Professional Designations - 1/22/08

INTRO: You know your ABCs. . .but how about your CPAs, CFPs, and CLUs? 

1. CAN ANYONE OPEN AN OFFICE AND CALL THEMSELVES A FINANCIAL PLANNER?

A. Yes.  That's why it's especially important to make sure you're dealing with a well-trained, experienced professional.

2.  DO PROFESSIONAL DESIGNATIONS, THOSE LETTERS AFTER A PERSON'S NAME, REALLY MATTER?

A. Certification can help you identify financial planners who are committed to a competent and ethical financial planning.  Individuals authorized to call themselves professionals have completed the established and rigorous education, examination, experience and ethical requirements of the certification process.

B.  Titles that establish credentials require years of study, difficult tests and extensive background checks.  The titles to look for are:

CERTIFIED FINANCIAL PLANNER CFP
CHARTER FINANCIAL CONSULTANT, CHFC
CHARTER LIFE UNDERWRITER, CLU
CERTIFIED PUBLIC ACCOUNTANT, CPA

C. For instance, obtaining a Professional Bookkeeper designation is not near as complicated as obtaining a Certified Public Account designation.  But the Professional Bookkeeper may be all you have a need for today.

3. I CAN SEE ON THE SCREEN THAT YOUR DESIGNATION IS CFP.  WHAT DOES THAT STAND FOR?

A. Certified Financial Planner.  To achieve this designation, you must have a 4-year college degree and a minimum of 3 years relevant work experience.  Then there is additional education and testing.  For example, I took a year of classes at John Carroll and then sat for a comprehensive two-day test to obtain the designation.  The national pass rate is less than 50%.

4. WHAT SETS APART A CFP FROM OTHER FINANCIAL PLANNING DESIGNATIONS?

A. Fiduciary Responsibility.  There are three designations with fiduciary responsibilities most recognizable to the public and that is an attorney, CPA and a CFP.

B. Some folks out there may be a fiduciary and not even know.  If you are trustee for a trust, an executor of an estate or an employee with responsibilities on the company retirement plan you may be a fiduciary.

5. CAN YOU explain WHAT BEING A FIDUCIARY MEANS.

A. As a Fiduciary you are required to do for your clients what a prudent parent would do for a child.  Without the fiduciary responsibility the guideline is based on what is acceptable practice under the laws.

B. Simply put, one has to do what is best for the client.  I like to think of it as putting myself in my client's shoes.  If my client had my knowledge, what decision would they make for themselves?

6. IF OUR VIEWERS ARE GOING TO AN ADVISOR WITHOUT FIDUCIARY RESPONSIBILITY, WHAT KIND OF RESPONSIBILITY DOES THAT ADVISOR HAVE TO THE CLIENT?

A. In the securities industry, the advisor only has to meet your investment objectives and risk tolerance.  The CFP is held to a higher standard.

7. CFP, CHFC, CLU AND CPA ARE TITLES TO LOOK FOR.  WHAT ABOUT OTHER TITLES?

A. Be careful C there are titles that sound similar but that are easy to obtain, often without years of study, difficult tests, or extensive background checks.  These include Certified senior adviser, Certified elder planning specialist, Registered financial gerontologist, and Certified Retirement Financial Adviser (requiring only four days in a classroom).

B. Before you agree to work with someone interview them, ask what they've done.  Get references.  It's your $ - don't be shy!

CLOSE: Are you A-OK with professional designations like CFP or CLU, or is your knowledge still MIA?