Wealth Management Credentials

Wealth Management Credentials

Measuring an advisor’s expertise

Many financial services designations today cover aspects of wealth management, but the sea of acronyms can be as confusing for you as it is for your clients.  As an attorney, trust officer or family office professional, you work alongside advisors in serving clients. Here’s a closer look at six certifications you’re likely to encounter.   

 

Certified Investment Management Analyst® (CIMA)

CIMA professionals work with individual and institutional clients as investment consultants, investment advisors and investment managers, providing guidance on the investment process.  Certificants must pass a “qualification exam” (level one) and a “certification exam” (level two), focused on topics such as the investment consulting process, portfolio performance and risk measurement, traditional and alternative investments and fundamentals such as statistics and methods, applied finance and global capital markets history and valuation.  CIMA professionals work for a range of firm types; roughly half are employed at large brokerage firms, and more than a third serve as independent financial advisors (registered investment advisors or independent broker dealers).

 

Certified Private Wealth Advisor® (CPWA)

The CPWA certification is designed for advisors who work with high-net-worth clients (defined as $5 million or more of net worth based on Investment Management Consultants Association’s 2012 job task analysis).  Advisors who hold the CPWA certification are well versed in topics like executive compensation, estate planning and wealth transfer, closely-held business owners and charitable giving.  CPWA professionals often serve on teams that provide comprehensive advisory services to high-net-worth clients.

 

Certified Financial Planner® (CFP®)

The CFP certification is the industry standard for financial planning.  CFP professionals focus on holistic planning and helping clients navigate insurance, budgeting and retirement needs. CFP professionals study and are tested on topics such as insurance planning, asset protection planning, tax planning and general financial planning and consulting. Financial planners are educated on a wide range of topics of importance to the United State’s mass affluent and middle class.  

 

Chartered Financial Analyst (CFA))

 Globally recognized and issued by the CFA Institute, the CFA charter covers investment analysis and portfolio management skills.  The program includes three exams that must be passed sequentially, focused on topics such as investment tools, asset classes and portfolio management and wealth planning. In the United States, more than 40 percent of charter holders work as research analysts or portfolio managers, according to the CFA Institute.

 

Chartered Financial Consultant® (ChFC)

ChFC focuses on advanced financial planning for individuals, preparing advisors to address the needs of professionals and small business owners, according to the American College of Financial Services.  Those who earn the certification gain in-depth understanding of financial planning disciplines, including insurance, income taxation, retirement planning, investments and estate planning.

 

Certified Trust and Financial Officer (CTFA)

Issued by the American Bankers Association, the CTFA certification is designed for trust officers, trust tax specialists, financial planners and private bankers. Knowledge areas include tax law and planning, investment management, fiduciary and trust activities and ethics.

Five Questions

This isn’t an exhaustive list of the credentials you’ll encounter.  The Investment Management Consultants Association—whose Board of Directors I chair—believes there are five important questions stakeholders should ask when evaluating a credential, and FINRA addresses most of these on its site: 1) Who offers the credential and why? 2) Does the program have rigorous requirements for each of the “Four E’s” (experience, education, examination and ethics)? 3) Is there an independent disciplinary process that can cause certificants to lose their rights to hold the marks? 4) What are the continuing competency requirements? 5) Who certifies the certifier?

It’s also important to understand the difference between certifications and certificate programs. Certificate programs—designed for newcomers and experienced professionals alike—entail completing a course and demonstrating knowledge, before listing the achievement on a résumé. A certification program, on the other hand, typically requires a minimum experience level, indicates mastery and competency, permits use of letters after an individual’s name and has ongoing requirements.  Simply put, a certification program is much more demanding and signifies additional expertise.   

When you’re working with financial advisors, take a minute to examine their credentials. Understanding what the letters after the advisor’s name mean can make a big difference in your partnership—and in how you work together to address your clients’ needs.

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