What do the initials after the person’s name Mean?

 

There are a number of professional qualifications and affiliations that you may see being used by individuals in the financial sector. Some may be more relevant for you and your situation than others.  The CFP, CFA and MBA are a few of the more popular designations, and we have outlined each below.

Certified Financial Planner (CFP)

The CFP designation is designed to add additional credibility to people who work as financial planners.  While there are licenses required to be involved in most aspects of the financial planning process, the study to obtain those licenses often revolves more around rules and regulations than how to design a good financial plan for a client.

The CFP designation is meant to fill this gap through the following requirements candidates must complete in order to obtain it.

1. All CFP candidates must hold at least a bachelors degree from an accredited university.
2. They must also sit through a CFP Board Registered education program which includes study on the following topics:

  • General principles of financial planning
  • Insurance planning and risk management
  • Employee benefits planning
  • Investment planning
  • Income tax planning
  • Retirement planning
  • Estate planning


3. They must pass the 10 Hour CFP examination which covers the above topics.
4. They must have 3 years of relevant work experience.
5. They must meet the ethical standards which are set by the board.

In short the CFP designation is a good one to look for is you are seeking someone to develop a financial plan for you.

Chartered Financial Analyst (CFA)


The CFA charter qualification is for professionals in financial analysis and investment management. It is considered by many as an equivalent to a Masters in Finance from a top university, and often seen as a better designation than the same from a mid tear or lower university.  CFA candidates are required to meet the following requirements:
1. Pass 3, 6 Hour Exams (normally 1 per year) which demonstrate proficiency in the following areas:

Ethical and Professional Standards
Quantitative Methods
Economics
Financial Reporting and Analysis
Corporate Finance
Equity Investments
Fixed-Income Investments
Derivatives
Alternative Investments
Portfolio Management and Wealth Planning

2. 48 Months of Qualified Work Experience.
3. Adherence to the code of ethics as defined by the institute.

While some financial planners do hold their CFA it is generally a designation obtained by financial analysts and portfolio managers at institutions such as mutual funds or hedge funds.


Master of Business Administration (MBA)


More general in approach than the other qualifications listed above, an MBA will often be based on core subjects such as accounting, finance, marketing, human resources and operations management. For individuals who want to become financial planners, MBAs are available with an emphasis on financial planning. This initial step could then lead to qualification for example as a CFP or CFA.

One thing to keep in mind with the MBA designation, is that unlike the CFP and CFA, MBA programs differ in their level of difficulty and prestige.


Affiliations


Besides being qualified in different ways, professionals in the financial sector may also be affiliated with a number of organizations. How relevant this is to you will depend on their nature and goals. Two such organizations relating to personal financial planning are:

  • National Association of Personal Financial Advisors (NAPFA)
    NAPFA is a professional association of comprehensive, fee-only financial planners in the United States with over 1,000 members and affiliates. It requires allegiance to a code of ethics and continuing education of members and affiliates.
  • Financial Planning Association (FPA)
    This association includes individuals and companies who are committed to promoting the financial planning process, extending knowledge on financial planning, sharing best practices and encouraging professional development.
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