Financial Advisor Licenses or Designations: What to Look For


There has been a dramatic increase in financial designations over the last decade.

The Financial Industry Regulatory Authority (FINRA), reports at least 95 financial advisor designations. The Wall Street Journal documents another 115 that FINRA doesn’t monitor.

All of these new “credentials” are obtained by paying a fee and passing an exam.

Some skip the exam altogether!

This makes you wonder if you can trust someone’s business card or resume for confirmation that they are a qualified financial advisor.

While the financial industry does not require advisors to be licensed to give advice – contrast that to doctors or lawyers – there are three designations that truly matter in a financial advisor.

The 3 Designations That Matter In a Financial Advisor


This designation is arguably the most widely recognized credential in the financial industry.

The CFP® Board of Standards in Washington, DC manages CFP®s.

To be a CFP®, you must be a college graduate and complete a series of courses covering the six areas of planning plus ethics. In addition you must have three years of experience.

CFP® candidates must pass a rigorous 10-hour exam requiring around 200 hundred hours of study. They must also pass a background check before receiving permission to use the mark.

To maintain the CFP® designation you are required to complete annual continuing education, ethics training, and renew your license every two years.

Many CFP®s manage investments but they emphasize plans that encompasses all aspects of clients’ finances.


This credential was introduced by The American College in 1982 as an alternative to the CFP®.  The American College is an insurance-focused nonprofit institution.

Chartered Financial Consultants® take the same core curriculum as Certified Financial Planners™ including elective courses.

The largest distinction between the CFP® and Chartered Financial Consultants® is that the latter need not have a college degree nor do they have to pass a comprehensive exam.

Those wishing to be have a financial planner designation of merit and wish to avoid lengthy board testing or perhaps do not have a college degree often go this route. This is particularly true if they work in insurance.

As a result the ChFC® is popular among professionals in the insurance industry.


CPA/PFS – Certified Public Accountant/Personal Financial Specialist

If you are a CPA in good standing you can obtain the companion designation PFS by doing the following

  • Taking 75 hours of personal financial education
  • Obtaining experience in financial planning
  • Passing a related exam
  • Paying a fee.

If you are a CPA and a CFP® you are exempt from the above exam requirement.

The requirements to become a PFS were not nearly as rigorous in the past. However the American Institute of Certified Public Accountants (AICPA) has given the PFS license more weight by strengthening the prerequisites.

Like the CFP®, Personal Financial Specialists are subject to continuing education requirements which may overlap those necessary to maintain CPA status.

Why You Should Choose an Advisor with These Designations

As you can see these financial designations require at least three of the following:

  • A Collegiate-style education
  • Rigorous exams designed to fail those who don’t fully comprehend the material,
  • Continuing education requirements (including ethics)
  • A national licensing board which maintain standards and enforces discipline

This far outpaces other financial advisor licenses. While other designations are credible, they are not normally used by financial planners.

FINRA found in a study in 2007 that 46% of older investors were more likely to use an advisor with some type of designation.

How to Research Your Advisor’s Designation

It is important to make sure that the designation you are counting on in your advisor has been earned and not purchased.

You can use FINRA’s Broker Check to begin your research.  In the Broker Check, you’ll find information on an advisor’s licenses, background, client complaints, and as well as other pertinent information.

Financial Advisor Licenses Review

It is imperative that your financial advisor has a designation that is earned and not something that has been purchased and for which there is no oversight or review.  Also, I don’t know about you but a weekend curse and some online tutorials doesn’t impress me.

Using FINRA’s Broker Check is a great way to perform research on your advisor’s licensure.

Of course, just having a license won’t guarantee the results you’re looking for, so be sure to do other research as well. Because in all honesty even the most comprehensive of financial advisor licenses will not fix the fiduciary problem in this filed. Be sure to get a fee only advisor and not fee based who holds one of these designations.

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