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Financial Designations

Money Manager | Monday, September 15th, 2008

You have probably seen financial advisors list an alphabet soup of abbreviations after their names, such as “John Smith, CPA, CIA”. Okay, CPA you may have heard of, but does the second abbreviation mean John is a former employee of the Central Intelligence Agency? Well, no. There is actually a financial designation known as the Certified Internal Auditor, or CIA, so don’t think John will regale you with stories of his past experience as a spy. The abbreviations indicate that John has achieved a certain level of education and passed examinations in the areas of accounting and internal audit.

So how do you find out what those abbreviations mean, and how do you know if they should be considered impressive or not? This article will explain exactly what financial designations are, what is the purpose of financial designations, why advisors get financial designations, and how to know if financial designations are worthwhile.

What are Financial Designations?

Financial designations are offered by financial professional societies in different subject areas. Financial designations are intended to distinguish which financial advisors have gone an extra step in gaining additional knowledge about a specific financial area. Generally, candidates for financial designations must qualify by completing education and/or coursework and passing an examination or series of examinations. To maintain financial designations once they are attained, a certain number of continuing education hours are generally required each year.

For example, the Certified Internal Auditor (CIA) designation is offered by the Institute of Internal Auditors (IAA), which is the professional organization for internal auditors. To qualify to sit for the CIA exam, a candidate must have a bachelor’s degree or equivalent work experience, provide a character reference, and have 24 months of internal audit experience. Then the candidate must pass a four part examination. After passing the examination, the candidate must agree to abide by the IAA code of ethics and to complete 80 hours of continuing education every two years. As you can see, to become a Certified Internal Auditor, a candidate must meet very rigorous requirements and demonstrate competency in the subject area, as well as commit to continued learning in the years to come.

Financial designations are attractive to both advisors and their clients because financial designations indicate the advisor is committed to learning as much as possible about his area of expertise and is also dedicated to continued learning as changes occur in the future. However, not all financial designations are equal. While many financial designations are set up by legitimate organizations, some financial designations may not mean much. Some groups use the promise of a quick way to get financial designations as a cash cow, and the financial designations may not be a reliable indicator of expertise.

So how are you supposed to determine if those letters after a financial advisor’s name are a worthwhile financial designations? Listed below are several questions to ask to determine if financial designations are worth their weight in gold.

  1. How strenuous are the requirements to get the finanical designations?

Financial designations should generally require candidates to pass at least one examination on the subject matter and also require some coursework or a certain level of academic achievement, such as an advanced degree in a financial-related field. However, some financial designations merely require attendance at a quick weekend seminar or allow open-book examinations. While these financial designations may indicate adequate knowledge of a financial subject, it is safe to assume that the more coursework, education, and examinations required to achieve a designation, the more reliable an indicator the designation is of the advisor’s knowledge and expertise.

  1. How widely are the financial designations recognized?

Some financial designations are quite well known, like the Certified Public Accountant. Others, like the Certified Divorce Planner, are not so well known. Just because you have not heard of a designation before does not necessarily mean it is not worthwhile, but be wary because some financial designations are set up just to generate money and marketing opportunities. While most are legitimate, some are not. Again, this goes back to the previous question about understanding how easy or hard it is to attain financial designations.

  1. Is there a code of ethics and professional conduct?

Knowledge of the subject area of financial designations is all well and good, but there must also be standards of conduct expected of those to whom the designation is granted. For financial designations to mean something, those who receive the financial designations must be held to high standards of conduct and ethics. Codes provide guidelines by which advisors can judge themselves and their conduct in delivering advice and services to their clients. Clients can also read the code and determine whether their advisor is living up to its standards. A code of ethics also provides a framework to determine if advisors who do not act in accordance with the code should have their finanical designations taken away.

  1. Is there a way for disciplinary action to be brought, or even for an advisor to lose his financial designations?

To maintain the integrity of financial designations, there should be a process by which advisors who do not live up to the code of ethics and professional conduct can be stripped of their designation. Since financial designations can only be as good as the advisors who make up the group with the designation, such a process is necessary. If the organization offering the designation is serious in its commitment to high standards, it will have disciplinary policies and procedures. If financial designations have been set up just to charge large amounts of money with no care for standards, there generally will not be a way for advisors to lose their financial designations once they are attained.

Why do Advisors Attain Financial Designations?

Attaining worthwhile financial designations benefits not only the advisor himself but also his clients. Financial designations distinguish advisors from colleagues who do not have any financial designations. By getting financial designations, advisors signal to clients and potential clients that they have gained additional knowledge and expertise in the subject area of the financial designations which other advisors have not.

Another reason is to be able to provide better services to clients. By gaining additional knowledge and training, advisors learn the intricacies and details of a particular financial area. The more an advisor understands the details of the services he provides or investments he recommends, the better he can serve his clients and help them make informed decisions.

