Let's be honest, finding the right advisor can be confusing.
Every time I do a web search, LinkedIn review or business card sort I am overwhelmed with acronyms. As cool as it seems to have certifications, one must ask... why? Do these certifications resemble the long-term commitment to learning that other commonly used acronyms (MA, MBA, JD, MD) do? These well-known designations indicate there was time, (a lot of) money and serious commitment to a chosen field. What about designations in the finance world?
I did a quick search and found that there are currently 166 "professional designations" that FINRA (the Financial Industry Regulatory Authority) has found being used. However, there are only 8 that are accredited!
Each state has the duty to qualify designations and aid in determining legitimacy to inform consumers. Each state can mandate that designations are accredited by either the American National Standards Institute (enhancing confidence between buyers and sellers as they mitigate risk) or the National Commission for Certifying Agencies (whose standards were developed to help ensure the health, welfare, and safety of the public and highlight the essential elements of a high-quality program). Each of these organizations hold the bearer to high standards and can take action against them for not maintaining the highest of ethical standards.
Most designations are viewed by FINRA as a sales/marketing strategy and not educational. Therefore, the designations that rise to the top will exhibit several factors: mandated pre-requisites, education requirements, a final exam, continuing education and some type of governing body that holds bearers accountable for their actions.
The CFP or Certified Financial Planner designation is the only designation that requires a candidate to complete a Bachelor's degree (or higher) and three years of full-time financial planning experience and is the most comprehensive qualification program for financial industry knowledge. furthermore, the Board of Standards holds accredited individuals ethically accountable for their actions.
In short, you can think of most designations as short one-day class with no outside study that could be taken by a high school senior and result in a certificate to hang on your wall. The CFP is one that requires a person to have been dedicated enough to graduate college, to be dedicated to the financial industry in order to qualify to sit for the exam, to be dedication to industry study for the exam (the exam itself is 7 hours long) and ultimately pass. That's a lot of dedication.
I hope this information will help you to choose your next advisor. It certainly helped me to sort through some of the options with more clarity. If you are curious what certain designations require, or for a full list of the ones that are accredited, log onto FINRA. And if you would like to schedule a complementary consultation with us, click here.