The 8 Most Important Criteria for Judging a Financial Advisers Professional Designation

Conrad Toner |

When trying to wade through the professional designation jungle, the third key question you should ask is: What requirements must an adviser meet to get and keep a particular designation? There’s an old joke about a doctor who got his degree from a Cracker Jack box. If indeed you could get a medical degree that way, would that doctor be as well trained as one who obtained hers over seven years of study and internship through a major medical university? Of course they wouldn’t. Furthermore, would a sane person deal with anyone other than a university-trained doctor? That said, how is the average person supposed to know about the requirements to obtain any of the many financial designations or the difference between them.

A good place to find this information is in the database compiled by the Financial Industry Regulatory Authority (FINRA) in the United States, which can be found at Unfortunately there’s no comparable Canadian database. While the following information is based on U.S. data, many of the designations are also available in Canada, through subsidiary organizations.

The FINRA database doesn’t just list the names of the 80+ designations. It also provides some other useful information to help you determine not only the degree of difficulty to obtain the designation, but also its legitimacy and significance. There are also handy links to the organizations that offer the designations that you can use in your search.

Primarily this database lists:

1.  Pre-requisite/experience required to apply for the course
2.  Education/course requirements to obtain the designation
3.  Type of exam required at the end of the course, if there is one
4.  Continuing education requirements after obtaining the designation
5.  Investor complaint process
6.  Public disciplinary process
7.  Online accessibility of a designation holder’s status
8.  Accreditation of the organization offering the designation

During my research, when I was going through the complete list, I began to notice significant differences between the designations with respect to the eight items listed above. Some designations have no prerequisites or prior experience requirements at all, while others do.  The level of education requirements tend to vary greatly. With respect to exams, some don’t have an exam, while some are online open book exams, and yet others are closed book proctored exams.

Once obtaining the designation, some organizations have no continuing education requirements while others have significant annual requirements. Some organizations that offer designations have no investor complaint process, while others have one, but don’t publicly list any of the disciplinary actions taken against their designation holders.  And finally, many of the organizations offering designations aren’t accredited in any way.

The differences between the multitude of designations has reaffirmed my belief that, for someone looking for financial planning advice, including retirement income planning, the CFP® is the most valuable designation.  All others are secondary.

As a profession evolves, the standards and requirements to qualify for designations will change. This applies to chartered accountants and doctors as well as financial planners, and it means not everyone will have qualified in the same way.  That’s why it’s important to check to see if the adviser practices the principles of the designation as discussed in our previous post.