Understanding Financial Advisor Credentials

How can you know if a financial advisor will fit your needs and put your interests first? While the answer often becomes clearer upon meeting them, you can narrow down high-quality experts by their credentials. Sometimes appended to the end of a financial advisor’s name or subtly placed in an email signature, these may include professional titles and designations issued by accredited organizations or institutions and signify a certain proficiency, experience, or ethical commitment.

In this article, we’ll explain what you need to know about advisor credentials, including what they mean and why they’re important. We’ll also detail how to navigate finding experts with specific designations and knowledge, as well as how you can evaluate their credentials before and during conversations with them.

What Are Financial Advisor Credentials?

Credentials are the certifications, titles, designations, or degrees financial advisors can earn to showcase their knowledge and commitment to high professional and ethical standards. They are issued by many accredited organizations or universities, such as:

• The CFP Board
• The CFA Institute
• The American College of Financial Services
• Investments & Wealth Institute (IWI)
• College for Financial Planning (CFFP)
• National Association of Estate Planners & Councils

Earning a credential typically involves completing educational, experiential, or ethical requirements. For instance, this may include a rigorous course of study, passing an exam in a specialized area, gaining relevant on-the-job experience, or agreeing to abide by a code of conduct. Some programs may require individuals to complete prerequisites before enrollment, such as holding a bachelor’s degree or earning another designation.

Laura DiFiglio, CFP^®, ChFC^®, financial advisor at Northwestern Mutual, points out that while “[there] are a wide variety of credentials available for financial professionals to pursue,” the “more mainstream and recognizable ones require a certain amount of classwork at a master’s level.” She explains that upon “selecting [her] first designation,” she chose to become a Certified Financial Planner (CFP) professional “because it had the most comprehensive education” and she “wanted to make sure that when helping clients solve problems, [she] wasn’t inadvertently causing others in a different area of their financial life.”

Why Do Credentials Matter for Advisors?

Credentials are a mark of credibility, experience, and trustworthiness. When a financial advisor lists one on their marketing materials, résumé, or next to their name, it represents a significant amount of time, effort, and money they’ve put into their career sharpening their expertise and collecting experience. Financial advisors pursue designations and titles to enhance their skills and serve their clients more effectively, but also to set themselves apart from others in their field as high-quality, reputable experts.

“I believe credentials show clients the dedication their advisor has to them. It shows their commitment to continued education which will allow them to serve their clientele at the highest level,” says DiFiglio, adding that “it instills more trust on the client’s end when they have tangible proof that their advisor is continuing to stay ahead on the knowledge front because it will better serve their financial needs in the long run.”

Because anyone can technically call themselves an advisor, credentials are a vital way to recognize professionals who uphold a fiduciary duty. This means they avoid conflicts of interest, prioritize your needs, and maintain strong ethics. Selecting a credentialed professional allows you the confidence and peace of mind that they’re accountable to the high standards of their issuing organization.

Common Financial Advisor Credentials and What They Mean

As noted, an important function of a credential is often to label the expertise of an advisor in a particular area. That is, you can use the title an expert has as a guide to know if they offer the service you need. For example, CFPs often have a well-rounded expertise and focus on financial planning. Meanwhile, someone with the Chartered Retirement Planning Counselor (CRPC) designation will have a more defined focus on retirement planning strategies.

Below are some well-known advisory credentials you may come across:

• Certified Financial Planner (CFP). Offered by the CFP Board, this prestigious certification includes a balanced skillset on various financial topics, such as retirement, taxes, and comprehensive planning.
• Chartered Financial Analyst (CFA). Issued by the CFA Institute and regarded as a top qualification, especially for portfolio management and advanced financial topics.
• Chartered Financial Consultant (ChFC). Offered by The American College of Financial Services, this designation emphasizes holistic planning around various aspects of a client’s financial picture.
• Chartered Retirement Planning Counselor (CRPC). Issued by the College for Financial Planning (CFFP), this designation denotes expertise in planning finances and managing investments around retirement.
• Certified Private Wealth Advisor (CPWA). Offered by Investments & Wealth Institute (IWI), this designation focuses on assisting high-net-worth clients with wealth management, financial planning, and estate planning.
• Certified Investment Management Analyst (CIMA). Also issued by the IWI, this designation centers around portfolio construction, types of assets, and risk management, emphasizing tailored investment strategies for clients.

It’s not uncommon for advisory professionals to hold more than one title to gain expertise and exhibit the various areas in which they can help prospective and current clients. Therefore, it can be a good sign if you see one with multiple designations, especially if you foresee several needs in the future.

While serving as an indicator of the expertise a financial advisor carries, credentials differ in the types of educational processes and rigors necessary to achieve them. Some serve as supplementary sources of knowledge, while others, such as the CFP or CFA titles, represent comprehensive experience and knowledge of financial topics. These credentials are widely recognized as hallmarks of professionalism and expertise in the industry.

DiFiglio explains how her experience earning the CFP title has influenced her career and relationship with clients:

The cool thing about learning how all these different areas work together is that it allows you to see further ahead and anticipate problems that clients will encounter. It helps you explain the problem – that they may not even be aware of – and then offer a solution to that future problem. You essentially get two to three steps ahead and make a client’s planning journey more efficient and enjoyable.

How to Find and Evaluate Credentialed Advisors

Identifying professionals with the right credentials for your needs is a critical part of choosing a financial advisor, as it can help ensure you receive the proper and highest quality assistance. To do so, you may need to research or ask questions to learn what a credential means for an expert’s skills and education level.

“When doing your research on financial services, always research designations and what they stand for,” DiFiglio emphasizes. “Too often clients get bombarded with trying to do their own financial research and may miss key areas that need attention in their financial life that a professional will be able to spot. Knowing what designations mean allows for potential clients to select an individual who can do this research for them,” she says.

Here are some helpful ways to learn more about an advisor’s credentials:

• Organizational websites. Institutions such as the CFP Board, CFA Institute, and The American College provide detailed descriptions, brochures, and materials about the designations they offer. This typically includes an overview of education curricula and the professional standards titleholders must adhere to.
• FINRA’s Professional Designations website. An official regulatory authority, FINRA maintains a database of all professional designations and important information about them, such as requirements to earn and keep them, links to the issuing organization, and ways for clients to report one.
• Ask them upfront. Another, more conversational way to learn about an advisor’s credentials is to ask them more about it in an initial consultation or phone/email correspondence. You can ask them what expertise they have and whether they must follow a fiduciary standard.

As mentioned, credentials are an important aspect of finding a high-quality advisor because they allow you to pinpoint a professional’s expertise and conduct standards in real-time. As you research, consider making it a point to understand the ethical standards they must uphold and the services they offer and compare them to your vision of the ideal individual for you.

For instance, per DiFiglio, “If a person needs something quite specialized, such as retirement planning or estate planning, there are designations that show an advisor has spent a good amount of time studying that concept and the strategies you can use.” She continues, “A CFP will know a great deal in these areas, but an RICP (Retirement Income Certified Professional) or an AEP (Accredited Estate Planner) will have a more specialized education.”

There are various ways you can find a reputable credentialed professional in your area with the right specializations. One option is to use the lookup tool from the National Association of Personal Financial Advisors (NAPFA), allowing you to narrow down by ZIP code and view the professionals at firms near you. Another method is using an online matching service, such as this free one, to connect you with a fiduciary advisor after answering a few questions about your goals and circumstances.