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Financial advisors need more than just a head for numbers; certifications are important too. The most common certifications include CFP, CPA, CFA, and CLU. Each certification requires specific education, experience, and exams to obtain and maintain.
When a person considers pursuing a career as a financial consultant, they may believe that the job itself is all about numbers. He will soon discover, however, that there is a lot of emphasis and importance placed on the letters that follow his name on the business card as well, particularly those designating the various financial advisor certifications he currently holds. A financial advisor can be certified in a variety of skill sets based on their individual area of expertise. The most common certifications sought after are Certified Financial Planner® (CFP®), Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Chartered Life Underwriter (CLU).
A financial advisor who holds a CFP and reg certification has proven to be a well-rounded financial expert with knowledge of all major aspects of the finance industry, specifically individual financial planning needs. He successfully completed and passed an exam, gained the required level of industry experience, and obtained the minimum education background. He is also required to complete ongoing continuing education requirements and periodically retest in order to keep his CFP® financial advisor certification current and in good standing.
CPA financial advisor certification is awarded to an individual who specializes in the accounting field and who has met the necessary education, experience, licensure, and exam requirements. A CPA prepares and files tax returns, and performs subsequent tax audits, for individuals or businesses. Sometimes, an individual who has already been designated as a CPA will also seek a financial advisor certification as a Personal Finance Specialist (PFS), showing their understanding of personal financial planning and taxes.
A CFA financial advisor certification is awarded to an individual who has successfully passed three certification exams after gaining three years of relevant accounting experience. The certification is designed to impart a broad understanding of accounting procedures as well as portfolio management and investment analysis. Many people who hold a CFA certification also hold a Chartered Investment Counselor (CIC) designation. This supplemental financial advisor certification shows that the individual has demonstrated a more detailed understanding of portfolio management standards and practices than required by the CFA.
CLU certifications are given to an individual who focuses on the economics of various insurance policies and benefits. It involves a combination of study programs and an extensive series of exams. A CLU-certified financial advisor is equipped to handle a wide range of topics, including estate planning, life and health insurance, retirement planning and investment management. CLU certifications are often required for people looking for work in the insurance industry who deal with the financial aspects of the industry.
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