Should My Financial Planner Be a CFP, CLU, or a What?

By Harry S. Margolis


Acronyms, acronyms. Does your financial planner have a lot of initials after her name? Is she a CFP, a CLU, a ChFC or a CFA? What do these designations mean and do they matter?

As with all designations and certifications, they matter a bit, but only a bit. Some advisors with lots of designations will not have their clients’ best interests at heart. Others with no designations are very knowledgeable and take great care of their clients. That said, these designations can be used as one of several data points in choosing your financial advisor.

I see the designations as telling us two things: First, the advisor has the basic knowledge necessary to achieve the certification—more for some designations than for others. Second, the advisor has the commitment to the field to take the time and spend the money necessary to get certified and to remain certified. Beyond that, other concerns are more important, including how the advisor is compensated and the experience of other clients and professionals who have worked with them.

All of that said, here’s a short primer on the various designations you’ll run across:

Certified Financial Planner (CFP)

This designation requires passing five courses covering insurance, estate, retirement, education, tax and investment planning as well as a 10-hour test over two days. Those holding the certification also must meet certain ethical standards dictated by the CFP Board. There are 78,000 CFPs nationwide, of whom almost 3,000 are in Massachusetts. For more information, go here.

Chartered Life Underwriter (CLU) and Chartered Financial Consultant (ChFC)

These designations require taking further courses in life insurance and estate planning than those required to be a CFP, though they are available to non-CFPs. Both the CLU and ChFC designations are offered by the American College of Financial Services, a training school for financial advisors.

Chartered Financial Analyst (CFA)

This designation offered by the CFA Institute trains advisors on investments and portfolio design. While financial advisors may have this designation, it’s more likely to be found among people who work for larger wealth management companies. The CFA Institute is international—having offices, conducting training, and hosting conferences worldwide.

Other Designations

A plethora of organizations have arisen to offer other designations with lower bars for certification. These include Accredited Asset Management Specialist (AAMS), Chartered Mutual Fund Counselor (CMFC), Licensed International Financial Analyst (LIFA), or Certified Senior Advisor (CSA). I would discount these designations heavily. In fact, it’s probably a bad sign if an advisor has one of these designations and not any of those listed above.

The Bottom Line

Though, as I said above, advisors with no designation can provide excellent counsel and service, I’d be inclined to stick to advisors with the CFP designation. This shows that they have the requisite knowledge and commitment to provide you the financial guidance needed to ensure your family’s financial security. But after you have limited candidates to CFPs, you will need to talk to their other clients and to professionals who work with them to determine who to engage yourself.


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