFCs must have at least three years of experience in the financial industry and then must pass an examination on financial planning fundamentals. ChFCs must pass three additional exams beyond those required for the CFP designation.

CRPS – Chartered Retirement Plan Specialist

The College for Financial Planning confers this designation on financial advisors who take coursework and pass an exam specific to the creation and administration of retirement plans. CRPSs are subject to a disciplinary process and must renew their designation every two years by completing 16 hours of continuing education.

What Matters Most?

With so many different designations to sort through and consider, it should be clear that finding the right advisor is about more than just the letters after their name. While it’s important to seek an advisor credentialed by an organization that requires education, experience and ongoing accountability, you should also conduct thorough research and interviews to help you find an advisor who you feel comfortable with and who understands your financial goals and situation.