It’s no secret that the financial world is filled with acronyms. However, it can feel like a secret when you have to decipher each and every meaning. The available financial advisor designations are no exception. Spanning from C3DWP to WMS, there are 212 professional designations listed on FINRA’s website. Over 100 of them start with the letter “C.”
Although you may have a few of them on your LinkedIn profile right now, even the most seasoned advisors would have trouble keeping track of them all.
However, if you are looking to expand your practice or specialize in a new area of expertise, you may consider adding another acronym to your repertoire. I won’t be going over all 200 designations today, but I will refresh your memory on six commonly acquired certifications if you want to hit the study books again.
Professional Designations, Accredited Designations, and Licenses
Before we get started, it is helpful to note that not all professional designations are considered accredited designations. What’s the difference? FINRA explains that some state securities and insurance regulators only allow specific designations that have been accredited by the ANSI National Accreditation Board or the National Commission for Certifying Agencies.
It is also important to highlight that a professional designation or certification is not necessarily a license. FINRA offers securities exams for securities professionals looking to obtain licenses and sell investment products. Passing a qualification exam registers an individual with FINRA.
Professional designations are titles that signify a certain level of education and experience in a specific subject matter, but FINRA does not approve or endorse any professional designations.
Commonly Acquired Financial Advisor Designations
Certified Financial Planner (CFP)
The CFP certification, acquired through the Certified Financial Planner Board of Standards, Inc., is often a starting point for financial advisors. It covers a broad range of topics from insurance, to retirement, to taxes. The CFP designation is for the advisor who wants to be prepared for all facets of financial planning and provide comprehensive advice. CFPs must act as fiduciary, meaning they vow to always put their client’s best interest before all else.
The process to obtain the certification is lengthy -- according to the CFP website, it takes on average 12 to 18 months to complete the required coursework. In addition to the coursework, the aspiring CFP must also hold a bachelor’s degree, pass the CFP exam, complete 6,000 hours of professional experience (or 4,000 hours of apprenticeship experience), and complete a background check.
Certified Public Accountant (CPA)
The CPA designation is a credential issued by the Boards of Accountancy to represent the level of expertise gained by an accounting professional. Becoming a CPA may be an enticing path if you are interested in working in tax preparation, auditing, bookkeeping, and more. Something that makes CPAs stand out from other accountants is that they can file audited financial statements with the SEC and represent clients for the IRS. Like CFPs, CPAs also agree to abide by a code of ethics.
Different qualifications and educational requirements will depend on the state in which you practice. To become a CPA in California, you must have a bachelor’s degree, hold the accepted coursework credits, take the CPA Exam, complete 12 months of accounting experience, 500 hours of attest experience, and acquire continuing professional education hours.
Chartered Life Underwriter (CLU)
Advisors who are especially interested in working with life insurance, annuities, and estate planning can become a CLU. Attaining this designation expands your expertise to life insurance underwriting and life insurance law. You will be prepared to assist clients or businesses in both legal and ethical insurance practices as you assess their risk levels.
The American College offers this designation. Participants are required to complete eight courses on select topics, such as insurance planning, life insurance law, income taxation, and planning for retirement needs. Those looking to become a CLU must also have three years of full-time business experience that occurred within five years preceding the awarded designation.
Enrolled Agent (EA)
If you are passionate about all things tax-related, Enrolled Agents are certified tax professionals approved by the Internal Revenue Service. According to the IRS, EAs represent taxpayers before the Internal Revenue Service. Moreover, EAs are tax practitioners who can represent and prepare tax returns for anyone – individuals, corporations, trusts, and more.
To become an Enrolled Agent, an advisor must obtain a Preparer Tax Identification Number, pass all three parts of the Special Enrollment Examination, pay an enrollment fee, and pass a suitability check conducted by the IRS.
Retirement Income Certified Professional (RICP)
Just as the name implies, an RICP is an individual who specializes in retirement income planning. Clients looking to form a comprehensive plan for their post-work years may be interested in working with an RICP. If you are looking to assist senior clients in preparing for all the future may bring, this designation may be an option to consider.
As with CLUs, the RICP designation is offered by The American College. There are three mandatory courses on retirement income planning, sources of retirement income, and managing financial plans for retirees. Those looking to become an RICP must also have three years of full-time business experience that occurred within five years preceding the awarded designation.
Chartered Special Needs Consultant (ChSNC)
Becoming a ChSNC provides you with the skillset needed to create thorough financial plans for individuals with disabilities or chronic medical conditions, as well as their families. As a ChSNC, you will become an expert in disability law, special needs trusts, and Medicaid, among other topics. With this designation, you will become a resource for families in need of insurance, tax, trust, or estate planning assistance.
To earn your ChSNC designation, three courses must be passed on the topics of disability and lifetime planning, legal and financial issues, and financial planning for those with special needs. You must have a minimum of five years of professional experience in financial services or law, or four years of experience with an undergraduate degree.
The certificates that you choose will largely depend on your personal goals or workplace practices. As you consider a designation, decide which ones match well with your experiences, education, and interests. Most importantly, you’ll want to make sure you select a designation you are passionate about and one that will help you best connect with your clients.
Not all 200 designations are created equal, so be sure to choose a path that won’t appear to be just another acronym.
Planning for Multiple Generations
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Dunham: World-Class Trust and Investment Firm
At Dunham, we work with financial advisors to provide methods that may help your clients meet their investment goals. If you have any questions about how our team can help, get in touch with us today. You can call any of our regional directors or complete an online form on our contact page.