Say you’re out in the world, considering which financial advisor to work with to get a plan for your future in shape. While you might compare advisors based on how you feel after meeting them, you can also look to advanced financial advisor certifications to help vet your options.
To help you understand all those letters after a financial advisor’s name, we’ve broken down the top 10 certifications an advisor can earn — along with the other types of professionals who can hold these certifications:
The Certified Financial Planner designation is one of the most popular financial advisor certifications, and CFPs are qualified to handle a wide variety of financial services. About 1 in 5 financial advisors in the U.S. holds the CFP credential.
Expertise: A Certified Financial Planner can handle a broad range of financial planning situations. They can help you with filing your taxes, manage your investments and plan for retirement — including creating a plan to save up for it and handle expenses once you retire. A CFP also can help assess your insurance coverage and plan for education expenses.
Requirements to earn: There are “4 E’s” for CFP credentialing: education, exam, experience and ethics. CFPs must complete coursework through a CFP Board-registered program, hold a bachelor’s degree, pass a 170-question CFP exam, have 6,000 hours of professional experience or 4,000 hours of apprenticeship and complete an ethics requirement.
A Certified Public Accountant is licensed to work as an accountant and prepare taxes. Some CPAs work with individuals who have unique tax needs and some work on the behalf of large corporations. For tax professionals, a CPA is an industry standard finance certification.
Expertise: A CPA can work in many tax-related roles, including as accountants, auditors and tax consultants. CPAs often use their expertise to work on topics related to tax accounting — including financial planning and consulting — even if they’re not necessarily working as an accountant.
Requirements to earn: CPAs must pass an exam containing four sections: auditing and attestation, business environment and concepts, financial accounting and reporting and regulation. These professionals must complete at least 150 hours of relevant education and abide by certain state requirements, depending on where they do business. There are also ethics and continuing education requirements for CPAs.
CPAs who want to expand the types of services they offer can obtain a Personal Finance Specialist certification. While it’s not specific to financial advisors per se, CPA-credentialed accountants can work in personal financial planning and wealth management, in addition to tax accounting.
Expertise: A CPA who works on specific, granular tax accounting may not find a PFS credential to be especially useful. But for CPAs who work on taxes as part of an individual’s financial situation, a PFS credential can help them offer valuable financial planning services to their clients.
Requirements to earn: There are a few different options for gaining a PFS financial license, but every pathway requires passing an exam related to financial planning. These individuals must also complete continuous professional education ahead of their exams. A CPA certification is a prerequisite for earning a PFS credential, as well.
Chartered Financial Analysts are qualified to work with investments and securities. This advanced financial advisor certification branches out into the data world, and gives advisors and financial data analytics specialists advanced training to manage investment strategies and portfolios for individuals. They can also work for larger wealth management firms.
Expertise: The CFA designation provides a broad range of detailed investment training, including quantitative methods for investing, the economics of the investing world, analysis related to investment performance and more complex investment mechanisms like derivatives.
Requirements to earn: In order to earn a CFA, applicants must pass three levels of examinations, achieve qualified work experience, submit professional letters of reference and submit an application to the CFA Institute.
The Chartered Investment Counselor is an additional financial certification that someone who holds a CFA can pursue. Issued by the Investment Advisor Association (IAA), a CIC means that a CFA is a fiduciary — meaning they’re an investment advisor who must provide the best possible advice to their clients.
Expertise: A CFA qualifies someone to work with investments and securities, and a CIC charter means that this individual has the fiduciary obligation to work in the best interest of clients. These two types of professionals have the same areas of expertise, including broad knowledge of investing in the stock market.
Requirements to earn: In order to qualify to become a CIC, applicants must already hold a CFA designation, have a minimum of five cumulative years of work experience in eligible occupational positions, work for a member firm of the IAA and spend more than half of work time related to investment counseling and portfolio management.
Chartered Financial Consultants offer a broad range of services, including financial planning, risk management, retirement and investment strategies and estate planning. This advanced financial advisor certification is offered by the American College of Financial Services. ChFC courses also fulfill the education requirements for CFPs.
Expertise: A ChFC is qualified to work in the same areas as a CFP; broadly speaking, these professionals help individuals with financial consulting and can branch into more specific areas like retirement savings and tax strategies. These financial consultants take one additional class than CFPs, which is called Contemporary Applications in Financial Planning.
Requirements to earn: A Chartered Financial Consultant must have three years of full-time business experience within five years of receiving the charter. They must also take 27 credits worth of education, and then complete 30 credits per two-year period after receiving the charter and passing an examination.
A Chartered Alternative Investment Analyst has a highly specialized focus in alternative types of investments as determined by the CAIA Association. These analysts have deep knowledge of alternative investments, including speculation in public equity and debt markets.
Expertise: CAIA coursework includes topics related to real assets, commodities, hedge funds, private equity, credit risk and derivatives. Someone with a CAIA charter is more likely to work in a large firm that handles some of those types of investments, rather than as a personal investment advisor.
Requirements to earn: A CAIA must pass two examinations regarding the asset classes and investment techniques covered in the coursework for the charter. The second assessment covers the knowledge learned in the first assessment in a portfolio context.
Risk managers in the financial space often earn the Financial Risk Manager finance certification. These professionals have specialized roles in financial institutions, anticipating and adapting to risk issues facing various markets and industries.
Expertise: As part of their coursework, FRMs learn about financial markets and products, valuation and risk models, credit risk measurement and current issues in financial markets. They’re broadly qualified to assess risk levels.
Requirements to earn: A candidate earns the FRM certification after passing two exams and demonstrating two years of relevant work experience. FRMs are encouraged but not required to earn 40 hours of professional development every two years.
Among the financial advisor certifications, the Certified Investment Management Analyst (CIMA) credential is tailored specifically towards the more complex planning needs of high net worth clients. As defined by the Securities and Exchange Commission (SEC), high net worth individuals are those with at least $750,000 under the management of an advisor, or a net worth believed to be at least $1.5 million.
Expertise: During their training, CIMAs learn about investment fundamentals and portfolio theory, as well as portfolio construction and investment consulting. These analysts can pair this certification with other specialized investment credentials if they work for a bigger firm.
Requirements to earn: A CIMA must pass online qualification and certification exams after completing the educational component. These analysts must have at least three years of financial service experience and complete 40 hours of continuing education after obtaining the financial certification.
CLUs specialize in life insurance and estate planning. Many CFPs also choose to acquire a Chartered Life Underwriter charter so they’re more qualified to handle those specific elements of their clients’ financial situations.
Expertise: A Chartered Life Underwriter has extensive training in life insurance underwriting and related concepts. The specialization helps them inform clients about how best to approach risk management and estate planning in addition to their life insurance policies.
Requirements to earn: In order to earn a CLU designation, applicants must complete five core and three elective courses for a total of 24 credit hours. After passing an exam for each course, these individuals must complete 30 hours of professional development every two years.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.