You know CPA means tax professional and CFP means financial planning, but if you're in the market for a financial advisor, you may have noticed other financial designations and wondered what they stand for. Here's a cheat sheet to help you navigate the wonderful world of financial designations.
Letters after a name mean some sort of authority and credibility, sure. But, not all letters carry the same amount of expertise. You just want to be sure you understand what your financial professional’s designation means so that you know exactly what level of expertise he or she can offer you.
Cheat Sheet for Financial Designations
To understand what financial designations stand for, here is a helpful cheat sheet you can reference when you are getting ready to hire a financial professional for a current or future financial need. We cover some of the most common, with a few highly specialized designations to get you started.
1. CFP. Certified Financial Planner. Financial planning. These financial professionals are equipped to help you with your total wealth picture and most financial aspects of your life.
2. CPA. Certified Public Accountant. Tax advisors. These financial professionals are your top shelf tax experts who can help you prepare your taxes and manage your taxes whether your and individual or large corporation. Everyone pays taxes and these financial professionals know how to navigate that confusing road.
3. CIMA. Certified Investment Management Analyst. Investment managers. CIMA professionals integrate a complex body of investment knowledge and help investors and other financial professionals to understand investment decisions.
4. RFP. Registered Financial Planner. Various. Commission-based and fee-based financial advisors can possess this designation. These professionals either manage assets or provide advice to clients. They typically work through a broker-dealer and become licensed under FINRA regulations to become a stockbroker or they register directly with the Securities and Exchange Commission (SEC) as an investment advisor.
5. CAP. Chartered Advisor in Philanthropy. Niche. This is one of those very narrow designations. This designation is awarded after completion of a program covering charitable giving strategies. The designation demonstrates that a financial professional has knowledge and tools to help clients identify and pursue their highest philanthropic aspirations for self, family and society.
6. CSRP. Certified Specialist in Retirement Planning. Niche.This one is rather obscure and is someone who caters to the older generation who is nearing or in retirement. This is really considered a senior specialty and is often combined with other designations that financial advisors possess to show an increased specialization for retirement planning.
7. ADPA. Accredited Domestic Partnership Advisor. Niche. This designation is fairly new and means specialized advice to unmarried couples in a domestic partnership. The ADPA designation was created jointly by Wells Fargo Advisors and the College for Financial Planning, to help financial advisors address the unique financial needs and considerations of domestic partners—lesbian, gay, bisexual, transgender and heterosexual clients—as they plan for their financial future.
8. AAMS. Accredited Asset Management Specialist. Niche. This designation is also issued by the College for Financial Planning since 1994. These are your providers of financial education for working adults in the financial services industry.
When in Doubt, Consult FINRA
For the complete list, check out the website of the Financial Industry Regulatory Authority (FINRA). A not-for-profit organization that regulates the securities industry, they are considered the ultimate authority when it comes to decoding the alphabet soup you'll find after a financial professional's name.
At the moment, their list numbers 174 different designations!
Knowing what the letters stand for is one hurdle, but understanding what those letters indicate in terms of education, requirements, accreditation, and ongoing education is a whole different matter. It's important to ask questions, or use the FINRA guide to help you understand just what the letters mean.
Want to have this checklist by your side the next time you're evaluating an advisor? Download a free PDF copy today!
Chris Hardy, CFP®, EA, ChFC®, CLU®, NTPI Fellow® is the Director of Planning and Investments at Paramount Investment Advisors, Inc., a fee-only wealth management firm located in the metro Atlanta suburb of Suwanee, Georgia. Chris specializes in providing clarity to his client’s financial vision through comprehensive and strategic wealth planning.
Chris and I were introduced to one another through the XY Planning Network. He has been a guide and mentor to not only me, but many other practitioners that have started down the path of opening their own firm. Seeing that he has a number of designations himself, I had asked him to write his thoughts on the various designations within the financial services industry as a guest topic for The Northwoods Blog.