Do Designations Matter When Choosing a Financial Professional?

There are many factors that one should consider when choosing a financial professional to manage your finances/assets.  Experience, education, areas of expertise, and personality compatibility are all areas one should consider.  Some people also want to see “letters after a name” before engaging in a relationship.

Professional designations in the financial world number close to 100.  Buyer beware, not all designations are created equal.  According to Bloomberg Business the CFP® designation carries the most clout out of financial planning designations.

In order to become a CERTIFIED FINANCIAL PLANNER™ professional, individuals must meet education, examination, experience and ethics.  Some financial designations require little more than a check.  The CFP examination is a two-day 10-hour exam that is no cake-walk (53% pass rate in July 2010).  The examination covers the following areas:

  • General Principles of Financial Planning
  • Insurance Planning and Risk Management
  • Employee Benefits Planning
  • Investment Planning
  • Income Tax Planning
  • Retirement Planning
  • Estate Planning

 

The Certified Financial Planner Board of Standards also insists that CFP® professionals adhere to a fiduciary standard of care, which requires them to put their client’s interest ahead of their own.

There are many financial professionals that are at the top of their profession without an official designation, it certainly is not a perquisite in delivering excellent financial advice and service.  However, if you are looking for that extra “stamp of approval” you should consider someone with the CFP® designation.

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