Financial Fact: Financial Credentials - What do they all mean?

Amongst the many benefits of MMBB membership is the access to working with our team of financial planning specialists at no cost. Financial planners can offer guidance to help you determine your financial goals and most importantly, develop a strategy to reach those goals with an eye toward building financial wellness. 

Our financial planning team has extensive training, and they provide expertise on a wide range of financial areas including budgeting, saving, investing and retirement planning. People often use terms like financial planner and financial advisor interchangeably and there is no standard industry definition for a financial advisor. Anyone who sells financial products, offers investment advice, builds financial plans, or sells insurance can use the term financial advisor to market themselves. Typically, financial planners will receive specific training that is indicated by the letters following their name and they can come across a bit like alphabet soup. But it’s important to understand what they mean so you know if they are qualified to offer financial guidance. 

The designations and credentials fall into several categories:

Financial Planning

CFP® / CERTIFIED FINANCIAL PLANNER professional, is the highest standard for a financial planner indicates the person has completed training and certification awarded by the Certified Financial Planner Board of Standards. A CFP® has financial management expertise in areas such as financial planning, taxes, insurance, estate planning, and retirement planning (including 401k and 403(b) plans.) To attain this designation a person must have a formal education and undergo a rigorous and demanding process that requires passing a series of standardized tests, years of experience (6000 hours), and meet ethics requirements of the CFP® Board. All MMBB financial planning specialists possess the CFP designation.

CFPs must complete ongoing training annually to maintain the designation and remain current with various skills and industry standards. A key differentiator from other financial planners is that with the CFP® designation comes a fiduciary duty. This means he or she is required to make financial recommendations with their client’s best interest in mind. 

ChFC® / Chartered Financial Consultant certification prepares a financial planner to offer guidance on basics of financial planning and risk management, tax strategies, retirement planning, investing, insurance and estate planning strategies that include gift planning and inheritance. Study and certification requirements are determined by the American College of Financial Services. Three years of relevant financial experience is required, successful completion of an eight-course regimen and adherence to The American College Code of Ethics and Procedures. Once certified, persons are required to enroll in the annual Professional Recertification Program to continue active practice.

Accounting

CPA / Certified Public Accountant is licensed by a state board of accountancy. Most states require a bachelor’s degree in accounting or a related area to qualify as a candidate for CPA certification. Applicants should have completed at least 12 full months with no less than 1,600 hours of qualifying experience during the 60-month period immediately preceding the date of application for the exam. The person is required to successfully complete the Uniform CPS exam under the supervision of the National Association of State Boards of Accounting (NASBA) by as well as several years of public accounting experience. The candidate must also meet the licensing requirements as determined by the state where they intend to practice. Accountants interpret and analyze a company’s operations and finances so management can make informed decisions about company finances that impact business goals and operations. This is the highest designation that an accountant can attain, and most states require continuing education to remain licensed.

Specialized Retirement Training

Many financial planners enhance their knowledge with in-depth training on retirement planning.

CRPC® / Chartered Retirement Planning Counselor a program for financial professionals that prepares them to advise clients on their pre-and post-retirement demands in addition to asset management and estate planning.  The College for Financial Planning®—a member of the Kaplan Company family has created the Chartered Retirement Planning Counselor™ (CRPC^®) education and designation program. The CRPC® course requirement includes 9 courses offered over three semesters. Applicants will spend 90-135 hours to train and prepare for the exam. To receive the designation, students must pass a final exam with a grade of 70 or higher and are entitled to make up to two attempts to pass the exam.

RICP® / Retirement Income Certified Professional demonstrates the person is trained to advise and implement on a range of retirement strategies including retirement income planning, decisions about social security, portfolio withdrawal strategies, Medicare, long-term care planning and inheritance and legacy planning. The person must have three years’ experience as a practicing financial professional such as a CFP® or ChFC® and must complete requirements determined by the American College of Financial Services. A person will take three-courses; each course takes 45-60 hours of self-paced study offered online and then must pass a closed book proctored exam at the end of each course. The RICP® designation requires three hours of continuing education every two years and must comply with The American College Code of Ethics and Procedures.

Investing

CIMA® / Certified Investment Management Analyst® receives training in a wide rage of investment areas including advanced portfolio construction, Environmental, Social and Governance (ESG) investing, active and passive investing styles, managing risk and return, developing investment policy statements, and having the capabilities to understand and construct portfolios as a fiduciary for their client. Certification is offered by the Investment & Wealth Institute. Candidates must demonstrate three years of related experience in financial services, pass two comprehensive background checks, complete an executive level course that covers five areas of investment and pass a rigorous exam process. To maintain their certification, a person must Complete and report 40 hours of continuing education credit, including two ethics hours and one hour of tax or regulation information and adhere to Investments & Wealth Institute Code of Professional Responsibility and report any complaints or disciplinary actions registered during the previous two-year period.

Remember, whether you are working with an MMBB financial planning specialist, an accountant, tax lawyer, or another financial professional, pay attention to their credentials so you can be aware of “who is minding your money.”