Financial Advisor Designations Don't Make You "Professional"

All of these letters are supposed to be "professional designations," which is a misnomer because -- with the exception of lawyers -- none of the members of your financial team truly is a "professional."

Most dictionaries define "profession" as a vocation or occupation that requires advanced training either in sciences or the liberal arts. You do not need an advanced degree to practice as a financial planner, insurance agent, real estate agent, stockbroker, tax preparer, or accountant. Standards vary for each role, with state or federal law dictating whether practitioners must even be registered or licensed.
Even then, "registration" is more about putting your name on file than it is about having achieved a minimum standard of education and academic excellence.

In other words, you can be a "financial planner" without having the "Certified Financial Planner," "Personal Financial Specialist," or any credential. That doesn't demean the designations; there's no denying that an advisor who goes through training and education to get them is set up to be a better, more skilled, more competent advisor.

Titles Can Be as Confusing as Credentials

Legally, you're not a "doctor" without the degree to back it up. That doesn't happen with most financial specialties, where an advisor typically can pick the title for himself, no degree required.

As a result, advisors who use the titles of financial planner, financial advisor, financial analyst, financial consultant, investment counselor, wealth advisor, wealth manager, personal finance specialist, tax preparer, and more may be true specialists with lengthy, detailed educations, or they may be some guy who thinks he's good at this stuff.

As with credentials, it's important not to let the titles confuse you. What an advisor is called -- and what designations she has -- is less important than what services she provides and your belief that she can help you reach your goals.

Moreover, there are a number of cases where the governing bodies that designate the criteria for a particular standard are warring with competing organizations touting a different standard. For example, an advisor looking to become more knowledgeable on the use of mutual funds could pursue the Chartered Mutual Fund Counselor (CMFC) designation, or the Certified Fund Specialist (CFS) standard. Or she could decide that the continuing education she gets on mutual funds just from being a Certified Financial Planner is sufficient. Truth be told, if you took three advisors, and each took one of the paths described here, you'd have a hard time telling the difference.

That's precisely why your decision will come down to more personal factors and be less about credentials.
By Chuck Jaffe
Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2020. Content published with author's permission.

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