If you are shopping around for a competent financial advisor, or FA, to help you decide whether to sell a structure settlement, or the best way to invest the proceeds, you should consider their education, experience, and expertise. One easy way to get an idea of a prospective FA’s background is to look at the letters after his name; that is, whether he carries any special certifications or professional designations. Attainment of any of these suggests a minimum level of knowledge and/or work experience. Here’s a guide to some of the more likely ones you’ll see when evaluating prospective advisors.
Designations of professionals with general financial planning knowledge:
CPA – Certified Public Accountant. CPAs have studied accounting and have passed exams to earn the certification. CPAs can specialize in a number of areas, however, so if you are seeking a CPA who has further expertise in financial planning, look for the PFS, or Personal Finance Specialist, designation.
CFP – Certified Financial Planner. This designation is given by the Certified Financial Planner Board of Standards, Inc., to candidates who have completed extensive study in financial planning, have passed certification exams, and have attained experience in financial planning.
ChFC – Chartered Financial Consultant. Much like CFPs, the ChFC has demonstrated knowledge of financial planning topics, passed certification exams, and has gained related work experience.
Designations of professionals who concentrate on investments:
CFA – Certified Financial Analyst. A designation for professionals who have at least three years of work experience and who have passed rigorous exams concentrating on portfolio management and investment analysis.
CFS – Certified Fund Specialist. This professional concentrates on analysis and investment in mutual funds.
CIC – Chartered Investment Counselor. Another designation that emphasizes investing.
Designations of professionals who concentrate on insurance and estate planning:
CFTA – Certified Trust and Financial Advisor. This person has passed an exam that focuses on retirement and estate planning, investment management, and taxation.
CLU – Chartered Life Underwriter. This is a designation administered by the American College, and goes to individuals who have demonstrated expertise in the areas of estate planning and life insurance.
This is far from an exhaustive list; many other designations exist, each with their own qualifications. While a professional certification should not be your sole criterion for choosing a financial advisor, the institutions that award these designations usually require the professionals to maintain certain ethical standards and even continuing education. You might consider giving a few bonus points to these professionals when choosing the one who will help you.
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