The Alphabet Soup of Advisor Credentialsin Trusted Advice
I was going through my mail when I came across a postcard for a retirement planning event at a local restaurant in Westfield. While I like a good meal as much as the next guy, sitting through the inevitable sales pitch would probably spoil it. I was about to throw it away, when I noticed a long string of initials after one of the presenters' names. It certainly looked impressive and I decided to take a second look.
The first two were the CFP (Certified Financial Planner) and CIMA (Certified Investment Management Analyst). So far so good. Both had educational and experience requirements, along with coursework, a final exam and an ethics requirements. Not in the same class as a CFA (Chartered Financial Analyst), if I say so myself, but good for a broad base of financial planning knowledge.
The next sets of initials were the CLU (Chartered Life Underwriter) and ChFC (Chartered Financial Consultant). I put them together, since they are offered by the same organization and if you earn the CLU you can also earn the ChFC by taking four more courses. These were somewhat along the same vein as the prior two, but were coming at planning from an insurance point of view. So more of the same stuff, but the odds of an insurance product being the answer to retirement income shot up in my mind for some reason.
The next two I was less familiar with: CRPC (Chartered Retirement Planning Counselor) and CMFC (Chartered Mutual Fund Counselor). So I decided to look them up. Good thing FINRA has a handy database of over 150 professional designations to help sort all of this out. It turns out, that the CRPC and CMFC are actually subsections of the CFP, and that each allow graduates to test out of up to one third of the CFP Certification Professional Education Program. In fact, there are a total of six such sub designations (AAMS, AWMA, APMA, CRPC, CMFC and CRPS) that the allow graduates to test out of up to one third of the CFP each.
So this person with six sets of initials after their name was really piling on the initials in the planning area. While some were good broad based designations, adding the two sub designations seemed unnecessary since they were covered as part of CFP. So why would someone do that? I don't want to impune anyone and it could be they earned the sub designations first and were proud of that and wanted people to know what they had achieved. They could also really like planning and got all of the designations to help become experts. Seems like a lot of expense and educational overlap and overkill to me, but to each their own.
But what also happens sometimes, is that the less scrupulous types get a bunch of credentials after their names to impress people that may not know better or have the time to look them up. The Certified Senior Advisor (CSA) designation sounds impressive, but to earn it requires an online course and passing a 150 question exam. And many sound similar. The FINRA site lists 98 designations starting with C, and 96 of them start with either Certified or Chartered.
As an example, the CFA and CRFA (Certified Retirement Financial Advisor) are only separated by one letter on a business card. According to their website, the CRFA requires 24 hours of secondary education where the curriculum is focused on professional financial services and passing a 100 question exam. The CFA requires over 900 hours of study in accounting, economics, ethics and finance, plus 4 years relevant work experience, and has less than a 50% pass rate for each of its three exam levels. Successful candidates take an average of four years to complete. One letter difference on the business card, but worlds apart in reality.