Your Advisor’s Certifications (What on earth do they mean?)

Finding the right advisor is never easy. There are many variables to consider when looking for an advisor, such as experience, location, personality, investment philosophy, and certifications. Nowadays, there are a number of different certificate titles complementing the names of financial professionals—CFP®, CPA, CFA, Series 65 and others—which can be quite overwhelming at times. The good news is that with a little research about each of these designations, the process of finding the right advisor can actually become a little easier.

Here we will focus on defining these certifications, some of the educational requirements behind them, and their benefit to you, the client.

 

What does a CFP certification mean?

Certified Financial Planner (CFP®)

The focus of the CFP® career and its training path is to educate financial advisors on how to create and implement financial plans for investors. According to the CFP® Board, to take the CFP® exam an applicant must have a bachelor’s degree (or higher) accredited by the US Department of Education and complete a CFP® Board-approved education program.1

The program consists of the following financial concepts:

  • Financial planning
  • Fundamentals of insurance planning
  • Income taxation
  • Planning for retirement needs
  • Investments
  • Estate planning

Once an applicant has met all the educational requirements, they must then pass a rigorous ten-hour exam. The applicant must also have three years of professional experience in financial planning before actually receiving their certification. A passing CFP® exam score combined with relevant work experience typically results in a very well-educated individual ready to assist those seeking financial planning and investment advice. As of 6/30/14, there are 70,051 CFP® Certificants in the United States.

 

What does a CPA certification mean?

Certified Public Accountant (CPA)

Accountants with the CPA designation have a fundamental knowledge of the US tax codes and may also specialize in taxation for certain industries. For example, some accountants may specialize in public accounting for telecommunication companies.

Requirements for the CPA can vary state to state, but applicants generally must have at least one to two years of working experience as well as a bachelor’s degree with up to 30 hours in accounting courses before they are eligible to take the CPA exam.2 The exam covers a broad range of accounting topics including auditing, legal regulations, reporting and more. Obtaining the CPA certification can be a rigorous process for the applicant, but the result is an individual equipped with the tools to tackle a variety of complex tax issues. A CPA designation is usually not required to assist with individual returns, but given the in-depth education and experience, it can be very beneficial to consult a CPA for tax assistance.

What does a CFA certification mean?

Chartered Financial Analyst (CFA®)

The CFA® program is a comprehensive pursuit to understanding principles in accounting, economics, statistical analysis and portfolio management.3

Given the breadth of the CFA® training and exam program, CFAs can pursue a behind-the-scenes analytical role (such as a financial analyst), or something on a business’s front-end such as a Financial Advisor. This program also requires an applicant to have an accredited bachelor’s degree and three years of applicable professional experience. This certification is considered by many to be world class and is recognized globally for financial professionals.

Series 65

The Financial Industry Regulatory Authority (“FINRA”) Series 65 is a license required by many states for professionals acting as investment advisors. The FINRA Series 65 exam tests on laws, regulations and ethics applicable to investment advisors as well as topics such as retirement planning, portfolio management strategies and fiduciary responsibilities.4 There is no formal educational requirement to take the FINRA Series 65 exam, nor is there any experience required to obtain the license, but relevant employment is mandatory for maintaining the license. This certification credits the applicant with having a foundational understanding of financial regulations and practices.

CFP®, CFA, CPA, Series 65

Each program emphasizes different financial principles, but what they have in common is their thorough emphasis on ethics. These designations bind their recipients to the highest standards of practice. Additionally, the CFP®, CFA, and CPA certifications are revered for high credibility, which is why each applicable board takes extreme caution with their applicants.

So do your own research on your advisor and find out if he or she holds any of these certificates or has specialized experience or knowledge they can bring to your particular situation. Remember, just because two advisors may have the same certification doesn’t mean they are necessarily equal.

 

 

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional. Hewins does not provide tax, accounting or legal services.
Sergio Campos
Sergio Campos

Technology Associate

Sergio Campos is the Technology Associate for Hewins Financial Advisors, based in Redwood City, CA. Sergio serves on Hewins' Operations Team, primarily focusing on issues related to digital security and technology trends impacting the advisory industry.

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Your Advisor’s Certifications (What on earth do they mean?)

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