Does Your Financial Advisor Measure Up?

Over the years, “Financial Advisor” has become both a widely used and sometimes confusing title.

When someone says they are a financial advisor, what does that mean? What’s their background? What qualifications do they have? Do they focus on selling insurance products? Or do they have extensive education and training in investments and comprehensive financial planning?

Here’s what you need to know: The two most sought-after and respected credentials in the wealth management profession are Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP).

The CFA program emphasizes investment management and analysis. To become a CFA Charterholder, a candidate must have a bachelor’s degree and pass three graduate-level, six-hour examinations. Also, a candidate must have four years of professional work experience in the investment decision-making process.

The CFA exams are offered twice a year. A candidate that fails to pass must wait an entire year before retaking it. Each exam lasts six hours and has a pass rate of roughly 47%. Only about 10% of all individuals that enter the program become a CFA Charterholder.

The CFP program emphasizes broad-based, comprehensive financial planning. Subject areas include the preparation and analysis of personal financial statements, investments, taxes, risk management, retirement, and estate planning. By design, the CFP program is less of a deep dive into investment analysis and portfolio management than is the CFA program.

To become a CFP professional, a candidate must complete an extensive board-approved education curriculum, pass a comprehensive six-hour exam, and log 6,000 hours of professional experience. The CFP Board offers the test three times each year. Only 60% of candidates who attempt the CFP exam pass.

Both CFP and CFA represent rigorous programs that thoroughly train professionals on how to help families plan and invest. Moreover, both programs enforce ethical standards and continuing education. So, if you’re going to trust a financial advisor, that advisor should have at least one of these credentials.

Odds are, you’re not going to have one advisor who manages your investments and another who provides financial planning. Wealth Management is a dynamic process with many layers, a single decision could affect multiple areas of your overall financial picture.

Thus, at Successful Portfolios, we believe you’re best served by an advisor who’s both a CFA Charter holder and CFP Professional.