The Quick List of Financial Designations

Understanding financial designations is one of the first steps in selecting the right financial professional for your needs.

Financial certifications or designations are credentials for financial industry professionals. Represented by multiple letters after a name, they indicate a degree of education, training, and specialization on the part of the individual and also show their specific area of expertise in finance.

Navigating the various financial certifications can be confusing, especially with many options available. From CFP to ChFC, CFA to CIMA, knowing which designation best suits your needs can be complicated. To help you make an informed decision, we’ll look at the most popular financial certifications and what they signify regarding education, expertise, and the type of work performed by the professionals who hold them. 

Certified Financial Planner (CFP®)

The Certified Financial Planner (CFP) designation is one of the most well-known and respected certifications in the financial planning industry. To earn the CFP designation, individuals must complete extensive coursework in financial planning, pass a rigorous exam, and gain hands-on experience in the field. CFP professionals are required to adhere to a strict code of ethics, and they must complete ongoing education to maintain their certification. Only those who have completed the certification and renewal requirements of the CFP Board can use the CFP® certification trademarks.

Note: The term “financial planner” is not regulated; anyone can use it regardless of qualifications or experience. If your financial advisor does not hold the CFP designation, it may be worth asking why. 

As fiduciaries, CFPs are legally obligated to prioritize their clients’ financial well-being. They must not receive compensation for recommending specific products. This commitment to putting clients’ interests first helps to build trust and transparency in the advisor-client relationship and can ultimately lead to better financial outcomes.

CFP professionals work closely with clients to understand their unique financial situations, goals, and values and provide customized advice tailored to their needs. They also have access to a network of specialists, such as tax advisors and estate planning attorneys, who can provide additional expertise and support to help clients achieve their financial goals.

Chartered Financial Analyst (CFA®)

The Chartered Financial Analyst (CFA) credential is highly respected in investment management. The CFA Institute, a global organization of investment professionals, offers it. Candidates must pass three challenging exams covering various topics: ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments, and portfolio management. Along with passing the exams, candidates must have at least 4,000 hours of relevant work experience and pledge to follow the CFA Institute’s Code of Ethics and Standards of Professional Conduct.

CFAs typically work in institutional money management and stock analysis rather than financial planning. They are often responsible for researching and analyzing various forms of investments, including stocks, bonds, and other securities. They may also be involved in portfolio management and providing investment recommendations to clients based on their research and analysis.

Certified Public Accountant (CPA)

A Certified Public Accountant (CPA) is a licensed professional who has met the education and experience requirements established by the National Association of State Boards of Accountancy for their state. The CPA designation indicates that an individual has passed the Uniform CPA Examination covering accounting, auditing, taxation, and business law.

While CPAs are experts in accounting and tax preparation, their title does not necessarily indicate expertise in other areas of finance, such as financial planning. CPAs who wish to provide financial planning services to their clients can obtain an additional certification as a Personal Financial Specialist (PFS).

Chartered Financial Consultant (ChFC)

The Chartered Financial Consultant (ChFC) designation is a professional certification offered by The American College of Financial Services. Candidates must complete an exam in financial planning, including income tax, insurance, investment, and estate planning. They must have at least three years of experience in a financial industry position and have met the ethical requirements set by The American College. 

A Chartered Financial Consultant is qualified to provide comprehensive financial planning services to their clients, including developing financial plans, recommending investment strategies, and providing guidance on insurance, tax, and estate planning.

Individuals holding the ChFC certification, like those with the CFP designation, help analyze financial goals and situations.

Certified Investment Management Analyst (CIMA)

The Certified Investment Management Analyst (CIMA) designation is a professional certification offered by the Investments and Wealth Institute (IWI) in partnership with the Wharton School of the University of Pennsylvania.

A CIMA is a financial professional who has completed the CIMA program, passed the CIMA exam, and met the experience and ethical requirements set by the IWI. CIMAs are qualified to provide personalized investment strategies to their clients through comprehensive investment management services, including developing investment strategies, recommending specific investments, and providing ongoing monitoring and management of investment portfolios.

To maintain certification, individuals with CIMA designations must complete 40 hours of continuing education every two years.

CIMA designation holders typically work with financial consulting firms, managing large accounts and engaging in extensive client interactions.

Certified Divorce Financial Analyst (CDFA)

A Certified Divorce Financial Analyst (CDFA®) is a financial professional with specialized training in divorce financial planning. CDFAs help clients navigate the complex financial issues that arise in divorce, including asset division, alimony, and child support. They also assist clients in developing financial plans for life after divorce, including budgeting, investment, and retirement. To become a CDFA, professionals must complete the CDFA program, pass the CDFA exam, and meet ethical requirements set by the Institute for Divorce Financial Analysts (IDFA).

Financial Risk Manager (FRM)

Financial Risk Managers (FRMs) specialize in identifying, assessing, and managing financial risks. Their expertise lies in financial analysis, quantitative methods, and risk management techniques, which enable them to help organizations make informed decisions about risk. FRMs work in various industries like banking, insurance, investments, and consulting.

