Ep. 18 – 21 Questions (Series) – 17. Which professional credentials do you have, and what are their requirements?

Welcome to the Real Retirement Financial Planning Podcast. This series covers the 21 Questions to Ask Your Financial Advisor. The list of questions was inspired by Jason Zweig of the Wall Street Journal, and his blog post: The 19 Questions to Ask Your Financial Adviser. Responses to Jason’s questions I read from other advisor websites lacked depth. “Yes,” or “no,” sometimes needs more context and a greater explanation into the whys. The goal of this series is to target the essence of what I think Jason is trying to protect you from, and help you make a better educated decision.


21 Questions to Ask Your Financial Advisor

17. Which professional credentials do you have, and what are their requirements?

Jason says: “Among the best are CFA [Chartered Financial Analyst], CPA [Certified Public Accountant] and CFP [Certified Financial Planner], which all require rigorous study, continuing education and adherence to high ethical standards. Many other financial certifications are marketing tools masquerading as fancy diplomas on an adviser’s wall. [Emphasis mine]
AT MARGIN, I’m a Chartered Financial Analyst (CFA®), a Certified Financial Planner (CFP®), and Chartered Alternative Investment Analyst (CAIA). According to FINRA, a regulatory body governing many advisors, there are…ready for it...184 financial designations. Of course you’re confused!
FINRA doesn’t “endorse” a credential, but they do exempt some from securities exams Five designations exempt you from the FINRA Series 65; passing the exam allows the advisor to provide investment advice for a fee.

(1) Chartered Financial Analyst (CFA®)

(2) Certified Financial Planner (CFP®)

(3) Personal Financial Specialist (PFS) – A CPA license is needed prior to earning this designation.

(4) Chartered Financial Consultant (ChFC®) – (Mostly an insurance salesman’s route into financial planning from what I’ve seen.)

(5) Chartered Investment Counselor (CIC) – The CFA Charter is needed as a prerequisite (none of my friends that are CFA Charterholders have signed-up for this…)

But! FINRA exams don’t change much (from what I’ve heard, and seen, according to Reed…) I currently teach a CFP investments class at a local university, and a candidate came up to me after class. Both of us had sat through Reed’s class to pass the FINRA series 7 exam (a while back),  but he’d helped her parents 25 years ago. My parents also took Reed Nakazono’s class she said. We laughed. Reed was fond of saying the exam “barely changed” since he had started in 1988. (Legitimate) Designations are just a start Two years ago, when I served on the CFA board in Colorado, I asked the Membership Chair to print off a list with all the names of dual CFA & CFP holders in Colorado. After poking around, I found there was about 10 advisors under 40 with both designations that worked with individual investors (not institutions). I’m sure the number has grown, though, there’s probably still a handful of professionals in Colorado. But…It’s not enough… The speed of evolution within our business is accelerating, and we need to have a base level knowledge as a minimum to keep up with the race. Continued competency is hard won everyday.
Show notes:
(1) CIMA Requirements – Sorry…Not Impressed…A little rant… (2) What is the FINRA Series 7? Does your advisor say they have a passion for learning and training, but no credentials?
Does your advisor tout: “I’ve been doing this “x” years.” but have no credentials?
Are the credentials you see on someone’s business card nothing more than marketing?