This is a modified post from 2/16/10 due to legal threats from certain parties.
Rather than going into detail on my personal experiences with a “research” firm, I’m adjusting my post to focus on the credentials and qualifications which an investor or financial planning consumer should research carefully and understand thoroughly before hiring a financial advisor based on letters or impressive looking logos.
There are many financial organizations out there today which promote certain designations. Some of them have alterior agendas such as corporate profits or other business motives. The average investor many times doesn’t grasp this fact, and many times they’re lulled into a false sense of security from fancy titles, letters after a name on a business card, or pretty logos and pictures.
Take for example some of the lesser known credentials – I even have one of them – the AAMS (Accredited Asset Management Specialist). After going through the CFP (R) and CLU programs, I decided to pursue the AAMS on a whim for fun.
The AAMS was simple to obtain when compared to the CFP (R) or CLU programs (coincidentally, the CLU designation is primarily for those advisors who sell insurance – I obtained it solely to be able to ADVISE my clients in those financial aspects, and do not sell any form of commissioned product like insurance). I earned my AAMS through the College for Financial Planning, which charges a fee for obtaining the designation and a renewal fee periodically. I’m not saying it’s without any merit – just that there are only a few designations that are really difficult to achieve and challenging to maintain.
Those designations in my opinion are the CERTIFIED FINANCIAL PLANNER(TM) designation, the Chartered Life Underwriter designation, and the Chartered Financial Consultant (ChFC) designation (in the order of most difficult to not quite as difficult to obtain, but all three are highly challenging!). Those three designations have earned and deserve industry respect more-so than for example my AAMS designation (which I think I completed in a weekend or two, it’s hard to remember it was so long ago).
Keep in mind, I’m focused on comprehensive financial planning and wealth management which includes investment management – and that’s the subject matter of this post. For a true investment manager not focused on other aspects of individual financial matters, the CFA(R) designation is by far the most respected in the industry and substantially more challenging to obtain over the aforementioned three. The CFA(R) designation however is typically obtained by professional investment managers such as mutual fund managers, hedge fund managers, investment analysts and the like.
All of that being said, there are numerous other designations or labels out there which may or may not mean much to you, if anything at all. They may or may not mean your advisor has truly been scrutinized or passed rigorous testing and examinations. They may mean little more than a fancy star by their name on their marketing materials.
For these reasons, consider carefully the branding or designations your financial advisor promotes or includes in their marketing material. Do your own research and due diligence. After all – it’s your financial future that you’re entrusting to the advice of a financial advisor. Shouldn’t you expect credentials and qualifications that really have substance and mean something to you and your personal financial goals?
Greg
