Welcome to Weakon 149: Financial Licenses and Certifications. What I’ve compiled here is one of the most extensive lists of financial certifications and licenses. Have you ever seen a business card of some advisor with a hundred letters on the end of his name? I do all the time because of the nature of my job. Below you will find a list of all the acronyms I could find. Know of others? Send them to me and I’ll add them. The important ones worth being on a business card are in bold.
AAMG – Accredited Asset Management Guru – Not making this up, a certification for people involved in asset management.
ATA – Accredited Tax Advisor – Education, experience, and examination are required to obtain this. Tax professionals only.
ATP – Accredited Tax Preparer – Similar to the ATA, but with more focus on the nitty gritty details of tax preparation. Your “tax guy” might carry this.
AEP – Accredited Estate Planner – Doesn’t sound fancy, but its a good one. You’ve got to hold a few other certifications (Like CPA and CFP) and an attorney’s license to obtain this. Not required for an estate attorney, but would be beneficial.
BCE – Board Certified in Estate Planning – One of 5 designations offered by offered through the Institute of Business and Finance. Many individuals that hold this designation will specialize in estate planning. Lawyers and trust advisors could benefit from this curriculum.
CAIA – Chartered Alternative Investment Analyst – Only a few years old, holders will specialize in matters concerned to hedge funds and venture capital. Analytical skills and creativity are likely requirements to be successful with this designation. I like this one, but you won’t find a holder doing personal finance.
CAS – Certified Annuity Specialist. -The 2nd of 5 designations offered by offered through the Institute of Business and Finance. Look for insurance salesmen to carry this. While a beneficial education, its not worth the money or time to obtain.
ChFC – Chartered Financial Consultant – The closest competitor to the CFP. Likely more specialized in the matter of insurance. I would not want an advisor that holds this and not a CFP, though a good amount of continuing education is required.
CCTS – Certified Corporate Trust Specialist – If you are in need of a corporate trust, maybe this is a good person to seek out. Talk about specialized.
CDFA – Certified Divorce Financial Analyst – Mostly held by CFPs, CPAs, and lawyers that specialize in divorce. It makes me sad this is a specialty, stay together people!
CEP & MCEP – (Master) Certified Estate Planner – Popular with CPAs involved with estate issues. The Master level is a tier above.
CFA – Chartered Financial Analyst – Perhaps the most difficult designation to obtain. The CFA has taken 3 increasingly difficult exams ranging from estate planning, to portfolio analysis, to ethical standards. The minimum work experience in the securities industry is 48 months, and the exams each recommend about 300 hours of study. Someone fresh out of college with a finance degree (like The Weakonomist) could probably pass the first exam. To give you an idea of how difficult they are though, a former professor of mine (CFA, CFP, PhD, MBA among others) helps grade the exams each year. He says he would have trouble passing the 3rd exam now. Like passing the Bar, once you’re in you’re in. Don’t seek out a financial advisor that is a CFA, they are often employed by investment banks and mutual funds doing complex analysis; not financial advisors helping you plan retirement.
CFP – Certified Financial Planner – The most important of all credentials. The CFP is the most widely recognized set of letters on a financial advisor’s business card. For good reason, the CFP requires testing in all aspects of financial services. It’s easy to obtain after being in the industry for a few years, and most with the CFP can be considered trustworthy. However I will warn that a CFP can still be a commissioned salesmen, it is always important to ask an advisor how they are compensated.
CFS – Certified Fund Specialist – The 3rd of 5 designations offered by offered through the Institute of Business and Finance. The curriculum focuses on the evaluation and understand of mutual funds. Anyone with a CFS will certainly knows mutual funds. However, this alone won’t make a good financial advisor, and the designation is not difficult to obtain.
CIC – Chartered Investment Counselor – You won’t find these guys working in personal finance. Look for them to be on the teams of mutual funds as this is a specialty one can obtain AFTER becoming a CFA. They make good money.
