Customers in search of sound advice to help manage their fiscal needs should speak to a trained consultant in the field, not someone who merely believes he knows a lot about the market. While there is much to be said for personal experience, and while a diploma or degree is no guarantee of ethics or ability, consumers are safer when they choose professionals who have been “certified” in the field – but who is this person?
What is a CFA?
There is no such designation as a Certified Financial Advisor but CFA does stand for something trustworthy. He is a Chartered Financial Analyst with a lot of schooling in the industry; just not the one a personal investor is looking for. This guy analyses markets for his firm and focuses on products within his employer’s field. Select a professional whose experience lines up with your interests.
You might not have any idea what sorts of products you wish to invest in yet in which case it’s best to research the market a little first and then it’s easier to know whether you should call on a Certified Fund Specialist (CFS), a Chartered Mutual Fund Counselor (CMFC), or an Investment Advisor Representative (IAR). Just beware of a person in a nice suit who gives himself accolades but fails to back them with credentials. Always look for certification which should be posted on the office wall of any professional you meet with. Make sure a current business license is displayed and ask to see references or a resume of recent work.
Where do the various credentials above and others come from? Professionals usually start by attending college and obtaining certification or a degree in their chosen area of business studies. This could be related to accounting or sales; perhaps investment counseling, more specifically, which is what you want. After passing exams a person must then either be employed by a registered firm recognized by a regulatory body, professional trade organization or the individual should belong to such an organization independently. An example could be the FINRA, IAA, or NAPFA.
A Certified Financial Advisor certainly could be a Chartered Financial Consultant working for the insurance industry. He is most likely to sell annuities while a CMFC (see above) deals with mutual funds specifically. He and a CFS help customers develop their portfolios but do not require degrees although they are trained and act in an official capacity.
All of these terms can be very confusing and some titles that sound really good are bogus. Who expects the average person to know the difference between an Investment Advisor (not an official or regulated position) and a CFS? Would most individuals recognize a scam right away? It’s also true that many ethical, hard-working, bright people have excellent advice to offer. Don’t be afraid of Certified Financial Advisors; just be prepared.