The Alphabet Soup of the Financial Industry


Have you ever been confused as to your advisor’s credentials, how they were attained, or what criteria were used to get the “alphabet soup” you find in the financial industry?

If so, you’re not alone.

This column will attempt to shed some light on the issue so that potential investors can choose an advisor wisely.

According to the Certified Financial Planner Board of Standards, the following list of designations are recognized by the industry and achieved through independent sources requiring continuing education and ongoing ethical standards.

In addition, in order to apply for the final examination, potential advisors must complete some level of college or graduate course work. (For those industry professionals reading this, yes, I realize there are more titles that are independent.)

Certified Financial Planner (CFP)

Certificate holders must meet the CFP board’s education, examination, and experience requirements; agree to abide by the board’s code of ethics and professional responsibility; and complete the board’s biennial certification requirements, including continuing education, to use the certification marks. Certificate holders must also pass a two-day, 10-hour exam.

Chartered Financial Consultant (ChFC)

This term is generally used by financial professionals such as accountants, attorneys, bankers, insurance agents and brokers, and securities representatives. Each must complete the American College’s eight-course education program, fulfill the experience requirements, and agree to uphold a code of ethics.

Chartered Financial Analyst (CFA)

Holders of this designation are generally securities analysts, money managers, and investment advisors who have completed the CFA program, as well as a graduate-level, self-study curriculum and examination program for investment professionals. CFA charter holders are required to affirm their commitment to high ethical standards.

Certified Investment Management Analyst (CIMA)

Offered through the Investment Management Consultants Association, the CIMA certification program is a credential designed specifically for financial professionals who want to attain a level of competency as an advanced investment consultant. The CIMA professional integrates a complex body of investment knowledge to provide objective investment advice and guidance to individuals and institutions. The CIMA certification program requires that candidates meet all eligibility requirements, including experience, education, examination, and ethics.

If your current advisor doesn’t hold any of these independently offered titles, it doesn’t mean that he’s incompetent. But, as a potential investor, you’d be remiss if you didn’t ask what requirements he fulfilled to achieve his title.

For example, was your advisor’s title offered independently? Or did he achieve it internally through his own firm? Sometimes a title is awarded based on production alone.

Unfortunately, the public is often confused as to who awards these titles and designations. The public can be equally unclear on the requirements for achieving them. By the same token, the public is often uncertain as to what services and competence they’ll receive when they initially meet with a financial advisor.

So don’t be left in the dark. As an astute investor, you should question titles and designations to find out what they really mean. Your family’s long-term financial future depends on it.


This article was written by Lou Melone, Managing Partner, with Budd, Melone & Company in Auburn Hills, Mich.

Lou Melone can be reached at 248-499-8704

CAR Approval Date 3.13.2010

Wells Fargo Advisors Financial Network did not assist in the preparation of this article, and its accuracy and completeness are not guaranteed. The opinions expressed in this article are those of the author and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.

Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Budd, Melone & Company is a separate entity from WFAFN.