Credentials Explained

There are literally hundreds of designations or certifications that a financial professional might choose to use with clients. Some are very meaningful, involving years of study and preparation. Others were earned in a weekend with an easy open-book test and represent very little real education. Click on "Learn About Common Credentials" below to review descriptions of the designations you are most likely to see. Before you trust a professional with a credential you don't recognize, be sure to find out more about what it took to earn.

What's the difference between a "certification" and a "designation"?

These terms are usually used interchangeably, even though some credentialing organizations may try to create artificial distinctions between them. The key is to look for strong education supported by ongoing requirements: does the mark require experience as a prerequisite and continuing education and adherence to a rigorous ethical code, and can the credential be removed if financial professionals are not compliant with those standards?

Aren't financial professionals required to hold a certification?

While many states require professionals to pass a proficiency examination or meet other requirements, financial professionals are not required to hold any specific designation. There are a number of quality designations your professional may hold, including the CLU® (Chartered Life Underwriter®), CFP® certification (Certified Financial Plannerâ„¢), or ChFC® (Chartered Financial Consultant®). Other common marks include the CFA for securities analysts and the PFS (Personal Financial Specialist) designation for CPAs.

What are the key attributes of a quality credential?

Look for financial professionals who hold credentials that are (1) comprehensive and academically rigorous; (2) are not focused on sales and marketing; (3) take significant time and effort to earn; (4) have experience, ethics, and ongoing continuing education requirements; and (5) may be removed for non-compliance. The education for such designations is often earned at accredited educational institutions and is most often conferred by non-profit organizations.

Sponsored by: