In jblankenship

Smoke, Mirrors, & Alphabet Soup

In an environment of Ponzi schemes and financial scandals many Americans have lost trust and confidence in the financial profession; seems like there are some financial advisers that have been helping themselves, more than their clients.

To fight back against this trend of lost trust and skepticism, advisors are being more creative with credentials, some of which can be earned with minimal or no study and can be bought with a couple hundred dollars.

A quick look at the Financial Industry Regulatory Authority’s web site (FINRA) (http://apps.finra.org/DataDirectory/1/prodesignations.aspx) shows over one hundred and twenty different credentials being used by advisors to build creditability and trust.  I’m sure there are many more not tracked by FINRA.

Professional certifications arose decades ago as a way for people in various industries to identify qualified practitioners. It’s always good to know that our doctor has an MD or our account is a CPA.

In the financial realm, many well-established credentials, including the Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP®) designations, require long study, demand continuing education and enforce strict codes of ethics. In order to become a CFP®, for example, one must meet the following requirements:

1)      A bachelor’s degree or higher from an accredited college or university

2)      Three years of full time financial planning experience

3)      Complete a CFP® board registered program or hold one of the following


Chartered Life Underwriter (CLU)
Ph.D. in business or economics
Doctor of Business Administration
Attorney’s License

4)      Successfully complete the 10 hour CFP® certification exam

5)      Complete 30 hours of continuing education every two years.

Increasingly, I suspect, financial advisers are using dubious designations as marketing tools to win back the trust of older, wealthier clients.  Some of the more popular are those that use the term “senior” in their name.

Some examples are: certified senior adviser, certified senior consultant, certified senior specialist, certified senior financial planner, chartered senior financial planner and chartered adviser for senior living.

I get confused when hearing all the “senior” designations and am left wondering, do the advisors who hold these, really have any special education or experience working with seniors, or do they just want you to think they do?

To confound the issue even more many designations sound similar (and I think this is intentional) for example, the certified retirement financial adviser, or CRFA, sounds similar to the CFA designation.

But the CFA requires roughly 900 hours of study in accounting, economics, ethics, finance and mathematics, and only 42% of candidates pass its three required exams, a process that can take several years.

The CRFA, by contrast, requires that students pass one exam consisting of 100 multiple-choice questions, for which 40 to 75 hours of preparation is typically sufficient preparation.

In much the same way, the CSFP, or chartered senior financial planner, credential could be confused with the certified financial planner, or CFP®, designation.

The CFP®, established in 1972, requires that students pass the equivalent of 15 credit hours of college-level courses, culminating in 10 hours of exams. The CSFP, launched in 2003, requires a three-day review course and the passing of one two- to three-hour exam.

Over the last few years the term “Wealth Management” has become popular with advisors as a way to attract wealthier clients.  It didn’t take long for a list of wealth management designations to appear.

WMS – Wealth Management Specialist
CWC – Certified Wealth Consultant
CWS – Certified Wealth Strategist
AWMA – Accredited Wealth Management Advisor

CWM – Chartered Wealth Manager
CWPP – Certified Wealth Preservation Planner

While some of these designations may be good for consumers by giving their advisor specific knowledge and experience, many will turn out to be marketing gimmicks employed by advisor to attract wealthier clients.

Credentials are used because they help advisers make more money. A 2007 study by FINRA’s educational foundation determined that 46% of older investors were more likely to accept financial guidance from someone with a professional designation – and 17% of investors would be more receptive to advice from a “certified adviser for senior investing,” even though such a credential doesn’t exist.

Buyers beware when it comes to initials behind someone’s name. According to the American Academy of Financial Management, based in New Orleans, the things to look for are these: accredited degrees, licenses, or master’s degrees from government-recognized or accredited programs or educational institutions with concentrations in Finance, Investments, Securities, Economics, or Accounting.

These requirements make individuals eligible for Professional Designation. You can also check out designations yourself by calling the issuing organization and finding out what the requirements are – you might be surprised by what you find.
Steven Young, CFP® (XZ$, LMNOP, EIEIO)

Robey:   What about an investment advisor without an alphabetic professional designation, but does list numbered Series registrations?

Jblankenship:    Robey, while the guys with the registrations are a part of the overall process, you need to keep in mind that the Series registrations mostly provide license for the “advisor” to sell products to you, not to provide advice. Those registrations are a required part of the salesman’s licensure.

Someone with those registrations being held to no other standard (e.g., fiduciary standard) is not looking out for your best interests. His job is to sell products, whereas, as mentioned above, some of the other designations are conferred for an advisor to provide advice, regardless of product sales.

Just keep your eyes wide open and understand who you’re dealing with…



A Note About Designations
Oct 18th, 2013    by sraskie.

As you begin to seek advice regarding your savings and investments, you may come across professionals that have designations after their names – some might even have a can of alphabet soup! Here are some common designations you’ll encounter when seeking out a professional. Your advisor should have a qualified designation as a minimum requirement before you start working with him or her.

​CFP® – CERTIFIED FINANCIAL PLANNER™. This designation is considered the “gold standard” in the financial services industry. Holders of this designation are required to take college-level financial planning courses, have three years’ experience in financial planning, and must pass a rigorous 10 hour, 2 day examination. The designation is owned and awarded by the CFP Board of Standards. www.cfp.net

ChFC® – Chartered Financial Consultant™. This designation is right in line with the CFP® with regards to the knowledge needed and required to earn the designation. Professionals that earn this mark must undertake 9 college courses in financial planning and endure 18 hours of total examination time. The designation is owned and awarded by The American College.www.chfchigheststandard.com

CPA – Certified Public Accountant. This designation is awarded to individuals that pass the rigorous Uniform Certified Public Accountant exam given by the American Institute of Certified Public Accountants. CPAs may be qualified to prepare tax returns and provide auditing services for companies. CPAs may also represent their clients in proceedings before the IRS. www.aicpa.org

CFA® – Chartered Financial Analyst™. This designation is pursued by individuals who have undertaken studies in security analysis, stocks, bonds, investment management and corporate finance. Individuals must endure three levels of examinations before the designation is awarded. Many mutual fund managers, pension fund managers and endowment managers have this credential.www.cfainstitute.org

EA – Enrolled Agent. The enrolled agent designation is awarded to individuals who pass three different IRS exams involving personal taxation, business taxation and general tax principles. Like CPAs, enrolled agents may also represent their clients in in tax proceedings before the IRS. www.irs.gov/Tax-Professionals/Enrolled-Agents