Financial Advisor Specialties And Career Paths

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Financial Advisor Specialties And Career Paths

Uncategorised Author: Admin


A career as a financial advisor is often a second choice career. A 2009 poll taken by the Financial Planning Association (FPA) found that over 85% of today’s financial planners started their careers in other professions. Is this a problem? No, not really and even though these advisors started their careers in another field, they underwent the best financial advisory education possible: life. The financial advisory profession is a people-driven profession and lends itself to those who have had a lot of life experiences under their belts.

Advisors who have already faced many of life’s challenges such as saving for and purchasing a house, paying for an education, or helping elderly parents deal with the financial challenges of retirement, are better prepared to advise others about successful planning and how to avoid the pitfalls associated with many of life’s challenges. In addition to the personal challenges they face, many future financial advisors learn valuable skills in their former professions. Skill sets such as problem-solving, analytical, sales, and people skills are the core foundation of the financial advisory profession.

Like many other professional services industries, all financial advisors are not the same. There is a great opportunity to specialize and many financial advisors will go on to obtain enhanced certifications in order to differentiate themselves from the competition and showcase their expertise.

So when you are interviewing to become a financial advisor and look at the interviewer’s card and it reads something like this; Joe Advisor, CFP, ChFC, CLU, RIA, AICPA/PFP, what does it mean? Here is a breakdown of the acronyms:

CFP (Certified Financial Planner) – There are three primary components to become a CFP. The first is a rigorous 10-hour exam divided into four sections covering over a thousand different topics integrated into major financial planning areas. Additionally, the CFP candidate must obtain a bachelor’s degree or higher in order to be able to sit for the exam. The second is a work experience component. The CFP candidate must demonstrate they have extensive experience in the financial planning field. The CFP Board defines work experience as “the supervision, direct support, teaching or personal delivery of all or part of the personal financial planning process to a client”. The third component of the CFP designation is continuing education. While a CFP is upheld to high ethical standards, the CFP holder is required to participate in 30 hours of continuing education.

CFA (Chartered Financial Analyst) – The CFA program is designed for advisors primarily in the institutional investing arena. The designation demonstrates a candidate’s mastery of investment analysis. To earn the designation, one must have at least four years of investment work experience, adhere to a code of ethics and professional standards, and pass a six-hour exam. On average, many candidates often spend an excess of 300 hours studying for each of the three levels of the exam.

ChFC  (Chartered Financial Consultant) – This financial planning designation is primarily used in the insurance industry and is awarded by the American College of Bryn Mawr. A ChFC holder must have at least three years of experience in the financial services industry and have passed the required exam.

CLU (Chartered Life Underwriter) – This designation is offered by the same institution that offers the ChFC designation. However, the CLU is specific to the insurance industry.

RIA (Registered Investment Advisor) – Although there are no exam requirements for the designation, it is significant. There are two types of RIAs and how they are regulated will give an investor an idea of how large the practice is. An advisor with at least $25mm in assets under management will be registered and under the regulatory control of the Securities and Exchange Commission (SEC). RIAs with less than $25mm in assets under management will register with the state they are located in but are still regulated by the SEC.

AICPA/ PFP – (American Institute of Certified Public Accountants / Professional Financial Planner) The Personal Financial Specialist (PFS) program lets CPAs demonstrate their knowledge and expertise in personal financial planning. The CPA/PFS credential can add credibility if the CPA specializes in personal financial planning with their clients or interacts with other financial planning professionals. CPA/PFS credential holders have specific requirements related to their personal experience, education, and exam record that sets them apart from other CPAs and financial planners. (AICPA.ORG)