With the cold weather ending in Wisconsin, I thought this article would be appropriate to help explain the differences between the certifications and designations found in the financial services industry.

 

When I was growing up, I used to love playing outside in the snow.   I remember coming in from the cold and sitting down to a warm bowl of Campbell’s Alphabet Soup that my mom had prepared for me.  I also recall spending as much time playing with my food as I did actually eating it (which drove my mom absolutely crazy).

 

In the financial services industry today, there are well over 100 different certifications and designations that a financial adviser can attain.  Some of these require a lot of hard work and dedication while others are really no more than a correspondence course designed to put letters behind an adviser’s name.

 

What I wanted to do here was discuss some of the main designations that you may come across in this industry and what it takes to achieve them.

 

CFA®: Chartered Financial Analyst is considered the most exclusive of all financial designations. One must pass a rigorous, three-level test on accounting, investment analysis, portfolio theory, economics, and corporate finance.  A CFA® is extremely qualified to help investors, unfortunately only 5% of those with a CFA® certification are financial advisors most are research analysts employed by investment firms, mutual fund companies or insurance companies.

CPA: Certified Public Accountants are tax specialists who must have a college degree, pass a strict national exam, and keep current on changes in tax laws.

CFP®: A Certified Financial Planner™ is recognized as the highest standard in personal financial planning. The required areas of expertise include the financial planning process, tax planning, employee benefits, retirement planning, estate planning, investment management and insurance.  Recent research conducted by the Aite Group concluded that 87% of clients working with a CFP® are satisfied or very satisfied compared with 72% of clients who work with an advisor without certification.

 

In closing, I’m not trying to say you must work with an Adviser who has these designations. However, I did want you to understand the most popular designations and the requirements needed to receive them.  I’ve attached some links at the bottom of the page so you can continue to do additional research if you wish.

 

If at any point in time, you find yourself caught in an alphabet soup of financial letters, please feel free to reach out to me and we can figure it out together.

Till Next Time,

Harry Hellen, CFP