Financial Credentials: What Do They Mean?

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The right advisor can help ensure that your finances are shipshape and that you are on a course that is appropriate for your risk, timeline and goals. But sorting through a sea of credentials – from CFPs to CLUs to the NAFEP – may make your head swim until you’re ready to go AWOL. So how can you find the financial advisor who’s best for you?

Common Credentials at a Glance

Designation Organization How Paid? Fiduciary?*
Certified Financial Planner (CFP) CFP Board of Standards Inc. Fee-based and/or commissions Maybe
Chartered Financial Analyst (CFA) CFA Institute Fee-based and/or commissions Maybe
Chartered Financial Consultant (ChFC) The American College Fee-based and/or commissions Maybe
Chartered Life Underwriter (CLU) The American College Commissions Not usually
Registered Investment Advisor (RIA)** SEC** Fee-based and/or commissions Maybe
Accredited Investment Fiduciary (AIF) Fi360 Fee-based and/or commissions Probably
Registered Representative*** FINRA† Commissions Not usually
Broker/Dealer FINRA Commissions Not usually
Insurance Agent State insurance agency Commissions Not usually

There are many other initials that may be trailing an advisor’s name – always ask what they mean. In addition, individuals without specific credentials may call themselves financial planners or financial advisors. They may be fee-based, commission-based or a combination. You need to ask whether they have fiduciary responsibilities in regard to their investment advice to you. Members of The National Association of Personal Financial Advisors are required by the organization to sign a fiduciary oath.

Always ask whether an individual will be acting in a fiduciary capacity when giving you advice. In some cases, individuals may be acting as fiduciaries for some kinds of advice they provide but not for others.
**  RIAs who manage $25 million or more in client assets generally must register with the SEC. If they manage less than $25 million, they generally must register with the state securities agency. Request Form ADV from the RIA to see if he or she is properly registered.
***  A registered representative who has successfully completed the FINRA Series 6 exam is licensed to sell annuities and mutual funds. One who has completed Series 7 and 63 can sell a full range of investment products. Do not confuse a registered representative with a registered investment advisor.
†   FINRA is the Financial Industry Regulatory Authority, the largest independent regulator for all securities firms doing business in the United States.