A Guide to Financial Designations

Whether you're new to the financial services business or an old pro, earning a professional designation can provide numerous benefits. Increased exposure, credibility and compensation are just a few of the advantages a certification confers. However, the proliferation of designations, particularly in the financial planning field, has complicated the process for those trying to decide which designation will benefit them most. In this article, we'll review these professional designations and their requirements.

Certified Financial Planner (CFP)

The certified financial planner (CFP) designation is one the most widely recognized credentials in the financial planning industry. Applicants must have a bachelor's degree and complete college or university-level coursework through a CFP Board Registered Program, of which there are more than 300 in the United States.

Coursework covers professional conduct and regulations; general principles of financial planning; education planning; risk management and insurance planning; investment planning; tax planning; retirement savings and income planning; and estate planning. Students must take the board exam, which is 170 questions broken into two sections lasting three hours each. Other requirements include 4,000 to 6,000 of professional experience and 30 hours of continuing education every two years. 

Certified Public Accountant (CPA)

A certified public accountant (CPA) is a designation to help enforce professional standards in the accounting industry. CPAs have a wide range of career options, either in public or corporate accounting. CPAs are known for their role in income tax preparation but can specialize in many other areas, such as auditing, bookkeeping, forensic accounting, managerial accounting and information technology. The American Institute of Certified Public Accountants (AICPA) awards the CPA designation.

Candidates must complete 150 semester hours of education. The number of accounting hours varies by state. The required Uniform CPA Examination covers four areas: auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation. The minimum passing score is 75%. Other requirements may include one to two years of work experience (set by the state), 40 hours of continuing education annually, and ethics examinations.

Chartered Financial Analyst (CFA)

A chartered financial analyst (CFA) is a globally-recognized professional designation given by the CFA Institute. The designation measures and certifies the competence and integrity of financial analysts. Those who earn this designation often become portfolio managers or analysts for various types of financial institutions.

Candidates must have completed a four-year college or university degree, or they must have at least four years of professional work experience. All CFA candidates are required to hold an international travel passport.

There are three exams to pass. The average person invests more than 300 hours over a four-year period to complete the program. The exams cover ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments, and portfolio management and wealth planning. Roughly 40% of candidates taking the Level I exam pass. Pass rates improve for candidates taking the Level II and Level III exams.

Enrolled Agent

An enrolled agent is a professional who is permitted to represent taxpayers before the Internal Revenue Service (IRS). To qualify, the individual must pass a three-part test covering individual and business tax returns, or they must have experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this designation must adhere to ethical standards and complete 72 hours of continuing education every three years. Enrolled agents, like attorneys and CPAs, have unlimited practice rights. They are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.

Chartered Life Underwriter (CLU)

Chartered Life Underwriter (CLU) is a professional designation for individuals who wish to specialize in life insurance and estate planning. CFP holders will often add CLU to their credentials to demonstrate additional subject-matter expertise. The American College of Financial Services is issuing organization for the CLU.

The education requirements are five core courses in insurance planning, individual life insurance, life insurance law, estate planning and planning for business owners and professionals. Three electives are also required. Candidates must have three years of business experience within the five years preceding the awarding of the designation.

Chartered Financial Consultant (ChFC)

A Chartered Financial Consultant (ChFC) is a professional designation representing the completion of a comprehensive course consisting of financial education, examinations and practical experience. Those who earn the designation are understood to be knowledgeable in financial matters and to have the ability to provide sound advice. The American College of Financial Services is issuing organization for the ChFC.

There are eight required courses: financial planning, insurance planning, income taxation, retirement planning, investments, estate planning, personal financial planning, and contemporary applications in financial planning. Candidates must have three years of business experience within the five years preceding the awarding of the designation.

Certified Employee Benefit Specialist (CEBS)

The Certified Employee Benefit Specialist is a designation for professionals who sell or administrate employee benefit plans. A Certified Employee Benefit Specialist must have comprehensive understanding of compensation structures, health insurance and disability insurance. The International Foundation of Employee Benefit Plans is the issuing organization.

There are five required courses covering the administration of benefits programs, strategic benefits management and the administration of retirement plans. Each course requires the completion of a 100-question comprehensive exam. CEBS holders must complete 30 hours of continuing education every two years.

Chartered Property Casualty Underwriter (CPCU)

Chartered Property Casualty Underwriter (CPCU) is a professional credential earned by individuals who specialize in risk management and property-casualty insurance. The CPCU is most likely to be earned by insurance agents and brokers, insurance claims representatives, risk managers, and underwriters. It is offered by The Institutes.

There are four core courses, one elective and three concentration courses in either commercial underwriting or personal underwriting. Candidates are required to have at least two years of experience in risk management and insurance. Candidates must earn a 70% minimum score on exams to pass. CPCU holders are required to complete 24 hours of continuing education every two years.

Other Designations

There are more than 200 designations available to financial professionals, all with varying requirements and degrees of industry reputation. Candidates will need to balance the investment of time and cost to earn an designation with the economic benefits a designation supposedly confers.

Two professional designations with less stringent academic requirements include the Accredited Asset Management Specialist (AAMS) and the Licensed International Financial Analyst (LIFA).

Some designations are no longer available, indicating a decline in their relevancy. For example, the American College of Financial Services has discontinued offering designations such as the Chartered Advisor in Senior Living and the Registered Health Underwriter. The Chartered Mutual Fund Counselor (CMFC) was once offered by the College of Financial Planning. However, the designation no longer appears on the company's website.

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  1. CFP Board. "The Certification Process."

  2. CFP Board. "Certification Coursework Requirement."

  3. CFP Board. "What You'll Learn."

  4. CFP Board. "Exam Format."

  5. The CFP Board. "The Experience Requirement."

  6. CFP Board. "Continuing Education."

  7. American Institute of Certified Public Accountants. "Frequently Asked Questions FAQs - Become a CPA."

  8. American Institute of Certified Public Accountants. "What does it take to become a CPA?" Pages 3-11.

  9. CFA Institute. "How to Become a CFA Charterholder."

  10. CFA Institute. "CFA Program."

  11. CFA Institute. "Curriculum & Exam Topics."

  12. CFA Institute. "CFA Exam Results and Pass Rates."

  13. Internal Revenue Service. "Enrolled Agent Information."

  14. The American College of Financial Services. "Chartered Life Underwriter."

  15. The American College of Financial Services. "Chartered Financial Consultant."

  16. International Foundation of Employee Benefit Plans. "Certified Employee Benefit Specialist."

  17. International Foundation of Employee Benefit Plans. "CEBS - Continuing Education."

  18. The Institutes. "CPCU: Your Action Plan for Career Advancement," Page 3.

  19. The Institutes. "What a CPCU can do for you."

  20. The Institutes. "Exam Information."

  21. The Institutes. "Continuing Education for CPCUs."

  22. Financial Industry Regulatory Authority. "Professional Designations."

  23. The College for Financial Planning. "AAMS Designation Program Details."

  24. International Research Association. "Become a Charterholder."

  25. The American College of Financial Services. "Legacy Programs."

  26. The College for Financial Planning. "What You Need to Know about the CMFC Designation," Pages 1-2.

  27. The College for Financial Planning. "Professional Designations in Wealth Management."

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