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What Certifications Do Financial Advisors Need?

·5 min read
What Certifications Do Financial Advisors Need
What Certifications Do Financial Advisors Need

Financial advisors are professionals who work with clients to help them with their finances and investments. Advisors may work with clients holistically to develop broad financial plans, or they can help with a narrower focus, such as estate planning or retirement. Advisors often have certifications that indicate a certain level of expertise or area of focus. While certifications and designations aren't mandatory for financial advisors, it can be beneficial to learn what types of certifications are out there and which you might want to gravitate towards.

A financial advisor can help you put together a financial plan for your long-term goals. Use SmartAsset's free matching tool to talk to an advisor today.

What Are Financial Advisor Certifications?

There are many different specializations for financial advisors, and the certifications they can earn also reflect that variety. Some advisors may have knowledge that centers around taxes, investing, estate planning, financial planning, retirement and more. Within these topic areas, there are often even further focuses. For instance, a retirement-focused advisor could specialize in retirement income, while another might stick to pre-retirement investing.

Below, we break down financial advisor certifications that you're likely to see when searching for an advisor:

Certified Financial Planner (CFP)

Certified financial planner, or CFP, is one of the most common financial advisor certifications. CFPs have gone through educational training and passed tests to make sure they're well versed in various financial planning topics. This certification is particularly relevant if you plan on working with your advisor on your overall financial situation.

Chartered Financial Analyst (CFA)

CFA professionals go through a rigorous series of tests over several years in order to earn their designations. CFAs aren't always financial planners or advisors, as the designation has more to do with actual financial and market analysis than financial planning. However, these skills often translate to working with clients on their investment portfolios.

Personal Financial Specialist (PFS)

This certification is earned by certified public accountants (CPAs) that pass a test. The PFS designation shows that the CPA is well-versed in all aspects of financial and wealth management, not just tax accounting. Therefore, finding a CPA with an extra PFS designation could provide you with some unique tax-focused insights.

Other Certifications

Some certifications can be more specific. For example, a certified kingdom advisor (CKA) specializes in Christian investment and planning tactics. A certified retirement counselor (CRC) is particularly versed in retirement. If you're looking for help with a specific area of your finances and want to find an advisor with that specific skill set, chances are there are certifications that make sense for you to target in your advisor search.

Do Financial Advisors Need Certifications?

What Certifications Do Financial Advisors Need
What Certifications Do Financial Advisors Need

Financial advisors are under no legal obligation to obtain certifications just to operate and market themselves as advisors. However, some firms may require their advisors to obtain certain certifications as a way of showcasing their expertise. As an example, some firms may require their advisors to become a CFP.

While not certifications, advisors typically need to have a number of different series licenses in order to sell investment products to clients. Specific products require different licenses, but these licenses are regulatory in nature, and are therefore different than certifications like CFP and CFA.

Why Financial Advisors Attain Certifications

A financial advisor might become certified for a variety of reasons. Certifications can demonstrate proven expertise and lead to better job opportunities. An advisor may also need to obtain a certain certification, or a set of certifications, in order to work with a particular company.

Another reason why an advisor may obtain a certification is to learn more and show their mastery within a certain type of financial advice. For example, if an advisor wants to work strictly with clients planning for retirement and wants to make sure they're providing their best advice, they may decide to get a certification that has to do with retirement planning.

Should You Look for a Financial Advisor With Certifications?

At the end of the day, only you can decide if a financial advisor with certifications makes sense for you. Some feel more comfortable knowing that a certified advisor has gone through additional levels of training and mastery, but it's not a required part of the trade.

If you want to work with a certified financial advisor, take some time to think about what kinds of certifications make the most sense for your given financial situation. For those looking for broader guidance, an uncertified advisor or a CFP may make the most sense for you. If you're after specific advice, you may want to target a certification that you think makes sense for you.

Bottom Line

What Certifications Do Financial Advisors Need
What Certifications Do Financial Advisors Need

Financial advisors have no legal obligation to hold certifications such as CFA or CFP to practice. However, certain certifications can signal to clients that an advisor is knowledgeable in the world of financial advice. More specific certifications can also help an advisor appeal to a more specific client base. While you don't need to work with an advisor that has certifications, it's still a good idea to understand what different certifications mean before deciding on a specific financial advisor to work with.

Tips for Investing

  • It can be complex and confusing to manage your investment portfolio entirely on your own. A financial advisor may be able to help. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.

  • It pays to be a knowledgeable investor. Do research to figure out what types of investments and strategies are right for your financial situation. Check out SmartAsset's free investment calculator to start today.

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