By Dee Dee Travis, AFC®
If you’ve ever looked for a financial professional, you’ve probably encountered unfamiliar acronyms, also known as designations or credentials, following the candidates’ names. CPA, CFP®, CFA®, ChFC®: What do these letters mean and why are they important?
Anyone can call themselves a financial counselor, coach, advisor or planner, but a credential often demonstrates a higher level of education, specialty or commitment. In many cases, the credentialing process is like going to school for a specialized program.
That said, all credentials are not created equal. A reputable certification program requires rigorous education and examination, field experience, an ongoing commitment to continuing education, and abidance by a high code of ethics. Some programs raise this standard by demonstrating compliance with an accrediting body. For instance, in the field of financial counseling, coaching and education, the Association for Financial Counseling and Planning Education® (AFCPE®) is one of the most respected organizations offering certifications. AFCPE® also connects financial professionals across the continuum to ensure that individuals and families, like yours, can navigate the “alphabet soup” and have access to the highest standard of financial advice, at any stage of life.
There are many financial designations, but the following are some of the most common and cover a range of services to meet the needs of most Americans:
An Accredited Financial Counselor® has expertise across the client’s entire financial life-cycle, so they are able to counsel clients at any point in their lives. An AFC® can help individuals and families successfully navigate a financial crisis, overcome debt, modify ineffective money management behaviors, build an effective spending plan and provide a strong financial education foundation to meet both short-term needs and long-term goals.
A Chartered Financial Analyst® provides advanced investment analysis and portfolio management. Their studies include the mastery of investment tools and analytical methods in a variety of applications for effective portfolio management and wealth planning.
The Certified Financial Planner™ certification indicates that someone has in-depth theoretical and practical knowledge of personal financial planning, tax planning, employee benefits and retirement planning, estate planning, investment management, and insurance and risk management. The CFP® requires field experience and successful completion of a comprehensive exam, and is regulated by an oversight body, the CFP Board.
A Chartered Financial Consultant® covers the fundamentals of financial planning like a CFP®, but a ChFC is an advanced planning designation that also covers real-world, practical planning applications for special circumstances, including in-depth coverage of planning for business owners, single-parent and blended families, LGBT families and special-needs situations.
A Certified Public Accountant (CPA) is an accounting professional who has passed the Uniform CPA examination, administered by the American Institute of Certified Public Accountants, and also has met additional state certification and experience requirements. CPAs can work in any area of finance, including tax preparation, consulting, and of course, general accounting.
FFC™ - A Financial Fitness Coach™ has a strong financial knowledge base, coupled with the coaching skills and techniques that allows their client to be an active participant in creating solutions and a personalized financial plan. This certification may stand alone or be acquired as an enhanced skill set to a financial counseling or planning certification.
A Retirement Income Certified Professional® offers focused expertise in retirement income planning, including structuring effective retirement income plans, mitigating risk to the plan and creating a sustainable stream of income to last throughout your retirement years.
If you come across an unfamiliar designation, you can search its meaning and requirements through the look-up tool offered by the Financial Industry Regulatory Authority (FINRA).
When working with financial representatives, don’t be afraid to ask questions about their credentials, including who issued them, what training and continuing education was required, and how to verify their standing through an accrediting organization. A trustworthy financial professional will be glad to share more about his or her credentials.
Understand the “menu.” By familiarizing yourself with the “alphabet soup” of designations, you can find the perfect advocate to help you achieve your financial goals.
UP NEXT: If a financial counselor and coach is right for you? And what questions should you be asking?