Financial professionals help clients with various aspects of their financial life, from investments to budgeting to retirement planning and beyond.
How can one best help their clients without the most up-to-date and advanced knowledge? Professional certifications are key to furthering your career and ensuring you are offering your clients advice during the planning process.
Of course, continuing education and certification programs are a big time investment, both financially and time-wise. However, these certifications help recognize your specialized knowledge or specialized skill set – which can benefit both your own career and help you with planning for your client’s future. Let’s dive into why certifications can be beneficial to your career and your clients and learn more about the many different types of financial certifications out there.
Why are certifications beneficial?
Certifications are a key cornerstone to your career as a financial advisor. Certifications can also help you position yourself within a niche. Being known in a niche market can allow for a steady referral stream and recognition as a thought leader.
1. Competitive advantage
When you have certifications and training that your competitors don’t have, it sets you apart. Certifications help distinguish you from your fellow colleagues, proving you have demonstrated commitment to excellence in your field. Introducing your clients to competitive products, strategies or technology can help account for a stronger referral base.
2. Improve productivity
Advanced training and more knowledge can help guide and direct you in your work – saving you time and effort. With more training, you can manage all aspects of your work more effectively and be more productive.
3. Maximize your potential income
It’s simple: clients want to work with established professionals in their field, and CFPs are often seen as specialists, and knowledgeable in their industry – and therefore, worth the added price.
Different Types of Financial Advisors Certifications
Certifications come in all shapes and sizes from a variety of professional organizations. You can receive one of these licenses from professional organizations like the Financial Planning Association, the American College of Financial Services, the American Academy of Financial Management, the Certified Financial Planner Board of Standards, Inc., and the National Association of Personal Financial Advisors, among others. Let’s dive into the different types of financial advisor certifications.
1. CFP: Certified Financial Planner
What is CFP? A CFP stands for a certified financial planner or someone who is trained to take a holistic, all-encompassing approach to financial planning for their clients. CFPs help their clients with budgeting, retirement planning, estate planning, and more. CFPs are certified financial planner fiduciaries and must work in their client’s best interests.
If you’re wondering how to get the CFP credentials, know it can be a big commitment. CFPs must take multiple classes, pass a notoriously difficult exam and accrue years of experience before they receive this certification.
2. ChFC: Chartered Financial Consultant
A chartered financial consultant (ChFC) works with personal financial management, retirement planning, tax issues, estate planning, and life insurance. However, this certification is slightly more in-depth than the CFP and requires more coursework. However, unlike a CFP, this certification requires a test after every section instead of one large exam. Like a CFP, ChFCs are required to act as fiduciaries.
3. RIA: Registered Investment Advisor
A registered investment advisor is a certification for a company, not a financial advisor. RIAs must register with the Securities and Exchange Commission (SEC) or a state regulatory agency. Again, RIAs must act as fiduciaries.
4. IAR: Investment Adviser Representative
Investment adviser representatives, or IARs, are financial professionals who work for an RIA. IARs are certified with Series 65 or Series 7 exams. They must also take Series 66 and/or Series 63, which is administered by the FINRA, which the federal government authorizes to oversee US broker-dealers. Most IARs will often have CFP or CFA certifications as well.
The big draw for clients? IARs have a strong commitment to fiduciary responsibility and must disclose conflicts of interest. In addition, they must tell clients about more efficient products – even if it means smaller commissions.
5. FSCP: Financial Services Certified Professional
An FSCP, or Financial Services Certified Professional, is a certification that offers financial professionals more knowledge in products, marketing skills, and planning skills. There is no educational prerequisite, but you must complete multiple courses and an exam to get the certification. The certification is issued by the American College of Financial Services.
6. RICP: Retirement Income Certified Professional
The retirement income certified professional, or RICP, gives financial advisors the training to help clients better plan for retirement. This means claiming Social Security, defining risk factors, and managing distributions from retirement plans. The program also helps advisors understand Medicare, life insurance management, long-term healthcare, and retirement tax issues, among others.
RICP certifications are administered by the American College of Financial Services. Financial advisors, lawyers, accountants, and bankers seek out this certification to gain a better understanding of all factors that play a role in retirement planning.
7. CPWA: Certified Private Wealth Advisor
The certified private wealth advisor certification, or CPWA, is meant for wealth managers who work with affluent clients. Wealth management advisors work with specific portfolios of investment securities for their clients. They manage their client’s portfolios, but these financial advisors generally do not offer a big variety of advice. CPWAs do not normally, for example, offer financial advice for their entire financial life and instead work with investments.
8. CLU: Chartered Life Underwriter
A chartered life underwriter certification, or CLU, teaches financial advisors about life insurance planning. CLUs work as part of an estate planning team, most often for high-net-worth individuals with complex holdings. CLUs often deal with family businesses and asset structures, as well. This certification is administered by The American College of Financial Services.
Key Takeaways
Financial advisors can take their business – and their own skills – to the next level with specialized certification. Certifications help convey to future clients as well as current clients that you know what you’re doing. In fact, 84% of consumers who work with CFP-certified professionals say they are extremely or very satisfied — and 71% are more confident about their finances. Obtaining certification may not only help you with a more niche market but also help in delivering a better experience to your current clientele.
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