What Do Your Advisors Initials Mean
What Do Your Advisors Initials Mean?
By Russell Dunkin, CFP®
12/15/2010
The state of Oregon recently announced plans to become one of only nine states barring the use of misleading or fraudulent financial designations. The issue at hand for both Oregon, and consumers nationwide, is deciphering the alphabet soup of financial designations.
For example, there are 86 different designations in use, according to the Financial Industry Regulatory Authority (the largest independent regulatory firm for securities brokers). EIGHTY-SIX! The troubling thing is, these are just the ones they've decided to catalog online. There are, no doubt, more in use around the country.
Other professions do not seem to present this problem to consumers. When you go to your physician, you will see either an M.D., or D.O., indicating the type of medical school they attended. If you hire an architect, you know they have graduated from college, completed an internship, and passed a board licensing exam subject to annual renewal. If you work with an accountant, you can work with a Certified Public Accountant or a non-certified accountant.
For one reason or another, the financial industry has invented more designations than the public can keep up with. Beyond designations and certifications, what does your advisor's title mean?
Common titles include Financial Advisor, Wealth Manager, Vice President, Registered Representative, Financial Planner, or Investment Consultant to name a few. Each of these are "generic" titles that may be used, but do not require any specific level of education, background, or expertise.
Although several states have adopted laws preventing the use of misleading or fraudulent designations, it is important to understand your advisor's title even if it is benign. But, as a consumer, how should you evaluate the professional you are working with?
While many designations are helpful, I suggest focusing on the requirements of their certification.
- What education was required to achieve this designation?
- Is a college degree required?
- What are the continuing education requirements to maintain the use of the marks?
- Was there an experience requirement prior to applying?
- What type of exam was required to achieve the designation?
- How many people typically pass the exam?
- Does the designation require the advisor to adhere to a fiduciary standard of care, the same as your attorney, physician, or accountant? That is, are they legally required to place your interests ahead of their own?
The answers to these questions will go a long way toward helping you determine the relevance of an advisor's designation or title to fit your needs.
Russell Dunkin CFP®, is a wealth advisor with McKinley Carter Wealth Services (www.mc-ws.com), an SEC registered investment adviser with its principal place of business in the State of West Virginia. The information contained herein is general market information only and is not intended to be personalized investment advice. Mr. Dunkin can be contacted at rdunkin@mc-ws.com, 304-230-2400 or 866-306-2400.