Understanding Financial Planner Certifications

When hiring a financial planner, it is important that you find one who not only helps your portfolio perform to its full potential but one whom you respect and trust with your financial security.

One financial planner is wildly different from another. Ask friends and family for references, do a background check. Review their status on the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck website for any improprieties, unlawful or unethical actions. Speak to past clients and when interviewing a new advisor be clear about your needs to ensure that they are not only willing but qualified to take on your financial planning.

Not all advisors are the same. Many hold more than one license or certification. David Barcomb is a dual licensed financial advisor with a number of financial certifications. Here are some considerations when choosing a financial advisor.

If the advisor has a public profile on LinkedIn, you can start there in reviewing their background. Find out where they attended college and if they have taken any advanced degrees or have specializations. Also, ask to see their resume find out which firms they may have worked for in the past and why they left. This information can also be found on the advisor’s Form ADV, a standard submission used by consultants to when they register with the Securities and Exchange Commission (SEC) and state regulators.

There are many different certifications that financial advisors can hold. Likely the most familiar is the Chartered Financial Analyst (CFA). CFAs have a long and rigorous testing process. They have expertise in a wide range of products including securities, financial analysis, banking, investing and portfolio management.

A Certified Financial Planner (CFP) has at least three years of experience in the industry and has passed a series of comprehensive tests, agrees to abide by a code of ethics and upgrades their knowledge with continuing education requirements. You can check the CFP Board website to verify that the advisor or financial planner is indeed a CFP. There is also a Chartered Financial Consultant (ChFC) certificate, which has the same core education requirements of the CFP, but does not have a board exam, nor does it abide by a code of ethics.

If you are seeking out someone with a retirement focus, you may want to source a Chartered Retirement Planning Counselor (CRPC), who has undertaken intensive training and education programs in retirement planning. Another option is to choose a Certified Public Accountant (CPA) with a PSA designation. Alternatively, you can try a Personal Financial Specialist (PFS) who is also a CPA but has undergone more education and testing, and therefore offers more expert financial planning qualifications.

The CFP designation is the only one of all of these options approved by the National Commission for Certifying Agencies for a comprehensive financial planning designation.

Lastly, some financial advisors may be Investment Advisor Representatives (IARs).  Or Registered Investment Advisors (RIAs). This means they are compensated for their services via fees and because of financial fiduciaries, so they must adhere to high ethical standards within the financial services industry.

Remember that anyone can call themselves a financial advisor, so doing your due diligence and checking out an advisor’s certificates or degrees is essential for the health and safety of your investments.