Understanding Financial Industry Designations

Are you confused by the numerous titles and designations used in the financial services industry?

Given the ongoing concerns about potential conflicts of interest and confusion about fiduciary standards of care, it’s in your best interest to know how to distinguish among the titles and professional designations used by financial planners.

The Importance of Understanding Professional Designations

Knowing how to distinguish among the various titles and professional designations can help you avoid problems relating to unethical and/or unqualified financial planners.

A thorough understanding of the titles and designations used in the financial services industry can also help you avoid problems with individuals who hold themselves out as financial planners without the appropriate competence and ethical standards.

Professional Qualifications

It’s important to know what qualifies someone to offer advice about financial planning, investments, insurance, retirement planning or estate planning and how to identify qualified professionals. For example, candidates for the CFP designation must complete an educational course of study at a college or university. In addition to education and examination requirements, candidates must have a have a minimum of three years experience prior to earning the right to use the CFP marks.

The CFP marks are owned by the Certified Financial Planner Board of Standards, Inc. and are awarded to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP practitioners must also agree to abide by a Code of Ethics and agree to provide their clients with objective financial planning advice and services. CFP practitioners must also follow certain standards – based on Financial Planning Practice Standards – which describe the process used during a financial planning engagement.

Another way to find out about a financial planners qualifications is by contacting a national association, such as the Financial Planning Association. The Financial Planning Association (FPA) is the membership organization for the financial planning community. Through the Financial Planning Association (FPA), you can obtain a list of CFP practitioners in your area.

You can also contact the National Association of Personal Financial Advisors (NAPFA). NAPFA is an organization dedicated to the advancement of fee-only comprehensive financial planning.

You can contact the Society of Financial Service Professionals to find out more about those who have the ChFC – Chartered Financial Consultant designation or other recognized professional credentials. Society members consist of qualified professionals who are committed to competent and ethical behavior.

Educate Yourself

There is still a lot of confusion regarding the standards and professional designations used by financial planners. Educating yourself about those who provide financial planning services is one of the best things you can do to protect yourself and avoid problems relating to unethical and/or unqualified financial planners.