Alphabet Financial Planners #1

There are 210 different professional designations for financial advisers. How are you supposed to know which ones are credible and which ones are lame?

Credentials help advisers make more money. Jason Zweig and Mary Pilon in a Wall Street Journal note that according to a “2007 study by the Financial Industry Regulatory Authority (Finra), 46% of older investors are 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.”

Here are a few of the 210 for you to think about.

CFA (Chartered Financial Analyst) Only 42% of candidates pass the three required exams after 900 hours of studying in accounting economics, ethics, finance and math. This process can take several years.

PFS (Personal Financial Specialist) and CPA (Certified Public Accountant) Every PFS holder must be a CPA. Usually you will see “CPA/PFS”. These CPAs have met education and experience requirements and have passed a comprehensive exam on financial planning. Many PFS advisers focus more on tax-efficient financial planning than just tax work.  CPAs must pass a 14-hour exam and must get 40 hours of continuing education on an annual basis.

CFP (Certified Financial Planner) These advisers must also meet education and experience requirements and pass an exam. They must get 30 hours of continuing education every two years.

RIA (Registered Investment Adviser) This is NOT a credential. It simply means that the person has registered with the either the SEC or the state securities board and has paid a registration fee.

More later…