Journal of Financial Planning: June 2024
FPA members can read the entire June 2024 issue in the digital edition.
Kristine McManus is chief advisor growth officer at Commonwealth Financial Network, member FINRA/SIPC.
Next-gen advisers often ask about the merit of various industry designations. The financial services industry changes frequently, and we are strong proponents of adviser education and staying on top of industry trends and changes. We have found that next-gen advisers in particular benefit from advanced designations, not just for the expertise learned, but for the increased confidence that having a designation often gives them.
But we also know that next-gen advisers are busy people, juggling work, family, community, and education all at the same time, so we don’t suggest pursuing a designation if it isn’t going to positively impact their practices. If you are considering obtaining a new designation, it’s worth taking some time to think about where you want to be in three, five, or 10 years. Even having a sense of whether you want to focus more on individual wealth management rather than retirement plan business will be helpful to your decision-making.
Then there’s the time frame, cost, and commitment to consider. Will your company pay the cost, or is it an expense you need to budget for? How long will it take to earn the designation, and is now the right time in your life to pursue it? Advisers should carefully consider their personal plans as well as their professional ones before undertaking studies with a rigid timetable. Young married couples might be busy now, but if they anticipate having children down the road, they will only be busier when that happens.
One popular and recognizable designation that can benefit most advisers is the CFP® certification, which helps advisers align client goals with the planning process. CFP® professionals meet rigorous education, training, and ethical standards and are committed to serving their clients’ best interests across several areas of expertise, including:
- Risk management
- Insurance planning
- Investment planning
- Tax planning
- Estate planning
- Retirement planning
The designation takes time, but advisers can chip away at it one course at a time, culminating in a master exam. Most clients and prospects recognize the CFP® certification as being positive, even if they aren’t sure what it means. If you decide to undertake the program, let clients know you are studying for the CFP® exam, and make sure you let them know when you pass.
The AIF designation is also useful. It assures that those responsible for managing or advising on investor assets have a fundamental understanding of:
- The principles of fiduciary duty
- The standards of conduct for acting as
a fiduciary - A process for carrying out fiduciary
responsibility
This designation is an important one for any adviser acting as a fiduciary on assets, whether at the individual or retirement plan level.
But there are many more designations than those two. When thinking of gaining advanced designations, a best practice is to carefully consider your ideal clients before undertaking any course of study.
There are several designations that can be enormously helpful in obtaining clients with particular needs or life situations, but they might not be necessary otherwise. For example, the CFA and CIMA designations are time- and labor-intensive designations focused on the investments and research needed for creating and managing advanced portfolios. While they are impeccable credentials, few advisers probably need them day to day.
Some other niches and relevant designations for planners to consider include the following:
- If advisers focus on pre-retirees and retirees, they might want to consider the CRPC, CLTC, or RICP designations, as the expertise gained would be relevant to their client base.
- Advisers looking for HNW clients might pursue the CPWA designation.
- A niche with divorced people could make the CDFA designation desirable.
- Advisers who focus on 401(k) and retirement plan businesses might wish to obtain the CPFA, PPC, C(k)P, or CRPS designations.
- Advisers who specialize in life insurance might find the CLU or ChFC designations beneficial.
There are many additional designations and specialties than the few mentioned here, and they can all be beneficial. Think carefully about the people you help and the problems you solve before deciding on the ones for you.
By the way, I deliberately didn’t spell out what each of these designations mean in this article. That’s because, far too often, advisers put letters after their name with no explanation, leaving clients confused about what those letters mean and why it should matter to them. Hopefully you are encouraged to advance your career with a designation, and please—don’t just throw up the alphabet; make sure to let clients and prospects know why it’s important!
Please consult your firm’s compliance policies on any sales or marketing ideas prior to moving forward with a new designation/certification program.