What Is a Chartered Financial Planner?

The financial services industry is full of acronyms and designations for its practitioners. CFP, CPA, CFA, ChFC, and CLU are just a few of the more than 50 designations awarded to specialists in the financial field. Some designations require extensive classroom coursework as well as a number of years of practical experience. Some designations, such as Chartered Financial Consultant (ChFC), are awarded by educational institutions like the American College at Bryn Mawr, Pennsylvania. Others, such as Certified Financial Planner (CFP), are awarded by industry accreditation boards such as the Certified Financial Planner Board of Standards.

Significance

Anyone can declare themselves to be a financial adviser. There is no particular educational and experience requirement. If a person is going to offer financial services or sell financial products, there are certain licenses that may be required by the federal or state government. With recent revelations of Wall Street scams running into the billions of dollars, it is essential that individual investors thoroughly investigate those who will be handling their savings and investments. One way to protect yourself is to work with financial counselors who are properly credentialed in their fields.

Function

Financial designations such as CFP (Certified Financial Planner), CPA (Certified Public Accountant), CLU (Chartered Life Underwriter) and ChFC (Chartered Financial Consultant are bestowed upon industry professionals who have demonstrated an exceptional level of training, education and experience. The awarding of these credentials enables to individual investors to gauge the competence of their financial adviser and to make an informed decision regarding who to commit their funds to. By controlling the curriculum and experience requirements to obtain the designations, the governing agencies are able to maintain the quality and integrity of the industry.

Types

While Chartered Financial Consultants and Certified Financial Planners have achieved a lofty position in the financial services industry, there are dozens of specialized designations awarded for excellence in a variety of niche markets. Investors who are most concerned with estate planning should consider a professional with the designation of AEP, Accredited Estate Planner. Investors who are going through a divorce may wish to consult a CDP, Certified Divorce Planner. Business owners concerned with the well being of their employees may call on the expertise of a CEBS, a Certified Employee Benefits Specialist.

Considerations

There are more than 50 legitimate designations for financial professionals and more are being added on a regular basis. But just because someone has a bunch of letters after their name doesn't mean he is the right professional for you. You should always inquire what designations financial professionals have, what they had to do to earn them, what benefit they might have for your situation and what institution granted them. Always contact the awarding organization to verify the person you are considering working with earned his credentials and is still in good standing with the organization.

Benefits

Working with a financial professional who has achieved the designation of CFC, ChFC, CLU, or CPA will probably entail paying a higher price for her expertise. However, with that price comes an exceptional level of education in accounting, economics, taxation, insurance, estate planning, ethics and investing. A Chartered Financial Consultant, for example, must have at least 3 years of work experience in the financial services business and have passed examinations on income taxes, insurance, investments, financial and estate planning. The ChFC designation also require eight college level courses in economics, investments and insurance.

Resources

• The American College, grantor of the ChFC designation