Financial Advisor Credentials 101
Financial Advisors are not all created equal—so it is important to understand the financial advice industry’s most common credential standards. All Guidefi Advisors who are financial planners have the Certified Financial Planner (CFP) designation, since it is the most rigorous credential for the financial planning profession. See below for a discussion on this and several other common credential standards for other types of financial advisors.
• Certified Financial Planner (CFP)
The issuing organization is the Certified Financial Planner Board of Standards. All CFP holders must have a Bachelor’s Degree or higher from an accredited college. In addition CFP candidates must have three years or 2,000 hours of practice in a financial planning role. The requirements of the role is that the candidate must complete the CFP Board exam. Any candidate that hold either a Certified Public Accountant (CPA), Chartered Financial Consultant (ChFC), Certified Loan Underwriter (CLU), Attorney’s License, Ph.D. in Business or Economics or DBA, may be exempted from the examination. There is a continuing education requirement of 30 hours every two years.
• Chartered Financial Analyst (CFA)
This credential is issued by the Chartered Financial Analyst Institute, which is a global association of investment professionals. As such, most CFAs focus on investment management and opt for wealth management and some retirement planning roles. CFA candidates must be in their final year of their Bachelor’s program at minimum, and have four years of professional experience or a combination of university education and work experience that totals four years. The CFA’s education requirement is based on a 250 hours self-study program in readiness for a very difficult three-level exam, which must be passed. In addition, CFA candidates must have at least 4 years of experience in finance in a decision making role. The CFA does not have a continuing education assessment.
• Registered Investment Advisors (RIA)
Contrary to popular belief, the Registered Investment Advisor (RIA) credential is not a professional designation. However to work as an RIA or to run a RIA brokerage firm, you or your firm must be registered with the Securities Exchange Commission or the financial securities board in your state of practice. Many wealth managers and investment managers are RIAs. Practice as an RIA also requires the passing of the Series 65 examination or the maintaining a Series 7 and Series 66 with a broker-dealer firm. The Series 65 is can be waived in some states if the individual holds CFA, ChFC, PFS or CFP.
• Chartered Financial Consultant (ChFC)
The Chartered Financial Consultant designation is issued by the American College. The main prerequisites are three years of full-time experience within five years of applying for the designation. In addition ChFC candidates are required to take seven core and two elective courses, an equivalent of 27 credit units. There is also a final closed book examination, with 30 hours of Continuing Education every two years.