By: Timothy Guilmette, Spring 2014 Student Intern
CAA, CAMS, CEP, CFP, CPA…
If you are like me you make some basic assumptions about the alphabet soup following a professional’s name. For instance, those designations cost a lot of time and money to obtain, and must be the direct result of arduous academic pursuits or years of professional experience. And, these individuals must be more equipped to meet my needs over someone without them. Why else would one go through all the time and effort. Like most, both of these assumptions are fraught with inaccuracies, but they do highlight two important issues for investors – what are professional designations and how do I research them?
Use of Professional Designations
Professional designations often are helpful in determining if an individual has the specialized skills and training necessary to competently provide the services you seek. In many cases those capitalized letters provide telling information about the professional’s qualifications, skills, or associations. On the flip side, unethical individuals can use professional designations to mislead potential clients. By placing misleading or fictitious designations at the end of their name line, the unethical professional seeks to exact a false confidence in their abilities. But all is not lost, the savvy investor can take a few simple steps to protect themselves from the deceiving tactics of unscrupulous practitioners.
Check Your State for Laws Concerning the Use of Professional Designations
Many states have specific laws addressing the use of professional designations. The Financial Industry Regulatory Authority, FINRA, maintains a list of States that have enacted legislation or regulations on the use of professional designations. Additionally, each state listed has links to the promulgating authority so investors can determine what the rules are in their jurisdiction and how to report suspected violations.
For example, in Massachusetts, financial professionals cannot list a credential or professional designation unless it was issued by an accrediting organization that is recognized by the Massachusetts Secretary of State. Many states have enacted similar language to prevent deceptive practices but others have not, and the prudent investor should research each certification and designation a professional has purportedly earned.
Where to Find Information on Professional Designations
To find out what a financial professional’s certifications or designations mean, investors can use FINRA’s Professional Designation Lookup tool. This free service charts what a particular designation or certification stands for, how it is obtained, if it requires continuing education and several other useful pieces of information. Designations vary, as does the training, cost and time associated with each. Some require years of training, while others only need a weekend of your time and a small fee.
By this resource, investors can determine several useful pieces of information from a single source, like whether a particular designation requires continuing education, or if the certification is accredited and if there is an investor complaint procedure.
The FINRA website also allows you to compare specific designations side by side. As an example, go to the site and compare a Chartered Financial Analyst (CFA) and a Certified Retirement Planner (CRP). As you can see, there are several differences between the two. Each designation has an established procedure in place for investor complaints, but only one requires continuing education and neither is accredited. Investors should research the requirements of each designation to determine if that specific qualification is relevant to the services they seek.
For more information on professional designations and how to choose the right financial professional for you needs, please read FINRA’s Selecting Investment Professionals.