Michael Kitces, the respected financial advisory industry blogger and co-founder of the XY Planning Network, possesses deep knowledge of many subsets in a complex field.
So he gets a pass for having an eye-popping eight industry designations on his business card. (That’s 29 letters in total if keeping score at home.)
For most advisors, that’s overkill. In fact, clients may not even generally notice a string of accreditations, beyond the all-important Certified Financial Planner (CFP) designation.
“CFP is the most recognized name in the entire alphabet soup of titles you can compile,” says Steven Stanganelli CFP, CRPC, AEP and principal of Amesbury, MA-based ClearView Wealth Advisors. He doesn’t necessarily think that also being a Chartered Retirement Planning Counselor and Accredited Estate Planner has led to a massive uptick in the number of clients contacting his firm.
“But if a prospect comes to me looking for help in one of those areas, they may be comforted by knowing that I have developed an expertise that can be of help to them,” he says.
Scott Hammel, CFP, CRPC, a Dallas, TX-based advisor, concedes that advisors may be overestimating the value that a trophy case of designations provides in attracting clients.
“When I was younger, the goal was to collect as many designations as I could,” he says. “Now, we’re seeing advisors drop off designations from their bios to more squarely focus on their specific niches.” He suggests that having “lots of letters after your name can come off as having a lot of insecurity around your skill set.”
Though the Certified Financial Planner Board of Standards’ LetsMakeAPlan.org website was sharply criticized in a Wall Street Journal article this summer, resulting in a task force that will study enforcement practices, the CFP designation’s lofty stature remains intact.
Hammel says two designations on a bio typically suffice – the CFP mark, “along with a popular designation such as CFA (Chartered Financial Analyst), CLU (Certified Life Underwriter) or CDFA (Certified Divorce Financial Analyst).”
Advisors, however, should think twice before pursuing a CFA. Anyone that has been through the multiple years of study and exams will tell you that it can be a soul-crusher, consuming thousands of hours of study time. And unless you hold yourself out as an advanced portfolio manager, the skill set may be nonessential in an era when many advisors are working to simply adhere to benchmarks and keep portfolios in balance.
Since many advisors join the field from accounting or law, having a CPA or JD is likely a business booster.
Still, some advisors are motivated to keep expanding the alphabet soup of letters after their name. Steven Kaye, founder of New Jersey-based AEPG Wealth Strategies, can also lay claim to the AAMS, AIF, CEBS, CFP, ChFC, CLU, CRC, and RHU designations.
While he’s been in business for 39 years, he still has ample time to keep learning. According to the Financial Industry Regulatory Authority (FINRA), advisors can choose from among 207 different professional accreditations.
Some are fairly obscure, such as the Fraternal Professional Certificate (FPC) and the Certified Kingdom Advisor (CKA) accreditation.
But many have tangible merit, for reasons that go beyond making an impression on clients.
Kaye says he “wanted to be a one-stop shop to meet many of my clients’ needs, and it was important for me to be very knowledgeable in a range of areas of expertise.”
He’s especially proud of his CEBS (Certified Employee Benefit Specialist) designation.
“It’s the gold standard of designations. The examination is even harder than the CFP exam,” he says. He adds that the Accredited Investment Fiduciary (AIF) is also an important option, providing even greater insights to the role of a fiduciary than you’ll find from most other sources.
Do additional designations translate into more business? Many advisors procure a range of designations in hopes of appearing in more “find an advisor” boxes. Thinking of them as a source for lead generation, however, is a mistaken idea, says Stanganelli.
“I’ve never had a client come directly to me through the portals of the firms that provide the designations,” he says. Yet, merely appearing as a member on some sites “can help from an SEO (search engine optimization) perspective.”
Perhaps the greatest reason to pursue industry designations is to become a smarter advisor for clients. Conversely, any designation that simply requires watching a few videos and taking a quick quiz is of little use. “For some of these, the bar is so low you could trip over them,” says Kaye.
David Sterman, CFP, is president of New Paltz, NY-based Huguenot Financial Planning
