Why your advisor should be a CFA Charterholder and CFP® Professional

“Financial advisor” has become a very broad title over the years. When someone says they are a financial advisor, what does that mean? What’s their background? What qualifications do they have? Do they focus more on insurance or do they have education and training related to investing.

After you decide to work with a professional to help you with your money (you should), knowing what kind of training, education, and experience they have can help you make a well-informed decision. The two most sought-after and respected credentials in the wealth management business are the Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP®).

Chartered Financial Analyst (CFA)

The CFA program is primarily focused on investment management, the two most common jobs for those with this designation are portfolio manager and research analyst. A portfolio manager typically provides investment advice to clients, while research analysts study publically traded companies and make investment recommendations.

To become a CFA Charterholder, a candidate must have a bachelor’s degree, pass 3 exams in consecutive order, and have four years of professional work experience in the investment decision-making process.

The first exam focuses on investment tools, the second focuses on asset valuation, and the third focuses on portfolio management. The exams are only offered once a year (with the exception of level 1 which is offered twice a year) and they must be completed in order. So, if you fail an exam you’ll have to wait an entire year before you can retake it. Each exam lasts 6 hours and has a pass rate of roughly 47%; about 10% of all individuals that enter the program become CFA Charterholders.

Certified Financial Planner (CFP®)

The CFP program is primarily focused on financial planning, common occupations include financial planner, wealth manager, and financial advisor. CFP professionals primarily work with individuals, families, and small organizations. CFPs are not focused only on investments, they help clients achieve specific long-term financial goals.

To become a CFP® professional, a candidate must have a bachelor’s degree, some college-level study in financial planning, pass an exam, and have 6,000 hours of experience in the financial planning industry.

The exam is 6 hours long and uses real-life situations to assess an applicant’s ability to use broad financial planning knowledge. The exam is offered multiple times throughout the year and has a pass rate of approximately 60%. Overall, the CFP program is shorter and less rigorous than the CFA program.

Why Both?

If you’re going to trust someone to manage your financial future, they should at least have one of these designations. Both certification programs teach applicants how to handle someone’s financial future and provide insight into an advisor’s work ethic. However, I firmly believe that your advisor should be a CFA Charterholder and a CFP® Professional.

Wealth Management is a very dynamic process with many layers – insurance, tax, investment, retirement, estate, and so on. A single decision could affect multiple areas of your overall financial picture and your advisor should have a good handle on how these decisions interact with one another.

Odds are, you are not going to have one advisor who manages your investments and another who provides financial planning services. Thus, you need an advisor that not only does both but does both well! How do you know if an advisor is capable of performing these tasks at a high level? Look for the CFA and CFP® marks.

If you’re interested in working with a wealth management advisor, please call/text (402) 515-3382, send me a direct message, or email me at Blake@SuccessfulPortfolios.com.


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