The financial services industry is a wide and deep pool of ever-changing information. Knowledge of stocks, mutual funds, annuities, financial planning, insurance products, and a conceptual framework of taxes are just a few examples of the tools a good financial advisor must have in his toolbox. Although most professionals in any industry would agree that their knowledge base is quite complex, our industry is missing one key feature that many other professions have: advanced academic degrees. Lawyers must earn a Juris Doctorate in order to sue each other, doctors must earn an MD in order to treat patients, and many other professionals can pursue PhDs in their fields of study to demonstrate a mastery of their craft. Financial advisors could pursue an MBA or PhD in economics or finance (both are well-respected and valuable), but neither degree would have the same relevance to our day-to-day tasks.

That said, there are countless professional certifications and designations that we can earn. Some of the most rigorous and comprehensive programs include the CFA (Chartered Financial Analyst) designation, the CFP® (Certified Financial Planner) certification, and the CIMA (Certified Investment Management Analyst) designation. All three require candidates to dedicate a considerable amount of time, brainpower, and financial investment (i.e. money) in order to complete the program, and earning a CFA charter also requires four years of industry experience. In fact, an article from the Financial Times dated 2014 suggested that the CFA designation may become more valuable than an MBA for professionals in all sectors of the financial industry (Financial Times Article) because obtaining a CFA charter is far more difficult than obtaining an MBA. However, as designations and certifications have become more sought-after by financial professionals, a cottage industry has arisen for all sorts of associations to offer acronyms to help advisors appear more credentialed than they actually are.

How can you tell the good ones from the not-so-good ones? We will keep our own opinions private to avoid upsetting anyone, but a quick Google search should help investors determine what a specific acronym means, who sponsors the course of study, and how difficult it is to obtain. The Paladin Registry, a research tool for investors to find financial advisors, also offers a “credential checker” with a brief summary of many popular designations. Although no designation guarantees an advisor is qualified and competent, performing a background check of your advisor’s experience and credentials should offer you some confidence and piece of mind that you made a sound choice.