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Banking 8 Questions to Ask About a Financial Advisor's Certifications

8 Questions to Ask About a Financial Advisor’s Certifications

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(StatePoint) Understanding abbreviations is essential, whether you’re texting “LOL” to a friend or asking guests to “RSVP” to a party. In a professional setting, they can provide useful information about an individual’s services and qualifications.

Those used in the financial services industry can be particularly difficult to decode. The Financial Industry Regulatory Authority has identified nearly 200 certifications and designations for financial advisors alone.

For any of these certifications and designations, you should know what each letter stands for, but you also need to understand the education and experience behind the letters. Some designations have extensive requirements that involve months or years of work, while others can be earned in a day.

Here are eight questions you should ask to fully evaluate a financial advisor’s credentials:

1. What educational requirements, both qualifying and ongoing, has the professional met?

2. How many years of experience does the advisor have within the profession?

3. What is the advisor’s professional standing, conduct and character?

4. Has the professional’s competence been assessed through an exam or other type of measurement?

5. What are the professional’s obligations to you, with regard to disclosing conflicts of interest, compensation and terms of engagement?

6. Has the professional committed to putting your financial interests ahead of his or her own?

7. How is the professional regulated or supervised?

8. What consequences does the professional face if he or she is found guilty of malpractice?

If you need financial planning assistance, you can help make sure you’re getting a well-qualified individual subject to high ethical standards when you look for the CFP certification, which stands for Certified Financial Planner professional.

If you ask these eight questions about CFP professionals, you’d learn that they have to complete a comprehensive financial planning program and hold a bachelor’s degree or higher from an accredited college or university, in addition to meeting continuing education requirements. They must also pass a six-hour exam that tests their ability to apply financial planning knowledge to real-life situations and must have at least two to three years of professional financial planning experience.

Developed by the non-profit CFP Board and certified by the International Organization for Standardization, the CFP professional code of ethics and practice standards require those with this certification to provide financial planning in a client’s best interests. Those found to have violated these standards can permanently lose their certification.

When evaluating a financial advisor’s qualifications, understanding the acronyms and certifications in the industry, and asking the right questions, can help you determine the extent of a financial advisor’s expertise and help ensure you are working with a qualified professional.


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