Understanding Financial Credentials
By: AARP Education & Outreach | Source: AARP.org | | April 17, 2006
What Do all those Letters Mean?
The surprising truth is that anyone can call himself or herself a financial advisor without meeting any educational and experience requirements. However, to offer financial services, they should be properly licensed in their field. For example, an accountant could obtain the designation Certified Public Accountant, or CPA. It isn't easy to figure out what all the initials after someone's name stand for and what the designations mean. One important thing to check in your search for financial help is if they really are licensed or have earned professional designations.
Where to Start
To help you determine the best financial professional for you, the chart below lists some of the most common designations and briefly explains the education and expertise each signifies. You'll also find contact information for the accrediting organization so you can check someone's status, ask questions, or register a complaint.
| Credential | Accrediting Organization | Requirements | For More Information |
| Certified Financial Planner (CFP) | Certified Financial Planner Board of Standards | A financial planner who has completed study and passed examinations in risk management, investments, tax planning, retirement planning, and estate planning. Minimum 3 years' experience, continue to update knowledge in the field, and adhere to prescribed code of ethics.
Continuing Education: 30 hours every 2 years |
Phone: 1-888-237-6275 Web: CFP.net Complaint Process: Online at Submit a complaint |
| Certified Public Accountant/ Personal Financial Specialist (CPA/PFS) | State boards of accountancy for CPA license
American Institute of Certified Public Accountants Personal Financial Planning Center for PFS designation |
An experienced accountant who has met education, statutory, and licensing requirements of the state in which he or she resides. Continuing Education: A CPA who has passed a financial planning exam and offers a broad range of personal financial services may obtain the CPA/PFS. Continuing Education: Combined total of 60 PFS points in personal financial planning business experience and qualified “life-long learning” activities every 3 years. |
Phone: 1-800-862-4272 CPA Complaint Process: Contact the Professional Ethics Committee of your own State’s Society of Certified Public Accountants and check with your state board of accountancy: NASBA.org |
| Chartered Financial Analyst (CFA) | CFA Institute | An investment professional who has passed examinations in economics, financial accounting, portfolio management, security analysis, and standards of conduct. The CFA Program is a graduate-level, self-study curriculum and examination program for investment professionals - especially institutional or private client investment managers, investment bankers / broker dealers, mutual fund managers, and investment consultants. |
Phone 1-800-247-8132 Complaint Process: Online at Professional Conduct Complaint Form |
| Chartered Financial Consultant (ChFC) | American College |
An insurance professional with a focus on financial planning who has completed courses in economics, investments, insurance, taxation and related areas. Continuing Education: 30 credits every 2 years |
Phone: 1-888-263-7265 Web: The American College Complaint Process: None |
| Chartered Life Underwriters (CLU) | American College |
A life insurance agent who has passed a national examination in insurance and related subjects. Continuing Education: 30 credits every 2 years |
Phone: 1-888-263-7265 Complaint Process: None |
There are more than 50 financial designations and new ones are being developed on a regular basis. Many of them signify expertise in a particular area. For example, if you have an estate planning question, you may want to learn more about an Accredited Estate Planner (AEP) who is recognized by the National Association of Estate Planners & Councils or a Certified Estate Advisor (CEA) who has earned a designation form the National Association of Financial and Estate Planning (NAFEP.) Among other specialized designations are Certified Divorce Planner (CDP) from The Institute for Certified Divorce Planners; Certified Employee Benefit Specialist (CEBS) from the International Foundation of Employee Benefit Plans and Wharton School of the University of Pennsylvania; and Certified Financial Gerontologist (CFG) from the American Institute of Financial Gerontology.
Check Them Out
While these credentials set the advisors who earned them apart, you should never judge a financial professional by a designation alone. Rather, you can use the designation as just one of the ways to learn more about the professionals you are considering. Ask them what the designations mean to them and what they had to do to earn them. Ask them if they have ever lost or given up a designation and if so, why. Their answers will tell you more any chart can. Ask the financial professional about codes of ethics and rules of professional conduct that he or she adheres to.
Finally, you should contact the organization issuing the credential to verify whether the professional you're considering did, in fact, earn the credential and whether he or she remains in good standing with the organization.
Take Action
- To investigate what designations your financial professional is holding, check out FINRA's Professional Designation data base.
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