Understanding Financial Credentials
If you have even thought about getting help with planning for retirement,
investing or insurance decisions, you have probably come across a variety
of designations attached to the people hoping to help you. It is often hard
to tell exactly what they mean or how much they matter in the type of help
you are seeking.
There are scores of credentials for financial professionals. Some are very
good indicators of the person’s training and skill, while others indicate
knowledge of a more limited scope. Still, credentials can serve as one
indicator of a financial advisor’s qualifications.
Some credentials that relate to financial planning and investment advice
are more widely recognized than others. The brief explanations and
descriptions below should help you better understand the differences and
the qualifications of any financial professional you are evaluating.
Licenses and registrations
Licensing or registration is legally required for brokers, investment advisors
and insurance salespeople. Different licenses allow them to sell different
types of investments. Some are state-required. Examples of various
licenses/registrations include:

Series 6, a basic license/registration, allows the person to sell only
mutual funds, variable annuities, and variable life insurance
products.

Series 7 licenses/registers the individual to deal in all securities
products, including stocks and bonds.
The Series 65 Exam

Series 63 covers state-specific securities laws.
Investment Advisors
Most investment firms and individual investment
advisors must register with either the US Securities
and Exchange Commission (SEC) or state securities
regulators. These firms and advisors are known as
RIAs—Registered Investment Advisors. Advisors
covered by a firm’s RIA rather than registering
individually are known as Investment Advisor
Representatives or IARs. Most states require that
IARs pass the Series 65 exam (see sidebar) or
equivalent.
Benchmark Financial Solutions
Members of the Benchmark Financial
Solutions team are often referred to as
financial consultants but each is also an
Investment Advisor Representative
registered with Infinex Investments,
Inc. Infinex Investments, Inc. is a
member of FINRA/SIPC and is a
registered broker/dealer and federally
Registered Investment Advisor. Infinex
offers securities, advisory services, and
certain insurance products.
This exam is administered by the
Financial
Industry
Regulatory
Authority (FINRA) (previously the
National Association of Securities
Dealers (NASD)). Completion of
the Series 65 Exam will qualify an
investment professional to operate
as an Investment Advisor Representative in certain states, including Virginia. The exam focuses
on topic areas that are important
for an investment advisor to know
when providing investment advice.
These areas include topics such as
retirement
planning,
portfolio
management
strategies,
and
fiduciary obligations.
Investment firms and independent advisors
register with the SEC by filing Form ADV,
which includes disclosures about
compensation, qualifications, and potential
conflicts of interest. The advisor must also
provide this information to potential and
continuing clients.
Some firms or persons dealing with
investments are not required to register as
investment advisors. These are usually
professionals (i.e., attorneys, journalists, or
teachers) who are not considered to be
Some members of the BFS team are
investment advisors as their advice is solely
also Registered Representatives or
incidental to their main profession. Others
brokers.
are investment advisors but are exempted
from registration due to their limited number
of clients, or the limited nature of their investment advice.
Investment Advisors are fiduciaries (see sidebar)—they
are required to put the client’s interests first by
recommending the investments that are best for the
client. Brokers are not subject to those requirements,
even if they provide investment advice.
Other types of financial advisors
The terms financial planner, financial advisor, financial
consultant are often used to describe individuals who
help with investing and/or financial planning. Sometimes
these are used loosely but there are certain titles that
What is a Fiduciary?
A fiduciary is someone who must
legally put your interest first,
even before his or her own
interests. A fiduciary financial
professional who is advising you
about
investments,
must
recommend investments that are
best
for
you.
Fiduciary
professionals must also tell you
about their qualifications and
services as well as how they are
compensated. They must reveal
any potential conflicts of interest
and any disciplinary actions
taken against them.
signify a very specific type of service. They include:
Estate Planner
Estate planners provide you with advice on estate taxes or other estate
planning issues and put together a strategy to manage your assets at the time
of your death. While attorneys, accountants, financial planners, insurance
agents or trust bankers may all provide estate planning services, an attorney is
usually used to prepare legal documents such as wills, trusts and powers of
attorney.
Accountant
Accountants provide you with advice on tax matters and help you prepare and
submit your tax returns to the Internal Revenue Service (IRS). All accountants
who practice as Certified Public Accountants (CPAs) must be licensed by the
state(s) in which they practice.
Attorney
A relatively small percentage of attorneys provide financial planning services,
usually specializing in estate and tax planning. A financial planner may ask an
attorney to provide specific legal advice for a client, particularly in the areas of
taxation or estate planning. An attorney may also be called upon to prepare
the legal documents necessary to implement recommendations in areas such
as wills, trust documents or business ownership planning.
Insurance Agent
Insurance agents are individuals licensed by a state or states to sell life and
health and/or property and casualty insurance products. Insurance
salespersons must hold licenses for each category of insurance they sell, in
each state where they sell insurance.
Many financial professionals are licensed to sell or give advice on insurance
products. Others might identify insurance needs for a client, but turn to a
licensed insurance agent for recommendations about which existing insurance
products best meet a client’s needs. Independent insurance agents sell
products for two or more insurance companies while exclusive insurance
agents represent only one.
Stockbroker
Also called Registered Representatives, stockbrokers ( or simply brokers) are
licensed, by the state(s) in which they practice, to buy and sell securities
products such as stocks, bonds and mutual funds. They generally earn
commissions on all of their transactions. Stockbrokers must be registered with
a company that is a member of the Financial Industry Regulatory Authority
(FINRA) and pass FINRA-administered securities exams.
CFP® Professional
CFPs are Certified Financial Planners. They hold CFP® certification and have
met certain education, examination, experience and ethics requirements. They
are required to get continuing education to maintain the certification.
Certified Financial Planners help clients with broad, long-term financial
planning that includes all aspects of the financial picture including taxes,
insurance, estate planning, debt management, and saving for retirement.
CFPs can choose to be compensated by charging a fee for their services or by
commission. Fee-only CFPs charge a set hourly fee for providing financial
guidance. Commission-only CFPs provide financial advice, of course, but they also
try to sell financial products. In addition to these two big categories, there are some
hybrids. For instance, some CFPs charge small hourly fees -- smaller than those of
fee-only CFPs -- and also earn commissions. Still other CFPs charge on a perproject basis.
Designations
®
AAMS
Accredited Asset Management Specialist
There are a myriad of acronyms that
A professional designation awarded by
financial professionals list after their
the College for Financial Planning to
financial professionals who successfully
names. Many designations represent
complete a self-study program, pass an
substantial education, training, and/or
exam and agree to comply with a code of
experience. Some of these, like the CFP
ethics. AAMS professionals must get
certification above, take years to achieve.
continuing education to retain the
Most, but not all, require continuing
designation. The AAMS program is
developed in conjunction with some of
education to retain the designation. (see
the nation’s top investment firms.
example in sidebar). Understanding the
meaning of these designations (the area of
study; whether continuing education is required and if so, how much; the
amount of relevant experience required to obtain the designation, and
whether the designation can be revoked for unprofessional conduct) can help
you evaluate and compare the qualifications of different financial
professionals. To learn more about the many different financial designations,
visit one of the FINRA site pages below and follow the links:
Listing of Financial Professional Designations
Financial Professional Designation Lookup
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doesn't necessarily deal with every important topic or cover every aspect of the topics with which it deals and might not be relevant or appropriate in all circumstances.
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