The Financial Certifications Alphabet Soup

When it comes to financial certifications, you’re not alone in having difficulty distinguishing between a CFA®, CFP®, CIC®, ChFC®, or any of the other options. In order to find the most appropriate financial professional for you, you must first sort through an alphabet soup of names. Here is a look at the nine most popular designations, as well as a brief explanation of the education and expertise each designation represents, as well as the type of work performed by the professionals who hold them, in this section.

CFP® is an abbreviation for Certified Financial Planner.

Those who have earned the CFP® designation have proven their expertise in all aspects of financial planning and management. More than 100 topics are covered in detail in the studies. These include stocks and bonds as well as taxation, insurance, retirement and estate planning, among other things. The Certified Financial Planner Board of Standards, Inc. is in charge of administering the program. Along with passing the CFP certification exam, candidates must complete qualifying work experience and agree to follow the CFP board’s code of ethics as well as the organization’s standards for professional responsibility and financial planning.

People who seek financial planning services work with professionals who assist them in understanding their options and making financial decisions that are appropriate for their personal financial situation and goals. Because of the nature of their work, people have a great deal of faith in these individuals and their abilities.

Information about the financial planning process and current licensees is made available on the CFP board’s website, allowing clients of CFPs to determine whether or not their financial planners’ designations are in good standing. The last thing anyone wants to do is choose a certified financial planner whose certification has been revoked.

CFA® is an abbreviation for Chartered Financial Analyst.

The CFA Institute offers this designation as a way to distinguish yourself from the competition (formerly the Association for Investment Management and Research [AIMR]). Candidates for the CFA charter must meet a number of requirements, including passing three difficult exams and accumulating at least three years of qualifying work experience. Candidates who pass these exams demonstrate their competence, integrity, and extensive knowledge in accounting, ethics and professional standards, economics, portfolio management, and securities analysis.

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CFA charter holders are typically analysts who work in the fields of institutional money management and stock analysis, rather than financial planning, according to the CFA Institute. These professionals conduct research and assign ratings to a variety of different types of investments.

CFS (Certified Fund Specialist) is an abbreviation for Certified Fund Specialist.

According to the name of the certification, a person who holds it has demonstrated his or her knowledge of mutual funds and the mutual fund industry. This group of individuals frequently advises clients on which mutual funds to invest in and, depending on whether or not they have their license, will buy and sell mutual funds on their behalf. This course is offered by the Institute of Business and Finance (IBF), formerly known as the Institute of Certified Fund Specialists, and it covers a wide range of mutual fund topics, such as portfolio theory, dollar-cost averaging, and annuities.

The knowledge that these CFS designees possess is kept up to date through the requirements of their continuing education.

ChFC stands for Chartered Financial Consultant.

Individuals who hold the Chartered Financial Consultant (ChFC) designation have demonstrated their extensive and in-depth knowledge of the financial planning industry. The American College oversees the administration of the ChFC program. Candidates must pass an exam in financial planning, which includes income tax, insurance, investment, and estate planning, and they must have a minimum of three years of experience in a financial industry position to be considered for this position.

Professionals who hold the ChFC charter, like those who hold the CFP designation, assist individuals in analyzing their financial situations and setting financial goals.

CIC is an abbreviation for Chartered Investment Counselor.

According to the Investment Adviser Association, CFA charter holders who are currently registered investment advisors can pursue this designation by taking additional courses. The portfolio management component of the CIC program is the primary focus. The CIC candidate must also demonstrate that they adhere to a strict code of ethics and provide character references, in addition to demonstrating high-level expertise in portfolio management.

Individuals who hold the CIC charter are frequently found among the financial world’s major players, such as those in charge of large accounts and mutual funds, among others.

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CIMA stands for Certified Investment Management Analyst.

Investment analysts who hold the Certified Investment Analyst (CIMA) designation have a strong understanding of asset allocation, ethics, due diligence, risk management, investment policy, and performance evaluation. The CIMA is only available to individuals who are investment consultants with at least three years of professional experience, due to the fact that this certification represents a high level of consulting expertise. CIMA courses are available through the Investment Management Consultants Association.

Every two years, individuals who hold CIMA designations are required to demonstrate their expertise through continual recertification. To maintain their certification, CIMA designees must complete at least 40 hours of continuing education credits.

Those who hold the CIMA designation are more likely to pursue careers in financial consulting firms, where they will have extensive contact with clients and will be in charge of large accounts.

CMT® is an abbreviation for Chartered Market Technician.

The CMT® designation is awarded by the CMT Association, which is based in New York. In the field of technical analysis, the CMT designation represents the highest level of training available, and it is the preeminent designation for practitioners all over the world. With the help of a disciplined, systematic approach to market behavior as well as the law of supply and demand, technical analysis can help investors navigate the gap between intrinsic value and market price across all asset classes.

Earning the CMT credential demonstrates mastery of a core body of knowledge about investment risk in portfolio management, which includes quantitative approaches to market research as well as the design and testing of rules-based trading systems. CMTs are most likely to be found working in the sales and trading departments of sell-side firms, as research analysts in firms that provide technical analysis to their clients, or as portfolio managers and investment advisors in financial institutions.

The CMT Association owns the registered trademarks CMT® and Chartered Market Technician®, as well as other related terms.

Professional designations include Certified Public Accountant (CPA) and Personal Financial Specialist (PFS).
A Certified Public Accountant (CPA) is a professional accountant who has passed examinations in accounting and tax preparation. However, their title does not imply training in other areas of finance. In order to gain expertise in financial planning to supplement their accounting careers, CPAs who are interested in becoming certified as personal finance specialists must first obtain their CPA designation (PFS).

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Awarded by the American Institute of CPAs to those who have completed additional training and already hold a CPA designation, the PFS designation is a specialized designation.

CLU is an abbreviation for Chartered Life Underwriter.

This designation is awarded by the American College, and those who hold it are primarily employed as insurance sales representatives. The CLU designation is awarded to individuals who successfully complete a ten-course program of study and 20 hours of examinations to earn it. The fundamentals of life and health insurance, pension planning, insurance law, income taxation, investments, financial and estate planning, and group benefits are all covered in this course, as well as other topics.

Are the Letters of the Alphabet Significance?

While certifications are not required for all investment professionals, those who possess them should be given additional consideration. Most of these certifications require candidates to put in a significant amount of study time and to adhere to high ethical and professional standards in order to obtain them. For example, in order to earn the CFA designation, candidates must complete approximately 250 hours of reading per exam, with a total of three exams to pass in order to be eligible.

Because the tests are so demanding, approximately 64 percent of those who sit for just the level 1 exam will fail the course. Charter holders are required to adhere to a code of ethics as well as rules of professional conduct, among other requirements, once they have completed all three levels of the process and have earned their charter.

However, even though all of these exams are rigorous and the hours can be long, these designations should be just one component of your decision-making process when choosing a financial professional.

What’s the bottom line?

If you have to deal with a financial professional, it’s critical that you understand the extent to which he or she is knowledgeable in various aspects of the industry. You should now have a better understanding of what some of the designations mean and what those who hold them are expected to do.

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