Another reason is to demonstrate his commitment to maintaining an up-to-date understanding of the subject area of his financial designations. Since most financial designations require continuing education to keep the designation, advisors must spend a certain number of hours each year learning about changes in their financial designations’ subject area.

Financial designations can be an indicator that a financial advisor has gone extra lengths to ensure he can provide the most up-to-date, in depth information and advice to his clients. Worthwhile financial designations can give you assurance that your financial advisor has the knowledge and expertise necessary to guide your investments and financial planning competently. Follow the advice in this article, and you will be able to determine if those initials after an advisor’s name are worth their weight in gold.

Accredited Asset Management Specialist (AAMS)
Accredited Business Accountant (ABA)
Accredited Buyer Representative (ABR)
Accredited Buyer Representative Manager (ABRM)
Accredited Estate Planner (AEP)
Accredited Farm Manager (AFM)
Accredited Financial Counselor (AFC)
Accredited Land Consultant (ALC)
Accredited Management Organization (AMO)
Accredited Residential Manager (ARM)
Accredited Rural Appraiser
Accredited Senior Appraiser (ASA)
Accredited Tax Advisor (ATA)
Accredited Tax Preparer (ATP)
Accredited Wealth Management Advisor (AWMA)
Associate of the Casualty Actuarial Society (ACAS)
Associate of the Conference of Consulting Actuaries (ACA)
Associate of the Society of Actuaries (ASA)
Board Certified in Estate Planning (BCEP)
Certified Annuity Advisor (CAA)
Certified Annuity Consultant(CAC)
Certified Annuity Specialist (CAS)
Certified Asset Protection Planner (CAPP)
Certified Buyer Representative (CBR)
Certified College Planning Specialist (CCPS)
Certified Commercial Investment Member (CCIM)
Certified Divorce Financial Analyst (CDFA)
Certified Employee Benefit Specialist (CEBS)
Certified Estate Advisor (CEA)
Certified Estate Planner (CEP)
Certified Financial Planner (CFP)
Certified Financial Services Security Professional (CFSSP)
Certified Funds Specialist (CFS)
Certified in Financial Management (CFM)
Certified in Long Term Care (CLTC)
Certified International Property Specialist (CIPS)
Certified Investment Management Analyst (CIMA)
Certified IRA Services Professional (CISP)
Certified Management Accountant (CMA)
Certified Manager of Community Associations (CMCA)
Certified Pension Consultant (CPC)
Certified Property Manager (CPM)
Certified Public Accountant (CPA)
Certified Real Estate Brokerage Manager (CRB)
Certified Regulatory Compliance Manager (CRCM)
Certified Regulatory Compliance Manager (CRCM)
Certified Retirement Administrator (CRA)
Certified Retirement Counselor (CRC)
Certified Retirement Financial Advisor (CRFA)
Certified Retirement Services Professional (CRSP)
Certified Senior Advisor (CSA)
Certified Senior Specialist (CSS)
Certified Tax Specialist (CTS)
Certified Trust and Financial Advisor
Certified Wealth Preservation Planner (CWPP)
Chartered Advisor for Senior Living (CASL)
Chartered Alternative Investment Analyst (CAIA)
Chartered Asset Manager (CAM)
Chartered Estate Planning Practitioner (CEPP)
Chartered Federal Employee Benefits Consultant (CFEBC)
Chartered Financial Analyst (CFA)
Chartered Financial Consultant (ChFC)
Chartered Investment Counselor (CIC)
Chartered Life Underwriter (CLU)
Chartered Mutual Fund Counselor (CMFC)
Chartered Retirement Plan Specialist (CRPS)
Chartered Retirement Planning Counselor (CRPC)
Chartered Trust and Estate Planner (CTEP)
Chartered Wealth Manager (CWM)
Elder Care Specialist (ECS)
Enrolled Actuary (EA)
Enrolled Agent (EA)
Estate Planning Law Specialist (EPLS)
Fellow of the American Society of Pension Actuaries (FSPA)
Fellow of the Conference of Consulting Actuaries (FCA)
Fellow of the Society of Actuaries (FSA)
Financial Designations
Group Benefits Associate (GBA)
Investment Management Certificate
Large Scale Manager (LSM)
Life Underwriter Training Council Fellow (LUTCF)
Master Financial Professional (MFP)
Member of the American Academy of Actuaries (MAAA)
Member of the Conference of Consulting Actuaries (MCCA)
Member of the Society of Pension Actuaries (MSPA)
Personal Financial Specialist (PFS)
Professional Community Association Manager (PCAM)
Professional Plan Consultant (PPC)
Qualified Financial Planner (QFP)
Registered Employee Benefits Consultant (REBC)
Registered Financial Associate (RFA)
Registered Financial Consultant (RFC)
Registered Financial Planner (RFP)
Registered Financial Specialist (RFS)
Registered Health Underwriter (RHU)
Retirement Plans Associate (RPA)
Wealth Management Specialist (WMS)

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