By: Reed C. Fraasa, CFP®, AIF®, RLP®
The two worlds of financial services are not clearly labeled so that you would necessarily know from which world you are receiving services. If you seek the services of a doctor, you will know if that doctor is a dentist, an internist, an oral surgeon, or a neurosurgeon by the sign on the door. Unfortunately, the titles used in financial services are less indicative of any professional standard. Terms like Financial Advisor, Wealth Advisor, Wealth Manager, Financial Consultant, and Financial Planner in financial services do not signify any license or certification. Many of the large Broker-Dealer firms also use titles like Associate Vice-President and Senior Vice-President. These titles may imply a level of professional knowledge or training, but they only recognize the volume of sales generated by the employee.
CERTIFIED FINANCIAL PLANNER™ (CFP®)
There is only one designation or title you can trust to provide any value to a professional financial planning relationship.
The CERTIFIED FINANCIAL PLANNER™, or CFP®, is the standard of comprehensive, personal financial planning knowledge and ethics. To achieve the certification, someone must complete six education topics over two years, then pass a six-hour exam. They must also complete two years of supervised experience under a CFP® professional or three years of individual experience working with the public, abiding by a code of ethics, and maintaining 30 hours of continuing education credits every two years.
No other advising or planning professional title or credential even comes close to covering its overall personal finance and investing areas.
In addition to the CFP® designation, two investment-focused designations are accepted standards of competency.
Chartered Financial Analyst (CFA®)
The Chartered Financial Analyst (CFA®) is a respected certification focused on security analysis and portfolio management, primarily on the institutional side of the industry. CFA® designees are common in the money management side of the business, serving as security analysts and portfolio managers for mutual funds, hedge funds, pension funds, and investment advisory firms focusing on money management.
Certified Investment Management Analyst® (CIMA®)
The Certified Investment Management Analyst® (CIMA®) is another certification focusing on portfolio construction and management, including a code of ethics and continuing education requirements. CIMA® is primarily applicable to advisors working with the public and less so with institutional clients. It is a concentration in one of the six areas of the CFP® program, investment management.
One additional designation focuses on the advisor’s competency in life planning skills, a foundational part of any financial plan.
Registered Life Planner® (RLP®)
The Registered Life Planner® (RLP®) is issued by the Kinder Institute of Life Planning. George Kinder is the father of financial life planning. His institute has trained over 3,500 advisors worldwide in the core competency necessary to deepen the financial planning experience for the client.
Life planning focuses on the human side of financial planning. In Life planning, the advisor learns to discover a client’s most profound goals through a mindfulness-based process of structured and non-judgmental inquiry. Then, using a mix of professional and advanced relationship skills, the advisor inspires clients to pursue their aspirations, discuss and resolve obstacles, create a concrete financial plan, and provide ongoing guidance as clients accomplish their objectives.
Many other designations and titles in financial services can be obtained over a weekend for a small fee and are primarily for marketing purposes. Still, the four designations above are the most valued in financial services, with the CFP® being the gold standard for personal financial planning.
Reed C. Fraasa is a CERTIFIED FINANCIAL PLANNER™ and founder of HIGHLAND Financial Advisors, a Fee-Only financial planning firm that offers comprehensive financial planning, retirement planning, and investment management. Reed has 30 years of experience as a fiduciary advisor and is the author of The Person is the Plan®, a unique financial planning process. Reed was a frequent guest contributor on PBS Nightly Business Report and has been featured in the New York Times, Wall Street Journal, and Star Ledger newspapers.