Friday, August 21, 2009

Alphabet Soup Revisited

Perry Moore authored this blog. Perry is Director of Wealth Planning at Payne Wealth Partners. Please read more about Perry here.

In a 2005 newsletter we wrote about the maze of professional designations those in our industry carry in an article titled “Alphabet Soup”. There were so many designations, in fact, that most investors didn’t have the slightest idea what each meant, and more importantly, what each required of the advisor to earn and maintain. Four years later the maze has turned into a labyrinth.

In a recent article by Elaine Floyd at, the International Association of Registered Financial Consultants estimated there are over 80 designations currently available to financial professionals. This does not include what would fall in the insurance, tax, and legal areas- with these the number quickly climbs into the hundreds. What complicates matters is that each of those designations has its own set of requirements (or in some cases lack of requirements) for education, ethics, experience, testing, and continuing education. For example, there are designations that require submission of a resume and $300 fee for completion. No specific education, testing, ethics or experience requirements! Still others require attendance at a 2-day seminar and a larger fee of $600 to obtain a designation. Compare these to the Certified Financial Planner™ designation, which requires a bachelor’s degree, 3 years experience in financial planning, passing a 2-day 10 hour exam (with pass rates averaging 50%), 30 hours of continuing education every 2 years, and ongoing ethics training. Quite a difference- but how can an everyday investor determine the differences when all the letters behind advisors’ names look so similar?

There are a number of things an investor should do to arm themselves with the right information. provides details about every financial designation available here: - you can find information on all the critical parts of every designation you may see an advisor using. With some quick research you’ll be surprised at how many “designations” are more smoke and mirrors than major accomplishments. Of course you can always ask the advisor what they have done and continue to do for their designations- look for the details about the programs they’ve been through and what they’re doing on an ongoing basis to keep up with planning, investment, and legislative changes. Another easy source to access is the website for the provider of the designation you’re checking out. For example, by doing a google search for “CFP” you can quickly find the Certified Financial Planner™ Board of Standards website. The old saying goes- “caveat emptor”- only this time you’re armed with the right sources to do your homework and pick out the winners.