Whether you are looking for a new financial advisor or you are trying to determine the value of your current one, there are certain designations you should be aware of. These include the following: A CPA, a CFP, and a Chartered investment counselor.
Each of these is considered to be one of the most prestigious and widely-recognized designations in the field of finance.
CFP
There are many types of financial advisor designations and deciding which is right for you is crucial. However, one of the most popular is the CFP designation.
To become a CFP you’ll need to show your skills as an advisor. This can be done by completing a prescribed course. You’ll also need to prove you have three years of experience in the field. Then, you’ll need to pass a computerized, six-hour exam. If you’re successful on the first try, you can get your CFP certification in less than a year.
The CFP Board, which administers the CFP test, posts a list of current licensees on its website. In addition, it publishes information about the financial planning process.
While CFP is not a magic bullet, it does have an impressive record of being a leading financial advisor designation. And, in fact, it’s arguably the “gold standard” for credibility in the industry.
For those looking to take the next step, you can also pursue the Chartered Financial Consultant (ChFC) designation. This is a professional certification from the American College. Its curriculum includes all the core material from the CFP program, along with three additional courses.
CPA
A CPA designation is one of the most useful professional designations in the industry. It allows you to provide financial planning services, which includes investment advice, retirement planning, and wealth management.
CPAs and their corresponding financial advisors are a necessity for businesses and individuals. They help solve tax problems, evaluate financial statements, and implement long-term, tax-efficient plans.
The designation is only legally required in some states. Those who hold the credential are required to pass a board exam and adhere to a strict code of ethics. These standards are outlined in the CFP Board Standards of Professional Conduct.
A CPA can be an asset to an advisor, but it doesn’t mean they’re automatically a great fit. Before you make a commitment, it’s important to determine what you need from a financial advisor. You may want to hire a fiduciary, or a professional who puts your needs ahead of his or her own. Ask questions about their working style, communicating, and investing philosophy.
CFA
CFA is a professional designation that is one of the most popular financial advisor designations. Chartered Financial Analysts focus on investing, portfolio strategy, and corporate finance. These professionals handle investment portfolios for large investment firms.
The CFA designation requires candidates to have a bachelor’s degree and 6,000 hours of relevant professional experience. The program is divided into three levels. Each level tests a specific aspect of portfolio management.
A CFA is trained in finance, accounting, and economics. They also have expertise in asset management and analyzing security investments. Their knowledge is used for asset valuation, estate planning, retirement planning, and insurance planning. This makes them able to manage large sums of money.
The CFA Institute is the governing body for the CFA designation. It offers charter exams. Candidates must pass three difficult exams to be qualified for the CFA. An average of 1,000 hours of study goes into these exams.
In addition to the exam, CFAs are required to complete a three-year training program. The course curriculum includes investment analysis, financial reporting, and ethics.
Chartered investment counselor
There are more than 200 financial advisor designations, but some of them are considered the gold standard for their professionals. They are awarded for meeting certain criteria, including experience, education, and ethical standards.
Understanding these certifications can help you decide on the right one for you.
Certified Financial Planner (CFP): This certification is awarded to professionals who are experts in planning and advising on personal financial matters. CFPs work with individuals and families in all areas of life, from saving for retirement to addressing cash flow and insurance needs. Some of the duties of a CFP include assessing investments and insurance, income and tax planning, and estate planning.
Chartered Investment Counselor: The Investment Adviser Association (IAA) offers this designation to individuals who have extensive portfolio management experience and are committed to a fiduciary standard of practice. In addition, CICs must have at least five years of investment counseling experience and have completed several exams.
