Avoiding Deception

Financial Advisor, Stockbroker, Financial Analyst, etc. Chances are you have either been approached by or worked with an individual with one of these titles.

Have you ever been curious about the difference between these titles and their meaning?

For most financial titles, there is no difference in what they mean or what they do. This is a common issue in the financial industry, leaving people falsely confident about their advisor’s credentials.

Why Do Requirements for Credentials Matter?

If you were hiring a contractor for a new patio, you would want someone who has put in the time to learn how to build your new deck, right? Wouldn’t that be even more true for who manages your finances? 

It’s essential to ask about your advisor’s credentials and the requirements to acquire them. Most families are unaware of their advisor’s credentials, which can hurt them. Below is a sampling of standard titles in the industry.

  • Vice-President of Investment or Senior Vice President
  • Retirement Planning Specialist.
  • Financial Advisor
  • Registered Representative
  • Financial Consultant
  • Wealth Manager

This list appears impressive, yes?  Most likely, you recognize or even have a person with the said title above – now, what they mean and how they achieved them.

The title of vice-president of investment or senior vice president is generally given for hitting a certain level of the commission generated for the firm that year. These are most recognizable from the larger brokerage firms. There are titles for completing a short test provided by their firm, taking no longer than an hour or two, coining them Retirement Planning Specialist. Another popular title is financial advisor; in most cases, the title of “financial advisor” will require some form of registration - this is on a state-by-state basis. In the public eyes, these titles can deem them considered experts, even when they required little to no education to receive them. Deceptive, isn’t it? Or is it just marketing?

Who has your best interest?

Whom do you trust to have not only required knowledge on a specific field but your financial interest ahead of their's - always?

A handful of titles have rigorous requirements, governed by a non-biased independent board that requires them to continue education and ongoing ethical standards in their specific field, keeping a lifetime of a true fiduciary standard.

According to the Certified Financial Planner Board of Standards website, the list of designations below includes some recognized by the industry:

Certified Financial Planner (CFP®): 

  • A bachelor’s degree from an accredited university. Including completing both coursework through an independent board registered program. Pass a one-day, two, and 3-hour splits exam. Complete the experience requirement (prepares the individual to provide personal financial planning to the public without supervision), 6,000 hours/3 years of full-time experience in the industry or 4,000 hours/2 years in an apprenticeship role.

 Source: CFP® Requirements

 Chartered Financial Consultant (ChFC®):

  • Financial professionals generally use them-including accountants, attorneys, bankers, insurance agents, brokers, and securities representatives who have earned the ChFC® designation by completing: three years of full-time business experience within the five years preceding the awarding of the title, seven core and two elective courses, an equivalent of 27 semester credit hours, final closed-book proctored exam for each course. In addition, 30 CE credits every two years and agreed to uphold a code of ethics. 

 Source: ChFC® Requirements

Chartered Financial Analyst (CFA):

Holders of this designation are generally securities analysts, money managers, and investment advisers who have completed the CFA Program, a graduate-level, self-study curriculum and examination program for investment professionals that covers a broad range of investment topics. CFA charter-holders are required to affirm their commitment to high ethical standards.

Source: CFA Requirements

Certified Investment Management Analyst SM (CIMA):

Offered through the Investment Management Consultants Association, the CIMA certification program is a credential designed specifically for financial professionals who want to attain competency as an advanced investment consultant. The CIMA professional integrates a complex body of investment knowledge to provide objective investment advice and guidance to individuals and institutions. The CIMA certification program requires that candidates meet all eligibility requirements, including experience, education, examination, and ethics.

 Source: CIMA requirements

To make one thing clear - just because someone has any of the titles stated (or not) doesn’t mean they are competent or incompetent at what they do. However, it’s important to note the time and requirements needed to help make clear who has specified knowledge in their given field.

“Hiring the right people takes time, the right questions, and a healthy dose of curiosity.” -Richard Branson.

Important Information
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.
Melone Private Wealth, LLC (“MPW”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where MPW and its representatives are properly licensed or exempt from licensure.
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