Thursday, May 19 2022

Financial certifications demonstrate a professional’s expertise in the financial services industry, whether the focus is on accounting, financial planning or investing.

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These certifications typically require hundreds of hours of coursework and lengthy tests and are one way to differentiate between the various types of financial advisors in the industry.

When you see M.D. next to a person’s name, you know they’ve been to medical school. They’ve been vetted, passed written tests and you can likely trust them with your health, says Charles Sizemore, chief investment officer of Sizemore Capital Management, a Dallas-based registered investment advisory firm.

“Financial certifications may not offer quite that degree of confidence, but it’s the same idea,” he says.

Here are 10 of the best financial certifications for professionals:

  • Chartered financial analyst (CFA)
  • Chartered investment counselor (CIC)
  • Certified financial planner (CFP)
  • Chartered financial consultant (ChFC)
  • Retirement income certified professional (RICP)
  • Certified public accountant (CPA)
  • Certified management accountant (CMA)
  • Accredited investment fiduciary (AIF)
  • Chartered alternative investment analyst (CAIA)
  • Financial risk manager (FRM)

Chartered Financial Analyst (CFA)

A chartered financial analyst designation is administered by the CFA Institute for people who manage portfolios of various assets such as stocks and bonds. To receive CFA marks, people have to pass rigorous exams on three levels and have at least four years of work experience.


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The most sought-after designation in finance is probably the CFA charter, Sizemore says.

“While no designation is a guarantee of investment success, when you see the CFA letters, you can at least be certain that the person has a deep level of knowledge and is extremely motivated,” he says. “The investment world is full of fast talkers, but there’s no way to bluff your way through the CFA examinations. I would consider this a major quality filter when evaluating potential consultants.”

Chartered Investment Counselor (CIC)

If the CFA designation isn’t enough for you, you could always take your certification one step further by getting the chartered investment counselor credential, too.

The CIC requires that you already have your CFA. You must then demonstrate “significant experience in performing investment counseling and portfolio management responsibilities,” according to the Investment Adviser Association, or IAA, which issues the certification.

You can generally complete that requirement with at least five years of work experience where more than half of your time is spent doing a combination of investment counseling and portfolio management. You’ll also need to submit a letter of reference from a CEO, managing principal or your senior supervisor, plus three other letters of recommendation. There is no exam or education requirement, but you do need to be employed by an IAA member firm at the time you receive your credentials.

Certified Financial Planner (CFP)

The CFP certification is highly regarded since advisors only qualify if they already have 6,000 hours of professional experience and take a lengthy exam.

Advisors with the CFP designation will focus on planning in various areas such as investments, taxes, estate and insurance.

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“As clients become more informed, they seek advanced certifications like the CFP,” says Daren Blonski, managing principal of Sonoma Wealth Advisors in California. “It’s important that advisors have done the learning to support the range of client needs, not just rely on entry-level licensing exams. Clients should pursue advisors who seek to grow their knowledge base with advanced certifications.”

The exam is given by the CFP Board.

Chartered Financial Consultant (ChFC)

The chartered financial consultant designation is often viewed as an alternative to CFP marks. The ChFC coursework covers the same topics the CFP materials cover, including basic financial planning, insurance, retirement and estate planning. But it also incorporates topics such as small-business planning, behavioral finance, divorce financial planning and planning for clients with special needs, same-sex families or unmarried couples.

To earn the credential, applicants must complete eight educational courses – seven of which are part of the CFP educational requirement – and complete a closed-book final exam. You’ll then need to complete 30 hours of continuing education every two years to maintain your accreditation.

Retirement Income Certified Professional (RICP)

Financial advisors who focus on retirement planning may choose to get their retirement income certified professional marks. Offered by The American College of Financial Services, the RICP was developed by more than 45 top retirement planning experts across the U.S. to give certificants the expertise necessary to build comprehensive income plans. This includes topics such as Social Security planning, portfolio withdrawal strategies, income tax planning in retirement, Medicare and long-term care planning.

To earn your RICP, you’ll need to complete a three-course educational program that is offered in a self-paced online format, then pass a final exam. While there is no prerequisite to begin earning your RICP, you won’t be able to use the designation until you have at least three years of relevant experience under your belt.

Certified Public Accountant (CPA)

Chief financial officers, tax preparers, accountants and stock analysts earn their CPA designations to advise clients about accounting and tax issues. Becoming a CPA requires passing an exam after taking 150 hours of classes. The certification is well-known and highly regarded.

“If someone has CPA next to their name, you know that they have a deep understanding of accounting and tax principles and have been tested and vetted,” Sizemore says. “This might not matter if you want an advisor to help you choose mutual funds or do basic planning. But if you want an advisor to help you go through your business books, a CPA designation is really helpful.”

Certified Management Accountant (CMA)

For financial professionals who want to focus on corporate accounting, the certified management accountant certification is the one to get. It’s provided by the Institute of Management Accountants and covers 12 competencies, including external financial reporting decisions, performance management, financial statement analysis, corporate finance and professional ethics.

To earn the certification, you must have a bachelor’s degree or professional accounting certificate, plus two years of work experience and successful completion of a two-part exam. You have up to three years to complete the two-part CMA exam, although most people do so in 12 to 18 months. There is only about a 50% pass rate globally, so be prepared to study hard for this one.

Accredited Investment Fiduciary (AIF)

An accredited investment fiduciary certification is issued by Fi360, formerly the Center for Fiduciary Studies, for financial advisors who are fiduciaries to help them meet their legal obligations. Fiduciaries must act in the best interest of the client, even if it is not in the advisor’s best interest to do so.

“While technically this is now mandated per the new Securities and Exchange Commission requirement called Regulation Best Interest (Reg BI) rules, the rules are patchwork molasses at best,” Blonski says. “Make sure the advisor you’re hiring is willing to act as a fiduciary to you. They should be willing to put this in writing.”

Clients should choose to work with fiduciaries because they abide by a higher standard of advice, unlike brokers and insurance agents, who often sell products that offer more lucrative incentives such as commissions.

Chartered Alternative Investment Analyst (CAIA)

The Chartered Alternative Investment Analyst Association provides a charter to financial professionals who want to demonstrate their expertise in managing, analyzing, regulating or distributing alternative investments. To earn your CAIA, you must be a CAIA Association member and complete two exams.

The first part of the exam tests your understanding of the alternative asset classes and the tools and techniques that can be used to assess an asset’s risk-return attributes. In the second part of the exam, you’ll demonstrate how you can apply this knowledge within a portfolio management context.

There are more than 12,000 CAIA holders worldwide, and three-fourths of them earned their CAIA charter in 12 to 18 months.

Financial Risk Manager (FRM)

Financial risk managers are often found working at major banks such as HSBC, Credit Suisse and Bank of America. The certificate is provided by the Global Association of Risk Professionals, or GARP. Recipients must have two years of relevant work experience and pass two sequential multiple-choice exams. You can complete your work experience before or after passing the exams. GARP provides study materials to help you prepare for the test.

Once you have the certification, GARP encourages certificate holders to earn 40 hours of continuing professional development every two years to maintain your credentials.

Copyright 2021 U.S. News & World Report

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