Unscrambling the alphabet soup of financial advisers

By Joel M. Blau, CFP, and Ronald J. Paprocki, JD, CFP, CHBC

The process of interviewing various financial professionals to determine whom to work with can be a daunting task. Many have designations, but what do they represent and what was needed to obtain them?

The relationship with one’s financial adviser is a true partnership in which both parties are working toward a common goal-financial stability and independence. A financial adviser may help manage investments, perform portfolio evaluations, and serve as an educator to ensure a greater understanding of the investment environment. In addition to registered investment advisers, there are a number of other financial-based professionals who may be in a position to assist with many financial planning areas.

The following list of professionals, as well as their industry-focused professional designations and educational requirements, should serve as a guide in the search for advice:

Accredited Asset Management Specialist (AAMS). These professionals complete a 12-module self-study course. Modules cover asset management, investment policy, risk, return, performance, asset allocation, investment strategies, tax issues, retirement planning, insurance products, estate planning, ethics, and legal and regulatory issues.

Accredited Tax Preparer (ATP). The course provides basic background on tax preparation issues for individuals and sole proprietorships.

Chartered Financial Analyst (CFA). The 3-year program is intensive, with three 6-hour exams. Prerequisites for the designation include a bachelor’s degree or comparable work experience, and 3 years of investment management experience.

Certified Financial Planner (CFP). The Certified Financial Planner Board of Standards is a regulatory organization for financial planners. It awards the CFP designation to individuals who meet its requirements. The curriculum covers insurance, income taxation, retirement planning, investments, and estate planning. In addition to self-study programs, there are classroom instruction programs offered at colleges and universities across the country.

Certified Investment Management Analyst (CIMA). Three years of investment management consulting experience, an interview, and a preliminary exam are prerequisites for the course. The program covers due diligence, asset allocation, risk management, and other investment management consulting concepts.

Certified Investment Management Consultant (CIMC). CIMC certification is a two-level, self-study course that covers investment management consulting. It also addresses asset allocation, formalizing investment policy, and active versus passive investment performance evaluation.

Certified Specialist in Tax Sheltered Accounts (CSTSA). The CSTSA self-study program is for advisers who work with 403(b) plans.

Chartered Life Underwriter (CLU). The CLU self-study curriculum includes 10 courses-eight required and two electives. Three years of business experience and client service in the financial field are prerequisites for the course.

Chartered Financial Consultant (CHFC). The CHFC self-study program includes 10 courses-nine required and one elective. Three years of business experience and client service in the financial field are required.

Chartered Mutual Fund Counselor (CMFC). This nine-module, self-study course is a primer on mutual funds.

Chartered Retirement Planning Counselor (CRPC). The CRPC program is an 11-module, self-study program for advisers who provide retirement planning for individuals.

Chartered Retirement Plans Specialist (CRPS). The CRPS program is targeted at advisers who work with qualified and non-qualified retirement plans.

Master of Science/Financial Planning Concentration. This graduate-level program focuses on financial planning, wealth management, tax planning, retirement planning, and estate planning. Participants must have a bachelor’s degree to enroll and complete 12 courses for 36 credits.

Word of mouth, through referrals made by friends and colleagues, is an excellent way to meet potential advisers. Even though they may come highly recommended, it is always a good idea to interview a number of advisers to determine compatibility. Only in this manner will it be possible to determine who you are most comfortable partnering with in guiding you toward, reaching, and ultimately maintaining true financial independence and long-term security.

Joel M. Blau, CFP, (top) is president and Ronald J. Paprocki, JD, CFP, CHBC, is chief executive officer of MEDIQUS Asset Advisors Inc., Chicago. They can be reached at 800/883-8555 or blau@mediqus.com or paprocki@mediqus.com