Widely recognized private financial and investment advisor certifications

Summary: This article provides information on seven of the more widely held advisor designations granted by private certification organizations. They are Accredited Estate Planner – AEP, Certified Financial Planner – CFP, Chartered Financial Analyst – CFA, Chartered Investment Counselor – CIC, Chartered Financial Consultant – ChFC, Chartered Life Underwriter – CLU, and Personal Financial Specialist – PFS

The following certifications are widely recognized within the financial services advisory industry:

  • Accredited Estate Planner (AEP)
  • Certified Financial Planner (CFP)
  • Chartered Financial Analyst (CFA)
  • Chartered Investment Counselor (CIC)
  • Insurance Agents
    • Chartered Financial Consultant (ChFC)
    • Chartered Life Underwriter (CLU)
  • Personal Financial Specialist (PFS)

For other information about these and other certifications, see: Private certifications of financial planners and investment advisors

This short list of certifications was constructed using several sources. First, many other certifications require these certifications as a prerequisite. Second, when registering as an advisor with certain states, some of these certifications can substitute for passing various tests administered by the North American Securities Administrators Association, Inc. (NASAA) http://www.nasaa.org  Third, Form ADV, which is used by the SEC and most states to register advisors, explicitly lists many of these particular designations. Finally, these designations are mentioned more frequently in the financial planning literature and on financial and investment websites.

Accredited Estate Planner (AEP)

The AEP is conferred by the National Association of Estate Planners and Councils (NAEPC). (See: http://www.naepc.org ) To obtain the AEP an applicant must:

  • hold an attorney’s license, CPA, CLU, ChFC, CFP, or CTFA
  • be professionally engaged in "estate planning activities,"
  • have at least five years of directly relevant experience (or 15 years to exempt the educational requirements)
  • take certain required courses from the The American College (http://www.theamericancollege.edu/ ) or take two "challenge exams"
      • (See the ChFC and CLU listings below for more information on The American College.)
  • have membership in an NAEPC council,
  • submit references, and
  • commit to the NAEPC code of ethics.

Certified Financial Planner(CFP)

The CFP is conferred by the Certified Financial Planner Board of Standards Inc. (CFPBS). (See: http://www.cfp.net ) To obtain the CFP designation, a candidate must have either five years of personal financial planning work experience or three years and a bachelors degree. He must pass a comprehensive examination. To take this examination, he must either complete a course of study offered by various educational organizations, or he must already hold a CPA, ChFC, CLU, or CFA designation or a Ph.D. in business or economics, Doctor of Business Administration, or an Attorney's license. The CFPBS has an on-line consumer complaint and practitioner disciplinary process, and it supports on-line professional status checking and referrals.

According to the CFPBS, it is “a nonprofit regulatory organization (that) fosters professional standards in personal financial planning so that the public values, has access to and benefits from competent and ethical financial planning. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements. CFP Board currently authorizes more than 43,000 individuals to use these marks in the United States.” The CFPBS also “establishes and enforces education, examination, experience and ethics requirements for CFP® certificants.” 1 

Chartered Financial Analyst (CFA)

“CFA Institute is composed of more than 70,000 individual voting members and 131 nonvoting member societies that believe in setting a higher standard for the investment profession. Individual members either hold the CFA designation or are active in the investment business and agree to abide by the CFA Institute ethical requirements." (see: http://www.cfainstitute.org/aboutus/index.html)

Formerly the Association for Investment Management and Research (AIMR), the CFA Institute confers the CFA designation. Successful candidates must pass three successive examinations requiring approximately 250 hours of preparation for each examination. A candidate must also have either four years of work experience or an undergraduate degree and three years of work experience. For more information on the CFA designation see the CFA Institute's website: https://www.cfainstitute.org/.

The CFA Institute manages a professional conduct process including an investor complaint process and investors can enquire about the status of an advisor’s CFA credentials. See: https://www.cfainstitute.org/ethics-standards/conduct/professional-conduct-statement

Chartered Investment Counselor (CIC)

The CIC designation is conferred by the Investment Adviser Association of America, Inc. (IAA), which is the successor organization to the Investment Counsel Association of America, founded in 1937. (See: http://www.icaa.org ) The IAA “is a national not-for-profit association whose membership consists exclusively of federally registered investment adviser firms.” 2 Candidates must have worked for an ICAA member firm and must hold the CFA designation.

The American College

      • Chartered Financial Consultant (ChFC)
      • Chartered Life Underwriter (CLU)

The ChFC and CLU designations are conferred by The American College. (See: http://www.theamericancollege.edu/ ) To obtain either designation a candidate must complete eight courses and have three years of full-time personal finance or insurance experience. If a person has completed the CLU designation, then he could also obtain the ChFC designation by completing three additional courses. There is no complaint or disciplinary process for either designation.

The American College states that "founded in 1927 as The American College of Life Underwriters, the College has in recent decades broadened its instructional offerings to reflect the growing convergence of insurance and other financial services professions. A variety of designation, certificate, graduate-degree, and continuing education programs now complement its long-respected CLU designation.” 3

Personal Financial Specialist (PFS)

The PFS designation is conferred by The American Institute of Certified Public Accountants (AICPA). (See http://www.aicpa.org ) The AICPA established a PFS credential “for CPAs who specialize in personal financial planning.” To hold the PFS designation a person must:

  • be an AICPA member
  • hold a CPA that is issued by a state and is unrevoked
  • earn points based upon experience and examination
  • submit references and other proof of experience doing personal financial planning work.

1) Certified Financial Planner Board of Standards Inc. (CFPBS) website,  https://www.cfp.net/
2) Investment Advisers Association (IAA) website, https://investmentadviser.org/
3) The American College website, http://www.theamericancollege.edu/

Do Your Own Financial Planning