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Not All Financial Credentials Are Created Equal

By Kevin R. Keller, CAE April 14, 2021 LinkedIn

Choosing a financial planner can be one of the most important decisions in a person’s life. A financial planner can help you set your goals, provide a roadmap to reach them, and be your guide to the special tools and strategies that can help you get there.

When you begin looking for the financial planner who will meet your needs, there are a number of factors to consider, including professional credentials.

In the financial services industry, it’s common to see financial advisors put letters after their names. Some advisors use long strings of these letters — something that has led to the phrase “alphabet soup.”

Not all financial credentials are created equal. There are rigorous certification and education programs that confer a designation. And there are designation-granting programs that can be completed over the course of a weekend.

However, not all financial credentials are created equal. There are rigorous certification and education programs that confer a designation. And there are designation-granting programs that can be completed over the course of a weekend.

How do you tell which are meaningful designations?

FINRA, the organization that oversees broker-dealers in the U.S., has a list on its website of the many professional designations held by financial advisors. There are now more than 200 designations listed. FINRA does not approve or endorse any professional credential or designation, but their list is a great resource for getting basic information about the designations you might see after a financial advisor’s name.

If you take a closer look at the FINRA list, you’ll find that only 8 of the 200+ designations are accredited. That’s less than five percent of the listed designations.

What does accredited mean?

Accreditation provides impartial, third party validation of a credentialing program, thereby enhancing the program’s credibility and legitimacy. It not only signifies that a credentialing program has met a set of accreditation requirements in the past, but also requires a program’s commitment to improve continuously. Accredited programs must maintain ongoing relevance by updating their requirements to align with changes in the topics and practice areas they represent.

Accreditation is important. And it is not easy to achieve. But accreditation is essential for trust and legal defensibility of a certification.

Accreditation is important. And it is not easy to achieve. But accreditation is essential for trust and legal defensibility of a certification.

That is why my predecessors at CFP Board pursued accreditation for our CERTIFIED FINANCIAL PLANNER™ certification program. In 1995, CFP® certification was first accredited by the National Commission of Certifying Agencies, or NCCA — and that was the first ever non-health related NCCA certification in the US. We successfully renewed NCCA accreditation in 2019, and we will go through the re-accreditation process again in 2024.

To ensure the CFP® certification program reflects the current practice of financial planning, CFP Board conducts a Practice Analysis Study to validate the essential financial planning knowledge and topics required for competent financial planning. The Practice Analysis Study is one of the ways we ensure that our accreditation continues, and we conduct this study approximately every 5 years.

A Practice Analysis Study involves research with our CFP® professionals, as well as broad-based input from educators from CFP Board-registered academic programs and other financial planning subject matter experts. This research validates which previously identified topics and tasks are still important to the practice of financial planning, and it identifies new topics and tasks that have become part of the practice of financial planning or will impact it in the near future.

For our latest Practice Analysis Study, we expanded our research to include studies with the end-users of CFP® certification: the firms that hire CFP® professionals, and the clients of CFP® professionals. This additional research provided us a holistic, 360-degree view of the practice of financial planning.

The primary outcome of our Practice Analysis Study is an updated list of Principal Knowledge Topics. These are the topics covered in the curriculum of each CFP Board-registered academic program, the topics assessed on the CFP® exam, and the topics we accept for continuing education credit.

The updated Principal Knowledge Topics from our most recent study includes a brand-new category called Psychology of Financial Planning. This includes topics related to the attitudes, values and biases of clients and financial planners, the sources of money conflict, the principles of counseling, and general principles of effective communication, among other things.

The new Psychology of Financial Planning category really reinforces the value and relevance of CFP® certification. I’ve heard many times from leaders at firms that hire financial advisors that they need more advisors who can effectively communicate to and relate with their customers. A financial planner can have all the technical financial knowledge in the world. But that knowledge has little value if she can’t effectively communicate that information to her client, and demonstrate understanding of how a recommended course of action meets the client’s needs and goals.

We believe the Psychology of Financial Planning will help ensure that the next generation of CFP® professionals develops not only with a mastery of financial planning’s body of knowledge, but also prepared to provide excellent service to their clients. And we believe the Psychology of Financial Planning will be an important focus for the professional development of the nearly 90,000 individuals who currently hold CFP® certification in the U.S.

Accreditation of the CFP® certification program validates and enhances the value of the CFP® mark for financial planners, their firms and their clients. The CFP® mark identifies financial advisors who have met competency standards that reflect the practice of financial planning. Those competency standards, together with CFP Board’s enforcement of the Code of Ethics and Standards of Conduct for CFP® professionals, make CFP® certification the standard of excellence for financial planners.


This article was originally published on LinkedIn on April 14, 2021.

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About the Author: Kevin Keller, CAE is Chief Executive Officer of CFP Board. CFP Board’s mission is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.