Financial Risk Managers (FRMs) play a crucial role in identifying and managing risks more effectively, which can ultimately result in reduced financial losses. They provide organizations with the necessary data and analysis to make informed decisions about risk, helping them gain a competitive advantage and capitalize on opportunities. 

Enrolled Agent (EA)

An enrolled agent (EA) is a tax professional authorized by the United States government to represent taxpayers in matters involving the Internal Revenue Service (IRS), most commonly collections, audits, or tax appeals. According to the National Association of Enrolled Agents (NAEA), they can advise, represent, and prepare tax returns for people, corporations, partnerships, estates, trusts, and anything else required to report to the IRS. 

EAs have much in common with CPAs but have a few key differences. While they are both skilled and authorized tax professionals, an EA is focused explicitly on taxation, whereas a CPA can specialize in taxation and other financial and accounting matters. A person can be both an EA and a CPA, but one doesn’t necessarily qualify the person to serve as the other.

Certified Exit Planning Advisor (CEPA)

The Certified Exit Planning Advisor is a designation for financial professionals who advise business owners on how to sell or transition their business successfully, a strategy referred to as “exit planning.”

Financial professionals with the CEPA designation learn how to blend exit strategy into the business and the business owner’s personal and financial goals. 

CEPAs are often financial advisors, accountants, bankers, insurance agents, or legal professionals who have gone through a four-day course and passed an exam. 

Chartered Life Underwriter (CLU)

A Chartered Life Underwriter (CLU) is a designation for those specializing in life insurance and estate planning. Dating back to the 1920s, the CLU designation is one of the oldest and most respected credentials in the financial services industry. 

Those with a CLU designation understand various personal risk management and life insurance planning issues. They can help you achieve financial security through life insurance and annuity products, enhance estate value, conserve existing assets, and provide for financial security during retirement. 

While CLUs sell life insurance, they also act as fiduciaries, meaning they will only sell you policies that are in the best financial interest of their clients rather than what will earn them the highest commissions. 

A CLU could be a good resource for you if you need help buying life insurance, are looking for a good deal on life insurance, or are hoping to increase the value of your estate. 

How to Choose the Right Financial Professional

Different financial designations indicate separate areas of expertise. When choosing an advisor, consider your financial goals and match them with the appropriate designation. This way, you can determine what type of financial professional you need and the specific services they should provide. 

In addition to general financial planning, there are many specialized areas of financial planning, such as retirement, tax, and estate planning. If you have specific needs in these areas, look for financial professionals with expertise in those specialty areas.

Before choosing a financial professional, research their credentials, experience, and reputation. Look for licensed professionals with a good track record of helping clients achieve their financial goals. Meeting with several potential advisors can also give you a sense of their personalities, communication styles, and approaches to financial planning, helping you find an advisor who is a good fit for you.

Recap of Financial Designations

CFP (Certified Financial Planner)

  • Specialization: Financial Planning
  • Trained to assess a client’s financial situation, develop a personalized plan, and provide ongoing guidance and support.
  • Highly regarded in the industry.

CFA (Chartered Financial Analyst)

  • Specialization: Investment Analysis
  • Trained to perform detailed financial analysis, conduct investment research, and make informed investment decisions to help clients achieve their financial goals.

CPA (Certified Public Accountant)

  • Specialization: Accounting
  • Trained to help individuals and businesses manage their finances, minimize tax liabilities, and ensure compliance with relevant laws and regulations.

ChFC (Chartered Financial Consultant)

  • Specialization: Financial Planning
  • Trained to provide comprehensive financial planning services, including insurance, taxation, retirement, and estate planning.

CIMA (Certified Investment Management Analyst)

  • Specialization: Investment Management
  • Trained to provide investment management services, including portfolio construction, asset allocation, and performance evaluation.

CDFA (Certified Divorce Financial Analyst)

  • Specialization: Divorce Financial Planning
  • Trained to provide financial planning services specific to divorce, including asset division, spousal support, child support, and tax and retirement planning in the context of divorce.

FRM (Financial Risk Manager)

  • Specialization: Risk Management
  • Trained to identify, assess, and manage financial risks to help organizations make informed decisions about risk and build resilient financial systems.

Enrolled Agent (EA)

  • Specialization: Taxes
  • Trained to advise, represent, and prepare tax returns for people, corporations, partnerships, estates, trusts, or anything else required to report to the IRS.

Certified Exit Planning Advisor (CEPA)

  • Specialization: Business Exit Planning
  • Trained to blend the exit strategy of a business into the business owner’s personal and financial goals.

Chartered Life Underwriter (CLU)

  • Specialization: Life Insurance 
  • Trained to understand various personal risk management and life insurance planning issues. 

In Summary: Finding the Right Financial Professional for Your Needs

A good financial advisor can make all the difference in your financial success. Finding the perfect advisor can be tricky with so many titles and designations. Credentials are necessary, but they are just one indicator of an advisor’s proficiency. You can find the perfect fit for your situation with research, asking the right questions, and referrals from trusted sources. Also, by understanding the different designations and their expertise, you can decide which financial planner is best suited to help you achieve your financial goals. Regular communication with your advisor is critical to keeping your financial plans aligned with your goals and adaptable to changing circumstances.