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Designation Alphabet Soup

CFA, CFP, CPA, CRPC, HUH!??? If you've ever looked at the business card of a professional in the financial services industry you've probably noticed the ample supply of different acronyms following names. According to www.wiseradvisor.com/designations.asp there are over 100 different designations related to the practices of accounting, investment management, insurance, and estate planning. So, if you find yourself confused about all these letters, you probably should be. Over the past decade a plethora of "professional" designations have sprung up, most of which are designed for little more than confusing the public. Touching on all of these designations is far beyond the scope of this article, so let's concentrate on the requirements of the most commonly used designations in the industry.

The "Good" - There are several keys to any good designation. First is the education component; a bachelors or masters degree requirement is preferable. Additionally, a good designation requires significant specialized course work above and beyond a typical college degree. Second, comprehensive testing is important in proving which individuals have a full understanding of their profession. Many designation tests only have 50% passing rates insuring only the most qualified pass. Third, experience needed to hold a designation is also important because it proves a professional has both classroom and real world experience. Finally, most of the good designations have an ethics component involved in their practice that typically requires some form of fiduciary responsibility to the client. What this means is that an advisor is legally responsible to act in a client's best interest in all situations and there is legal recourse if they do not.

The "Not So Good" - Unfortunately this group of designations has ballooned over the past decade. Many designations prove little more than someone had two hours available to sit for an online exam. Currently the most abused title in the financial industry is that of Financial Advisor. There is actually no education, licensing, or legal requirement for one to refer to themselves as a Financial Advisor.

So, do any of these designations really matter? Not always, there are plenty of good advisors with no designations and vice versa. However, if you're shopping for professional help you're going to significantly increase your chances of finding qualified advice by sticking to advisors with designations relevant to the help you need. And should you run into an advisor using the esteemed "Certified Financial Gerontologist" designation, I suggest you run.

Financial Advisor Designations