Financial advisors can live and die by the letters following their name on their business card.
The professional designations and certifications you hold often say more about you to clients than the actual title you hold at the office. There may be two dozen financial planners in your office, but if you're the only one with your certified private wealth advisor (CPWA) designation, you're more likely to land those ultra-high-net-worth clients.
"Certifications and credentials are often good indicators of expertise and understanding," says Kyle Ryan, executive vice president of advisory services at Personal Capital Advisors.
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Get the weekly U.S. News newsletter for financial advisors. ]Since advisors can go by many terms, such as as financial advisor, financial planner, financial consultant or even financial guru, having more definitive designations and credentials can help clients determine what exactly you do.
Many financial advisors start by getting their certified financial planner (CFP) designation, and for good reason, Ryan says: The CFP designation "shows clients that advisors have passed a strict code of ethics and professional responsibility standards."
While arguably the "gold standard for credibility" in the financial planning industry, the CFP has become so popular as to be merely a baseline, says Brad Owen, senior wealth advisor and senior vice president at EP Wealth Advisors. Just as a bachelor's degree has become ubiquitous among job applicants, so, too, has the CFP designation become among financial planners.
"Clients are trained to look for it and, if you don't have it, you're at a serious, if not perilous, disadvantage," Owen says. "It's really a prerequisite to be seen as a qualified advisor at this point."
This, in Owen's opinion, means if you want to stand out from the crowd, you need to go beyond your CFP designation. Here are some factors and options to consider:
- What to do after getting your CFP designation.
- How to choose which post-CFP certifications to get.
- Post-CFP designations.
What to Do After Getting Your CFP Designation
Before you start collecting more of the alphabet behind your name, Julie Genjac, managing director of Applied Insights at Hartford Funds, says to take time crafting how you'll articulate what the CFP means to your clients.
"Just like any acronym in the financial services industry, oftentimes (CFP) can be overused or misinterpreted," she says. She suggests sharing stories of how having the CFP has helped other clients.
"The power of story is real, and carefully choosing examples and stories to share with other clients and prospects can truly bring the credential and its power to life," she says.
Owen agrees the first step after your CFP designation is to spend some "time behind the wheel," so you can turn the knowledge you gained from the training into wisdom.
"If you're new to the industry or a younger advisor, I recommend spending the bulk of your time working with new and existing clients for the first few years after receiving your CFP," he says. "You need those valuable interactions to start attaching the bookwork terminology from the CFP into actual client scenarios."
After you've put in a few years of hands-on practice, he recommends that you pursue a new designation every three to five years "to keep yourself fresh, current and intellectually stimulated." This will also help separate you from the crowd of other CFP advisors.
How to Choose Which Post-CFP Certifications to Get
The best financial advisor certifications and designations to pursue come down to your niche and passion. Genjac encourages you to reflect on what aspects of the business you're most passionate about, or what areas you feel least prepared to discuss.
"When we engage in work that brings us joy, and we can find meaning in, it makes that work all the more enjoyable," she says. And clients can feel when you're passionate.
Ensuring that you understand how the core components of any given credential align with your passions and value proposition is a crucial step in choosing the right post-CFP designations to pursue, she says.
Ask yourself if there is a topic or area of the business you'd love to know more about, she says. "What type of knowledge would give (you) more confidence in order to sit down with clients and educate them and connect them to resources?"
When you have the answer to that, you'll be ready to pursue a post-CFP designation.
Read:
What Does a Financial Advisor Do? ]Post-CFP Designations
The Financial Industry Regulatory Authority, or FINRA, recognizes more than 230 professional designations. It would take multiple lifetimes to obtain them all, not to mention one giant business card to display them.
To save you from sorting through the entire alphabet soup, here are five of the most recognized post-CFP designations to start with:
- Certified Private Wealth Advisor (CPWA): The CPWA designation is administered by the Investments and Wealth Institute to help seasoned professionals serve clients with a net worth of $5 million or more. It takes a holistic approach that goes beyond just investing or financial planning.
- Chartered Financial Consultant (ChFC): Seen by some as an alternative to the CFP, the ChFC covers the core content of the CFP and then some. Since it requires additional courses beyond those of the CFP, it can be used to expand your CFP baseline. It also helps satisfy your CFP continuing education requirements.
- Chartered Financial Analyst (CFA): The CFA program is one of the highest distinctions in investment management. It's also one of the hardest certifications to obtain. A top choice for portfolio and wealth managers and investment and research analysts.
- Retirement Management Advisor (RMA): Also issued by the Investment and Wealth Institute, the RMA certification helps you build customized retirement plans for clients. It provides advisors with practical tools, techniques and methodologies to improve their retirement planning practice.
- Certified Divorce Financial Analyst (CDFA): If you expect to work with clients who are going through a divorce or are divorced, the CDFA is not to be skipped. The certification prepares you to be an expert on the financial aspects of divorce.
You could also consider returning to the classroom in a more traditional sense by obtaining your master's in financial planning. Two popular options for advisors who are already working in their field are the Master of Science in Financial Services (MSFS) from The American College of Financial Services and the Master of Science in Advanced Financial Planning from Golden Gate University. The latter is specifically designed for financial planners who already have their CFP and want to go deeper into areas of taxation, estate planning or financial life planning while earning a master's degree.
If a master's is too docile for you, there's always a Ph.D. in financial planning to consider. Several universities, including Texas Tech University, Kansas State University and the University of Georgia, offer a Ph.D. in financial planning. Some, like the one offered by the University of Georgia, may emphasize a certain area of financial planning, such as tax matters or investment principles.
