Making the Letters (After a Name) Count

You’ll notice that different financial advisors and wealth managers usually have a variety of different letters behind their names that indicate various certifications. The question that stands is: are all certifications created equally? The easy answer is “no,” it is important to make sure that the letters following your financial advisor or wealth manager’s name count.

From the CFA (Chartered Financial Analyst) to the CPWA® (Certified Private Wealth Advisor®), certifications are important because they indicate that your financial advisor is continuing his or her education as a professional to become savvier in different areas of expertise within the industry.

In 2011, there were 118 “professional designations,” or certifications, according to the Financial Industry Regulatory Authority website, but only a few were geared specifically for wealth management and you can determine the amount of value associated with the designation based on how rigorous it is to obtain.

Here are some designations and what they mean to a client:

CPWA® (Certified Private Wealth Advisor®) is a widely-recognized title in the industry that represents an advisor has attained the education necessary to help guide sophisticated, high net worth clients through complex strategies related to tax management, monetization and protection of assets,  growth, and transfer of wealth all according to a client’s goals and objectives.

CFP® (Certified Financial Planner®) and CFA® (Certified Financial Analyst®), are also well- respected titles, however they cover a more general life-cycle of wealth.

CIMA® (Certified Investment Management Analyst®) is often coupled with the CPWA® as they are both issued by the Investment Management Consultants Association. The Investment Management Consultants Association is a non-profit organization based in Colorado with a membership of over 8,000 financial advisers.

It is important to note that the designations and certifications that financial and wealth advisors carry aren’t regulated, but their use is monitored by state regulatory agencies, the SEC and FINRA.

What about the other 114?

If you’re looking to determine if the letters behind a potential advisor’s name are legitimate, it is best place to start is FINRA’s Professional Designations database.

The FINRA database provides information that can help you determine the value of a certification including the issuing organization, educational requirements, what type of exams are given, continuing education and experience requirements. FINRA, however, does not endorse or approve any designation and even having the designation listed does not mean that FINRA finds it acceptable for use by a registered representative.

FINRA also lists some helpful steps to picking an advisor on their Professional Designations database homepage under “Selecting Your Investment Professional”.