Find a Financial Advisor Who Specializes in Your Needs: Certifications
by Catherine Tansey
Finding the right financial advisor can be a headache, but it doesn’t have to be. Start by reviewing individuals’ financial advisor certifications to ensure you’re getting expert advice that aligns to your personal needs, goals, and focuses.
It’s important to know that “financial advisor” is not a legally designated term, and you don’t need to meet any qualifications to call yourself one. Instead, look for someone who has financial advisor certifications that demonstrate their experience and ability in guiding your financial planning.
Here’s a quick rundown of the most common financial advisor credentials and why you should with individuals who have earned them.
To achieve the well-known CFP®s designation, applicants must meet requirements for the “4 E’s”: education, exam, experience, and ethics. This positions CFP®s to provide broad-ranging financial advice, from general estate planning to retirement and insurance.
With their extensive course of study and experience requirements, CFP®s are the minimum designation you should be looking for, says Jake Northrup, CFP®, CFA, and CSLP® . “The CFP® teaches advisors a very broad range of topics and how the puzzle pieces of someone’s financial life fits together,” he added.
Not sure if a financial advisor has your best interests at heart? This interview checklist makes it easy to find out.
CPAs are highly accredited, state-licensed accountants who advise individuals and businesses on investments, taxes, mergers and acquisitions, and financial planning. CPAs are well regarded financial professionals and work as auditors, forensic accountants, tax consultants, and financial planners.
Seek advice from a CPA if you’re a business owner, a self-employed individual, have multiple sources of income, or are a high-earning or high-networth individual. CPAs have extensive tax and regulatory expertise, and they’re well positioned to advise you in these situations, which may result in complicated tax implications.
CFAs are investment experts. This globally recognized designation is widely considered one of the most regarded in the world. CFAs are required to meet a number of education and experience requirements, as well as past three levels of exams, sequentially.
No other certification is as rigorously focused on investments. Consider working with a CFA if you’re especially focused on investments.
EAs are “are federally-licensed tax practitioners who may represent taxpayers before the IRS when it comes to collections, audits and appeals,” according to the National Association of Enrolled Agents. These individuals must meet a number of education, experience, and continuing education criteria.
EAs are tax specialists and able to represent their clients before the IRS. They are bound by limited client privilege, meaning they must remain confidential in certain circumstances, like with audits and in collection matters. EAs are tax specialists. Seek advice from an EA if you owe back taxes, are facing collection, or are being audited.
The Chartered Financial Consultant designation is a financial advisor certification that prepares individuals for a wide-range of financial planning services.
Their areas of focus are very similar to CFP®s, but their education requirements differ. The ChFC® designation requires more coursework and includes specialization in cases like for divorcees and families with special needs. Another difference between CFA®s and ChFC®s is that CFA®s are fiduciaries, and ChFC®s are not always.
Chartered life underwriters are life insurance specialists, and originating in1927, the CLU® financial advisor certification is the oldest in the insurance industry. Their curriculum includes five courses focused on various aspects of life insurance that prepares them for the “practical, legal, and ethical” components of life insurance underwriting.
The process of becoming a CLU® is not constrained by time, meaning individuals can work at their own pace. Because of this and the fact that life insurance is a key part of financial planning, many CFP®s or ChFC®s earn the CLU® credential as well. Seek out someone with a CLU® designation if you want a life insurance specialist.
Narrowing your search for financial advice by financial advisor certifications is a strong place to start. Use this resource as a guide to the various acronyms to ensure you’re receiving expert guidance from a rigorously trained and tested professional. And if you’re still unsure, My Financial Counsel is here to help.
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