Designation Definitions
Align your needs with your prospective financial planner’s expertise. To ensure your financial planner’s skills match your goals, review this quick reference that details all the professional acronyms.
CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals must complete coursework in the principles of financial planning, insurance, employee benefits, investments, income taxes, retirement, and estate planning and pass a 10-hour exam. They must also have three years of relevant work experience and subscribe to a code of ethics. A CFP® certificant may or may not hold licenses to sell investments or insurance.
Back to Top
Chartered Financial Analysts (CFAs) have completed an extensive set of exams on ethical and professional standards, tools, and input for investment and portfolio valuation and management. They must meet professional experience requirements. CFAs usually work as institutional money managers or stock analysts.
Back to Top
The Chartered Life Underwriter (CLU) designation is held mostly by life insurance agents. They have completed a curriculum of 10 college-level courses, have at least three years of professional experience, and subscribe to a code of ethics. With three additional courses, they can earn the Chartered Financial Consultant (ChFC) designation.
Back to Top
A Certified Public Accountant (CPA) has completed a college curriculum in accounting, has passed an extensive uniform exam, and has qualifying work experience. CPAs can also earn the PFS (Personal Finance Specialist) designation, granted to those who have substantiated experience in financial planning, received peer recommendations, and passed an additional exam.
Back to Top
Enrolled Agents (EAs) are taxation experts licensed by the federal government. They are authorized to appear before the IRS on the taxpayer’s behalf. They must pass a two-day exam on the taxation issues of individuals, partnerships, corporations, and estates and trusts. Their knowledge and experience about investments, like that of CPAs, varies.
Back to Top
The Master of Business Administration (MBA) degree may cover a broad base of business issues or may have a special focus, such as marketing, finance, or healthcare administration. You may find comfort in working with a person having an MBA in finance, but you might want to think twice about taking financial advice from someone with an MBA in marketing.
Back to Top
Registered Representatives are also referred to as stockbrokers or investment representatives. They are generally licensed to sell securities, and although knowledgeable about certain types of investments, their experience and training regarding financial planning may be nonexistent.
Back to Top
A Registered Investment Advisor (RIA) has registered with either the Securities and Exchange Commission (SEC) or a state regulatory authority as someone who charges for investment advice. The registration requires a disclosure of qualifications and business practices but does not impose any requirements for minimum training or experience. The SEC or state may examine RIAs (the review resembles a bank exam) to ensure they are complying with applicable laws and record-keeping requirements.
Back to Top