A guide to advisers' credentials

June 20, 2003

Here's what the letters following a financial pro's name tell you about his experience and education.

 

A guide to advisers' credentials

If you're looking to hire a financial adviser, no doubt you've come across a veritable alphabet soup of acronyms behind candidates' names—CFP, PFS, ChFC. What kind of training do those credentials imply, and how can you be sure an adviser really earned the claimed designation? Here's a primer to guide you.

Certified Financial Planner (CFP). These advisers have completed advanced training in financial, retirement, and estate planning; employee benefits; investments; taxes; and insurance. They've passed a 10-hour certification exam and have at least three years' work experience—five if they don't also have a bachelor's degree. The Certified Financial Planner Board of Standards, in Denver, awards the CFP designation. You can check on the status of a planner with the CFP credential by visiting the CFP Board of Standards Web site ( www.cfp.net) or by calling 888-237-6275.

Certified Public Accountant (CPA). To be certified, an accountant must pass a rigorous two-day exam and meet state-specific education and experience requirements. The CPA license is issued by each state's Board of Accountancy; for licensing inquiries, contact your state's board. (Visit www.nasba.org/nasbaweb.nsf/sit and click on Boards of Accountancy to find contact information.)

Chartered Financial Analyst (CFA). Candidates must pass three exams focusing on investment analysis and management and have three years' work experience (four if they don't have college degrees). The Association for Investment Management and Research, in Charlottesville, VA, (800-247-8132) awards this credential.

Chartered Financial Consultant (ChFC). These professionals focus on overall financial planning. Recipients must pass eight college-level courses covering subjects such as investments, taxes, and estate planning, and they must have at least three years' professional experience. The American College, in Bryn Mawr, PA, awards the designation; to verify that an adviser has it, call 610-526-1000 and ask for the Registrar's Office.

Chartered Life Underwriter (CLU). These insurance experts have passed eight college-level courses on that subject as well as financial planning and estate planning. They have at least three years' professional experience. The American College awards this designation also. Again, call 610-526-1000 and ask for the Registrar's Office.

Personal Financial Specialist (CPA/PFS). Only CPAs who are members of the American Institute of Certified Public Accountants can earn this designation. To receive it, candidates must pass a comprehensive exam and meet specific requirements for business experience and lifelong learning. Visit www.cpapfs.org or call the AICPA at 888-777-7077 to verify the PFS credential.

Registered Investment Adviser (RIA). RIA is not a credential, per se. Generally, anyone who gives investment advice for compensation and manages $25 million or more in assets—including accountants, brokers, and attorneys—must sign up as a Registered Investment Adviser with the Securities and Exchange Commission.

RIAs who sell securities must fill out a form called an ADV, which details their background and how they're paid. They also must supply an audited financial statement to the SEC. The SEC will verify RIA status and whether the adviser is licensed to buy and sell securities; call 202-942-7820.

An adviser who manages less than $25 million must register with his or her state's securities agency; contact that organization for verification.

—Staff Editor Diane Weber

 

Diane Weber. A guide to advisers' credentials. Medical Economics Jun. 20, 2003;80:61.