CIMA – Certified Investment Management Analyst – Often employed by investment firms, the CIMA is one of the few worthy designations that requires re-certification. They focus on asset allocation and risk management. Look for them to be working with large increments of money.
CISP – Certified IRA Services Professional – An IRA expert. Redundant and too specialized.
CLU – Certified Life Underwriter. Employed by life insurance companies. Requires some serious understanding of insurance. A CLU will know the ends and outs of life insurance better than anyone. Just make sure he/she only recommends term life, never whole.
CMT – Certified Market Technician – Often employed by mutual funds and investment houses. The CMT understands technical analysis of the stock market. That is, guessing prices based on volume and price history. They ignore what may be the actual value of a stock. Half psychology, half mathematician, all quack. Unless you are really into buying stocks and trading day to day, stay away from a CMT.
CPA – Certified Public Accountant – This designation is sought after in most people for tax prep. Your “tax guy” is likely a CPA. They are trained in matters of taxation and corporate accounting. Take investment advice with a grain of salt, as they are not trained in this matter. See below for the PFS certification if you want a CPA and advisor in one package.
CPB – Certified Personal Banker – Might be nice if you have a personal banker with a small bank. If you have a banker with a large bank, its likely nothing was gained from obtaining this certification.
CRFA – Certified Retirement Financial Advisor – Redundancy. See CRSP and RIS.
CRSP – Certified Retirement Services Professional – A retirement specialist. Could be a good complement to a CFP, if the CFP focuses only on retirement.
CSOP – Certified Securities Operations Specialist – A good designation for a stock broker looking to add some letters to their business card.
CTFA – Certified Trust and Financial Advisor – Work experience and an exam are required, but the designation is lost in redundancy Look for estate and trust specialists to have this.
CTS – Certified Tax Specialist – The 4th of 5 designations offered by offered through the Institute of Business and Finance. Good luck finding a CTS that will charge less than a CPA. CPA is harder to obtain, stick with a CPA.
MBA – Master of Business Administration: Perhaps the most useless 3 letters a financial advisor can put on a business card. You know what an MBA is so don’t assume its some additional credential the advisor got. While I’ll someday have an MBA, putting it in a signature just screams vanity. Keep in mind one can get an MBA without taking so much as a couple of basic finance classes. This is just credential plumping. The only degrees worth putting on the end of a business card contains the word “Doctor” in there somewhere.
MSFS – Master of Science in Financial Services – Look for this degree to grow in popularity over the next few decades. However no real experience is required for this degree. A CFP has experience and education. If you find someone with this degree and the CFP, you can trust that they know what they’re talking about.
PFS – Personal Financial Specialist – If you can find a PFS, stick with them. This is a credential you can get after obtaining a CPA and CFP. This is possibly the best combination for a financial planner. Years of study and experience would be required to obtain the PFS.
RIS – Retirement Income Specialist – The 5th of 5 designations offered by offered through the Institute of Business and Finance. Look for advisors in the future to specialize just in retirement planning. A CFP might benefit from this designation if they were to specialize in retirement planning, but a CFP doesn’t need it.
REBC – Registered Employee Benefits Consultant – Hiring an HR coordinator? Look for this on their resume. Certainly not required, but every branch of finance has a certification to pump credentials
RHU – Registered Health Underwriter – Like the CLU but only requires a few courses and is for health insurance. In the complicated world of insurance, it would be nice to have a buddy that is a RHU.
All series licenses are obtained via an examination. Many require company sponsorship. This is the government’s way of making sure salesmen and advisors are legitimate. There are about 50 different licenses available.
Series 3 – Allows the holder to sell commodities and futures contracts.
Series 4 – Allows the holder to supervise the sale of option contracts.
Series 6 – Allows the holder to sell mutual funds and variable insurances.
Series 7 – Allows the holder to become a registered broker/dealer of securities (a stock broker).
Series 55 – Allows the holder to participate in live stock trading. The guys on the floor of the NYSE would have this.
Series 63 – Allows the holder to register as a securities agent within a given state.
Series 65 – Allows the holder to register as an investment advisor.