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Alphabet Soup: Making Sense of Advisor Designations

Published -
May 3, 2020

With the multitude of financial issues facing people today, it’s imperative that advisors have the knowledge, skill and experience to offer appropriate solutions.  Besides undergraduate course work, many financial planners enhance their knowledge base and skill set by attending graduate school or earning various industry designations.  These programs are one way to demonstrate that advisors have a commitment to professional development.

There has been a proliferation of designations that industry professionals can obtain.  In fact, there are 211 designations currently on the Federal Industry Regulatory Authority database1 .  Some are widely recognized in the marketplace, while others are more specialized and less well-known.  Unfortunately, there are a number that require little more than attending a weekend seminar and passing an open book test.  Others are “earned” by selling products or hitting sales goals.  The key is to recognize which designations indicate competence in the subject matter rather than only a means to gain some form of credibility.

Most would agree that the top four designations among financial planners are:

  • CFA (Chartered Financial Analyst) – certification exam process for investment professionals
  • CFP (Certified Financial Planner) – certification exam for comprehensive financial planners
  • CPA (Certified Public Accountant) – certification exam for public accountants and tax professionals
  • J.D. (Juris Doctor) – graduate law school degree

The CFA, CFP and CPA programs all include broad curriculums that require extensive study time in order to pass a rigorous examination process.   The pass rates are low for these three exams.

There are many items that can be reviewed concerning a designation to determine its legitimacy, such as the age of the program, a review of the required curriculum, the program’s experience qualifications, the examination pass rates, and finally, if the sponsoring organization has a code of ethics.  

1  As of 3-2-2020 –

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