Finding a professional to help develop your financial roadmap and make the right decisions can be very confusing for consumers today – “Are they able to do what I need? How do they charge fees? What is their experience?” are just a few of those questions. Then, to muddy the waters even further, they have lots of letters after their names that are not quite as widely known. So, let’s take a moment to break down some of the more common designations.
Certified Financial Planner (CFP®)
For one to obtain this designation the individual must have a Bachelor’s Degree from an accredited U.S. college or university or its equivalent from a foreign institution. In addition, one must complete an advanced college-level course of study approved by the CFP Board of Standards, a self-regulating organization for professionals using the designation. The course of study covers subject areas such as, but not limited to, income tax planning, investment planning, retirement planning, college planning and estate planning.
The candidate must complete at least three years of full-time practical experience related to financial planning and must pass the CFP® Certification Examination. This test is a rigorous and comprehensive exam that covers all of the topics completed through their education. It is administered over two days, for a total of 10 hours. Candidates are expected to correctly apply one’s knowledge of financial planning to real-world examples and diagnose a multitude of financial planning issues.
For more information on the Certified Financial Planner™ designation, check out Charlie’s article, Top Four Reasons Why You Should Work With A Certified Financial Planner™
Chartered Financial Consultant (ChFC®)
This designation has been in existence for almost 30 years. The average study time to obtain this designation exceeds 450 hours and requires nine college-level courses. Coursework that is required includes financial planning, income taxation, investments, estate and retirement planning. Additional electives are chosen from topics such as executive compensation and macroeconomics.
The American College, a non-profit educator with an 83-year heritage and the highest level of academic accreditation, awards this designation.
Chartered Life Underwriter (CLU®)
The American College also awards this designation.
This designation has been in existence for almost 100 years and is the insurance profession’s oldest standard of excellence. Required coursework to obtain this designation include basic insurance planning, individual life insurance, life insurance law, estate planning and business planning. Additional electives are chosen from areas such as group benefits, health insurance and applied estate planning.
A holder of the CLU designation must complete 30 hours of relevant continuing education coursework every two years and submit it to the American College.
Chartered Financial Analyst (CFA)
The Chartered Financial Analyst designation is a globally respected, graduate-level investment credential that was established in 1962. To earn the CFA charter, candidates must pass three sequential, six-hour examinations, have minimum four years of qualified professional investment experience, join the CFA Institute as a member, and commit to abide by their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct.
The CFA exams are very difficult and require extensive study, generally 300 hours of study per level of exam. Earning the CFA charter demonstrates mastery of many of the advanced skills needed for investment analysis and decision making.
The CFA Institute awards this designation.
Chartered Advisor in Philanthropy (CAP®)
This designation provides a professional the knowledge and tools to help clients articulate and advance their highest aspirations for self, family and society. The advisor earning this designation has taken three graduate-level courses in philanthropy covering various impacts of planning for family wealth, charitable giving and gift planning for non-profits. There is also a three year, full-time requirement of relevant business experience.
The designee must adhere to The American College’s Code of Ethics and either, “The Code of Ethical principles and standards of Professional Practice of the Association of Fundraising Professionals,” or “The Model Standards of Practice for the Charitable Gift Planner adopted by the National Committee on Planned Giving and The American Council on Gift Annuities.”
There is a requirement of 30 hours of continuing education credits every two years. The American College awards this designation.
Accredited Estate Planner (AEP®)
This designation is available to Certified Financial Planners®, Chartered Life Underwriters®, Certified Public Accountants, Certified Trust and Financial Advisors, Chartered Financial Consultants®, and attorneys who are actively engaged in estate planning and must meet stringent qualifications at the time of application. They must also commit to ongoing continuing education and recertification requirements.
With a minimum of five years of experience, the designation is available after taking two courses through The American College. For those individuals who have 15 years of experience or more, one may choose exemption from the required graduate-level courses in estate planning.
The National Association of Estate Planners and Councils award this designation.
I hope this gives you a better understanding of some of the more common designations one may encounter in the financial services industry.
