Happy New Year! We hope your 2019 is off to a great start. This is a good time to get your financial house in order and working with an advisor can help you set tangible goals. When it comes to picking an advisor, it can be difficult to understand what credentials or experience an individual might have. After all, anyone can call themselves a financial planner, financial advisor or wealth manager. What does CFP or CFA really mean? What is the difference between an RIA or a brokerage firm? Who has my best interests in mind? The article we are sharing today explains in more detail what goes in to obtaining the various financial designations so you can make better sense of your advisors qualifications.

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Advisors come with an alphabet soup of letters after their names. The Financial Industry Regulatory Authority (FINRA) lists more than 150 professional designations. Many have value, but some are hyper-specialized and others require very little time or effort to obtain.

Here are a handful of the most rigorous and respected designations:

Chartered Financial Analyst (CFA)

One of the toughest designations to obtain, requiring an advisor to pass three six-hour exams that together require about 750 to 900 hours of study over three years. This designation is on a par with an advanced college degree, and those holding a CFA have shown proficiency in a wide range of financial disciplines, including economics, accounting, portfolio management and ethical behavior.

Certified Financial Planner (CFP)

This designation is aimed specifically at the discipline of financial planning. Advisors must complete a CFP Board-approved educational program, which amounts to about 18 semester hours in various areas of financial planning such as tax strategies, estate planning, insurance, and investing, plus a course that draws all the learning together. There is also a final exam and a continuing education requirement of 30 hours every two years.

Certified Investment Management Analyst (CIMA)

Your advisor is the gatekeeper between you and an industry that really wants to sell you stuff, not all of it in your best interest. The curriculum behind this designation is aimed at helping advisors analyze asset management, investment policy, and risk management, and reflects an advisor’s skills in evaluating investment managers and others who provide financial products. Obtaining a CIMA takes about nine months and includes about 250 hours of study and passing two exams. It also requires completion of a program at a top-20 business school and 40 hours of continuing education every two years.

Registered Investment Advisor (RIA)

Not a designation, but still an abbreviation worth knowing. RIAs are independent financial advisors — a group that has long stood in contrast to the advisors who work for the large brokerage houses. Independent advisors are governed by the SEC and by the fiduciary standard, meaning that they are legally obliged to look out for their clients’ best interests.

There was a time where this fiduciary duty was a huge point of differentiation between RIAs and brokerage-house advisors, but this is changing. Although the Department of Labor’s fiduciary rule is officially dead, it has left its mark; more would-be clients understand the importance of working with a financial advisor who is a true fiduciary.

Regulation or no regulation, your best defense is to understand how your financial advisor is compensated, and ask point-blank how he or she is putting your best interests first. If an advisor seems too eager to sell you on an unnecessary insurance policy or a mutual fund whose high fees are unwarranted, don’t be shy about asking what’s behind the advice.