There are over 100 designations used by various financial advisors.  Many are not much more than made up designations such as “Retirement Specialist” or “Financial Investment Advisor.”

Sarasota financial advisor

There are some credentials that have teeth and meaning and require a certain level of attainment to qualify.  These designations, or “Abbreviations” should contain the following requirements.

  • Is there considerable training required?  Financial planning is a complex field with many variables and life issues such as estate planning, income tax laws and investment strategy.  Some designations require college level coursework and passing tough exams which can take several months or years to complete.
  • Does the organization hold the advisor to a strict code of ethics?  Does the code have teeth?  That is, could the advisor lose his designation if he strays from the ethical boundaries he has agreed to keep?  Is it easy to file a complaint on the advisor thereby helping to maintain discipline?
  • Is the designation accredited?  Is there a governing body that maintains a high level of control and supervision in the use of the designation as well as the requirements of those that wish to practice under that designation?

Of the many designations or abbreviations a few stand out as generally recognized for their requirements for advisor intellect, experience, education, and ethics.  The following are some designations that hold their advisors to a high degree of discipline.

Certified Public Accountant (CPA)

For most people a CPA is best known for the person that does taxes.  A CPA is the recognized leader in tax preparation and auditing but not necessarily in financial planning.  To bolster that expertise the CPA can add a personal finance specialist (PFS) designation to help demonstrate their additional training in personal financial planning.  The CPA designation maintains a strong ethics culture and is well managed on a state wide basis.  A CPA must have no less than a bachelor’s degree, pass the rigorous CPA exam and have a minimum level of experience.

Certified Financial Planner (CFP®)

Those with the CFP® designation have demonstrated competency in all areas of financial planning.  Candidates complete studies on over 100 topics, including stocks, bonds, taxes, insurance, retirement planning and estate planning.  The program is administered by the Certified Financial Planner Board of Standards Inc.  In addition to passing the CFP certification exam candidates must also complete qualifying work experience and agree to adhere to the CFP Board’s code of ethics which includes the requirement that the advisor works in the best interest of the client, the highest standard of care.

Chartered Financial Analyst (CFA®)

The CFA program is very broad and might be more aptly described as the equivalent of a Master’s degree in Finance with minors in accounting, economics and portfolio management.  The CFA designation earns its reputation mainly due to its grueling process candidates must endure to earn the CFA charter including passing three six hour exams with a passing rate typically less than 55%

Enrolled Agent (EA)

An Enrolled agent is a federally authorized tax practitioner who has demonstrated to the IRS to have expertise in the field of taxation.  The Enrolled agent status is the highest credential awarded by the IRS.  Only Enrolled Agents, CPAs and attorneys can represent taxpayers before the IRS.  To receive the Enrolled Agent designation an applicant must demonstrate thorough knowledge of the tax field by passing a series of exams.  In addition, continuing education on an ongoing basis is required.  The Enrolled Agent certification is governed by the IRS.

Disclosure:

K-Mack Financial, LLC (“K-Mack) is a Registered Investment Adviser. K-Mack and its representatives are in compliance with the current registration requirements imposed upon registered investment advisers by those states in which K-Mack maintains clients. K-Mack may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements. K-Mack’s website and Facebook is limited to the dissemination of general information regarding its investment advisory services to prospective clients where providing such information is not prohibited by applicable law. Accordingly, the publication of K-Mack’s website on the Internet should not be construed by any prospective client as K-Mack’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.

You should contact your attorney before making any decisions with legal implications. For additional information about K-Mack including registration status, fees, and services, contact us for a copy of our disclosure brochure.

K-Mack does not make any representations as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to K-Mack’s web site or Facebook or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.