Check out your financial advisor's credentials

Some less-than-scrupulous financial advisors have inflated their worth by resorting to bogus credentials, but help is on the way in this article.


In the pursuit of senior clients, some less-than-scrupulous investment advisors have resorted to using bogus professional credentials. At last count, there were over 200 professional credentials available for financial advisors, but if any advisor had acquired any credential that connoted specialized knowledge or expertise that he did not possess, the advisor is guilty of using a deceptive sales practice to enhance his or her appeal. Such practices are in violation of accepted industry standards and have actually been the subject of Congressional review.

Interestingly enough, this week the Securities and Exchange Commission announced that it is actively reviewing the materials that advisors submit to them for suspect information. "Some of the areas they’re looking at are education, business background, disciplinary disclosures and credentials," said Marilyn Miles, vice president at National Regulatory Services. "They’re not taking [those items] at face value anymore."

 According to Investorwatchdog.com, there are four "top-notch" advisor credentials: • CFA® (Certified Financial Analyst) • CPF® (Certified Financial Planner) • CPA/PFS® (Certified Public Accountant/Personal Financial Specialist) • CIMA® (Certified Investment Management Specialist) According to this web site, these credentials meet their standards for high quality professional designations, and the site actually lists all 200 credentials with their requirements. Go to: www.InvestorWatchdog.com / Get the Facts / Certifications to see their lists.

This site states that there are four essential components to any professional designation: prerequisites, curriculum, examination, and continuing education. High quality credentials call for years of experience and college degrees, among others, before a candidate can even begin the process to earn a designation. The best certifications have curriculums that cover a plethora of topics and require months or years to complete.

In my case, the CFP ® designation had an extensive curriculum that covered topics with which I was totally unfamiliar. The CFA® program takes three years to complete (I began that program at one time, and it was tough!).

High quality credentials may call for classroom learning, augmented by online study. Conversely, low quality certifications may not even have curriculums. Such designations are often awarded based on life experiences, or there are a few pages of content. The CFP® program had a 10-hour, closely proctored exam over two days. Prior to the exam, I studied for more than six months! Some lesser credentials may not even have exams, or if they do, they may be open-book tests.

Finally, high-quality designations have meaningful continuing education requirements. In the case of the CFP® designation, 30 hours of CE must be completed every two years. Included in this total is a requirement that at least two of the hours must cover "Standards of Professional Conduct."

This listing of only four designations does not do justice to several other designations, such as ChFC® (Chartered Financial Consultant) that is provided by the American College. I am proud to say that I earned that credential in 1983, and the study required, along with the exam itself, was rigorous.

Another important designation offered by the American College is the CLU® (Chartered Life Underwriter) designation, which designates a life insurance professional. I must say that many CLU’s have greater life insurance acumen that do the average CFP® certificant.

Designations are certainly not the only determinant in choosing an investment advisor. One good way to determine if an advisor is competent is to interview his or her current clients. It is also vitally important to check out an advisor’s status on finra.com. If he or she has had complaints or been reprimanded, such actions can be found in their records.

Got a financial planning question for Greg? You may e-mail him at greg@lifesolutionsonline.net


Full disclosure: Greg Roberts is a certified life underwriter and a Certified Financial Planner. He holds an MBA from the Wharton School of Business. He is also the brother of Athens Patch editor Rebecca McCarthy.


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